Objective• The free transit of produced goods, services and factors among the member states Among other things, this includes the elimination of customs rights and lifting of nontariff restrictions on the transit of goods or any other measures with similar effects• Fixing of a common external tariff (CET)• Move member countries’ economies away from import-substitution models• Develop institutional groups
History• 1991: Treaty of Asunción goes into force in 1991, effectively mandating the creation of a common southern market (MERCOSUR) by December 31, 1994. Original signatories are Brazil, Argentina, Paraguay, and Uruguay• 1994: Creation of Mercosur• 1995: Creation of customs union. MERCOSUR and the European Union sign an agreement of trade association and cooperation in various areas• 1999: Free trade agreement with two trading block EU and NAFTA• 2004: Preferential trade agreement with India
Facts• Population : 0.3 billion(2010) , 43% of Latin America’s population• Languages : Portuguese, Guaraní and Spanish• Combined GNI : $1.1 trillion(2010) ,encompasses roughly 50% of Latin America’s Gross Domestic Product• Land : 7,941,856 sq. miles, 59% of its total landmass• Climate : most types of climate from Arctic to tropical• 4th largest trading bloc in the world after EU, NAFTA, ASEAN (2010)
Levels of regional economic integration• Free Trade Areas• Customs Union• Common Markets• Economic UnionMERCUSOR’s current position- Customs Union
Reasons for difficulty in existence on Integration• Economic Instability 2002- Argentina’s economic issues, peru value reduction, affecting Brazil and Uruguay, price of commodities in Argentina fall.• Political Instability President of Brazil trying to get global recognition to become the leader of developing countries created resentment to Argentina.
Associates and Observers• Colombia• Bolivia• Chile• Ecuador• Peru• Venezuela• Mexico ( Observer) Reason- Mexico is a member of NAFTA.
Administrative/Institutional Structure of MERCOSUR• Common Market Council (CMC):The Council is the highest- level agency of MERCOSUR with authority to conduct its policy, and responsibility for compliance with the objects and time frames set forth in the Asuncion• Common Market Group ( CMG):basic duties are to cause compliance with the Asuncion Treaty and to take resolutions required for implementation of the decisions made by the Council. Furthermore, it can initiate practical measures for trade opening, coordination of macroeconomic policies, and negotiation of agreements with non-member states and international agencies, participating when need be in resolution of controversies under MERCOSUR
Administrative/Institutional Structure of MERCOSUR• Commercial Commission of MERCOSUR (CCM):assists the Common Market Group in the enforcement of trade policies• Joint Parliamentary Commission (CPS):The Committee will have both an advisory and decision-making nature, with powers to submit proposals as well• Social-Economic Consultative Forum (FCES):brings together various associations and interest groups from member countries
India and Mercosur• A Framework Agreement had been signed between India and MERCOSUR on 17th June 2003• India – MERCOSUR PTA came into effect from 1st June, 2009• Products covered in Indian offer list are meat and meat products, organic & inorganic chemicals,• Product covered in the offer list of MERCOSUR are food preparations, pharmaceuticals, essential oils• Trade volume should reach 17 billion USD in 2012 and 30 billion USD by 2030
Current News• Mercosur Signs Trade Deal with Palestinian AuthorityThis is the first trade deal between the Palestinian territories and a bloc of nations outside the Arab world