Table of Contents
MERCOSUR.
INTRODUCTION.
Mercosur comes from three Spanish words; Mercado
(market), Comun (common), and Sur (south). Mercosur was established in 1991 by
the Treaty of Asuncion. It is the common market of the South and is the largest
trading bloc in South America. Mercosur has both permanent members and
associate members as well. The permanent members are: Argentina, Brazil,
Paraguay, Uruguay and Venezuela which joined officially in June 2012 after the
Brazilian and Argentina parliaments ratified it. Paraguay is temporarily suspended
from Mercosur since June 2012 for the violation of the Democratic Clause of
Mercosur. The official languages in
Mercosur are Spanish, Portuguese and Guarani.
The five associate
members of Mercosur are: Chile, Bolivia, Colombia, Ecuador and Peru. These associate
members do not enjoy full voting rights and complete access to the markets of
the full members of Mercosur. However
they do receive tariff reductions. Bolivia is being considered for full
membership but the decision is proving to be difficult because of the history
of Bolivia with Mercosur. The president of Bolivia, Evo Morales has criticized
Mercosur saying, "What I have discovered is that the CAN [Andean Community
of Nations] as well as Mercosur are tools that only benefit businessmen and
wealthy people, instead of the poor people"
This economic and
political organization aims to promote free movement of goods, services and
people among member states. It is currently the fourth largest integrated
market after the North American free trade area, the European Union, and Japan.
It haslengthened its domain by going into free trade agreements with Chile and
Bolivia and has as well formed an economic cooperation engagement with the
European Union.
Although Mercosur was
established in 1991 the integration spirit in South America goes way back to
the sixties with Latin-American Free Market Association beginning its
functions, it later changed its name to Latin-American Integration Association.
Towards the end of the 20thcentury, there was an increase in number
of trade agreements among the member states of Mercosur specifically Brazil and
Argentina who had historical rivalries but they decided to put them behind them
when presidents Raul of Argentina and Jose of Brazil signed the Argentina-
Brazil Integration and Economics Cooperation Program which would turn out to be
for the good of regional leadership and hence they started on economic
complementation which became the foundation of
Mercosur.
Uruguay and Paraguay
are located between Brazil and Argentina also joined in on the regional
cooperation and they collectively decided that Montevideo was going to be the
headquarters for Mercosur. This had also been had also been the headquarters of
Latin-American Integration Association and the Latin-American Free Market
Association as well. Marcos is ruled by the Common Market Council which is
responsible for the political decisions of the process of integration.
ORGANS OF MERCOSUR.
The institutional
structure of Mercosur comprises six organs. These organs have different roles
that help things flow smoothly. This comprises of Council
of the Common Market, Common Market Group (CMG), Mercosur trade Commission,
Joint Parliamentary Commission, Economic and Social Consultative Forum and
Mercosur Administrative Secretariat. Mercosur’s
organs are mainly deliberative, and their powers are generally limited to their
own sphere of operation.
The Council of common market is the
highest organ of all. It is composed of the
Ministers of Foreign Relations and the Ministers of Economy (or Ministers of
equal rank) of the Members. The Ministers of Foreign Relations coordinate its
meetings. Other ministers or authorities may participate in these meetings by
invitation of the coordinators. All decisions are made in the presence of all
its members (Campbell, 1999).
It ensures that all the objectives that
are outlined in the treaty of Asuncion are achieved
by all means. It also has powers of decision making and political direction.
The council formulates policies and takes necessary actions that may lead to
the development of the market; it negotiates on different agreements that may
be proposed by other countries.
The common market group is
another organ that comprises of Ministries of Foreign Relations, the Ministries
of Economy and the central banks. Respective Governments appoint them into
office. The ministry of foreign relations takes part in the coordination. It
reports back to the common market council. It participates in the settlement of
disputes under the conditions that are set by the Brasilia protocol. Its
various functions are approving the budget, proposing draft decisions for
adoption by the Council. All this is done with the help of an administrative
secretariat.
Mercosur Administrative Secretariat. Its
role is to provide support to the other organs.
Mercosur trade Commission. This
commission is composed of four members of each member states. It is responsible mainly for the group’s trade policies. It
comes hand in hand with assisting the CMG.
Economic and Social Consultative Forum.
This organ deals with the economic and social sectors of its members. In terms
of decision making it can recommend on what can be done to the common market
group. Any economic issue has to go through them and finally come up with
various solutions. Afterwards referring the recommendations to the CMG.
Joint Parliamentary Commission. It
is composed of an equal number of representatives
from each Member’s parliament that are appointed by their members. In this case
the main objective of the organ is to merger the treaties and decisions of
mercosur in domestic legislation in order to support the trade laws of its
members.
OBJECTIVES OF MERCOSUR.
The bloc was formed for various purposes but the
main one being to Promote free movement of goods and people for the member
states and also increase market base for the products manufactured in different
member states.
Provide
better education by allowing students to move freely from one country to
another in search of better education. In this case each country has something
that is good in an example in Brazil which is well known for the manufacture of
Embraer aircrafts. Any non- technical level of education for example primary or
junior high level is considered to be on the same level in all member states.
Enable citizens of the member states learn from each
other culturally. This takes place when people interact with each other from
all walks of life and share various ideas on how to live as one.
The bloc also was meant to create wider free trade
zones to the member states which enable the member states assess merchandise
from the areas with the common external tariff used for Mercosul merchandise
and through the increased trade the citizens will be able to learn from each other
culturally and this will bring upon a political bloc that will stand with each
other in case s of political or economical turmoil. Promote a wider and
stronger political union.
The EU believes
that the Mercosur countries have an interest in strengthening the integration
model and actively supports Mercosur. The EU has bilateral partnership and
agreement with the member states of Mercosur. This is because the South America and Europe
tend to share some economic and political relations. The EU tends to open its
markets to economies that meet their qualifications such as have
to be very large, well regulated and well connected with the rest of the world.
In this case the EU was very much and still is
interested in economic sector of Mersocur. Not forgetting that Brazil takes up
the largest population. The negotiations
between the two regions were launched in Madrid in 2010 and this was in order
to have an agreement that stipulated the trade agreement, the services , rules
on procurement ,the trade facilitation and the how to deal with the barriers
that affected trade. Mercosur is said to export a large chunk of agricultural
products and raw materials to the EU while on the other hand EU exports
machinery and transport equipments.
The EU is Mercosur's first trading
partner accounting for 20% of Mercosur's total trade and having Mercosur is the
EU's 8th most important trading partner, accounting for a certain percentage of
EU's total trade. EU's exports to the region have steadilyincreased over the
last years ( Horn& Sapir, 2009).
ACHIEVEMENTS OF MERCOSUR.
As a trade and political bloc it has been able to
increase bargaining power that the Mercosur countries have been as a bloc to
negotiate trade agreements with the world this has enabled them to increase
their trade as region and hence more foreign income from the trade. The bloc
has been able to engage in a deeper, fast and ambitious integration process
among them which has meant increased democratic space and growth of diverse
political ideology in the member states.
The bloc has
been able to bring together the various countries together economically,
politically and culturally. The consolidation of democracy among Mercosur`s
members is one of the most important achievements of the economic integration
process. In the 1998 Ushuaia Protocol, member countries agreed that democracy
was an essential condition of the integration process among them which led to
increased multiparty and the growth of opposition in countries such as
Venezuela. The process of trade liberalization among Mercosur members has been
successful on many fronts, from increased trade flows and cross-country
investments leading to higher trade and hence creation of employments for the
many idle youths and the poor jobless members of society (Paiva, 2003).
CHALLENGES FACING MERCOSUR
Even though the various countries that came together
to form Mercosur have achieved a couple of things together they have also faced
a couple of challenges in the way to establishing themselves together and some
of the challenges includes disputes between member states especially Argentina
and Brazil which have been able to slow down the level of trust hence slowing
down the speed of development among the various states.
Also Venezuela under the leadership of the late Hugo
Chavez did not agree with the bloc`s international policy, most of the time the Venezuela dragged its
feet when it came to matters involving foreign policy especially the trade with
United States which hindered the growth of the bloc hence leading to
skepticism. (Frischtak et al.., 1996)
Another challenge is the In adequate institutional framework to support progress
in multilateral negotiations as the mistrust and Venezuela stand on
international policy slowed down the process of coming up with the policies and
the framework needed. Countries have unilaterally changed tariff levels and
nontariff barriers too many times, creating a poor environment to consolidate
gains and walk toward higher levels of integration.
Lastly the lack of a more formal mechanism for
settling disputes and dealing with trade flow imbalances contributes to these
occasional setbacks as decisions continue to depend on “diplomatic/political”
actions, and costs of setbacks are not known (De Oliveira, 2012)
CONCLUSION.
This bloc has
evolved and is trying to extend its influence to some areas beyond the
economic/commercial market project as much as it has had its many challenges. The
reason
as to why mercosur has indeed improved is due to the mutual trust among the
different member states. Twelve years
after it started, Mercosur has accumulated more success than failure. However,
the frequent setbacks resulting from domestic and external shocks have hurt the
credibility of the integration process. Decreasing credibility can jeopardize
the consolidation of the gains achieved in the past and seriously block higher
levels of economic integration among Mercosur members.
REFERENCES.
De Oliveira, A. (2012), “The Global oil market: An
outlook from South America”, presentedAt the Korean Development Institute and
Korea University Conference, “InternationalMonetary System, Energy and
Sustainable Development”, Seoul, 21 September
Campbell, J.
(1999) Mercosur. Entre la Realidad y la Utopı´a (Buenos Aires, Editorial
Nuevohacer/CEI).
Frischtak, Claudio, Danny M. Leipziger,
and John F. Normand. 1996. Industrial Policy in MERCOSUR: Issues and Lessons.World
Bank.
Horn, H., P. Mavroidis and Sapir, A
(2009), Beyond the WTO? An anatomy of EU and US
Preferential trade agreements,
Brueghel, Brussels
PAIVA, Paulo; (2003) Gazel: Ricardo.
Mercosur: êxitos, fracasos tareas inconclusas. Quorum Revista Ibero americana, Universidad de Alcalá,
España, Primavera 2003
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