Transcript Positive Scenario

The Future of the
MERCOSUR
Jesica Avalos
Alejandro Flores
Aurélia Lavernhe
Joanna Lucas
Mercado Común del Sur
Introduction

Mercosur is a customs union between Brazil, Argentina, Uruguay,
Paraguay and Venezuela, founded in 1991 by theTreaty of Asuncion,
which was later amended and updated by the 1994 Treaty of Ouro
Preto.

Its purpose is to promote free trade and the fluid movement of
goods, peoples, and currency.

Mercosur origins trace back to 1985 when Presidents of Argentina,
Raul Alfonsin, and Brazil, Jose Sarney, signed the Argentina-Brazil
Integration and Economics Cooperation Program or PICE (Programa
de Integracion y Cooperacion Economica Argentina-Brazil).

Some South Americans see Mercosur as having the capability to
combine resources to balance the activities of other global economic
powers, perhaps especially the United States and The European
Union.

The development of Mercosur was greatly affected by the
collapse of the Argentinian economy in 2001 and it has still
had internal conflicts over trade policy, between every
member country.

However, in December of 2004 it signed a cooperation
agreement with the Andean Community trade bloc (CAN),
and afterwards they published a joint letter for an intent of a
future negotiation in order to integrate all of South America.

Fortunately, more than 220 million people are benefiting and
the combined GDP of the members is still over $1 trillion a
year.

And as every treaty, there have to be reforms. So there are
two possible scenarios according to the global market: one
that can be positive if there are changes in the system, and
one that can be negative if there are not any changes.
Positive Scenario
To become a common proper market it has to harmonize:
To
improve



Investment
Trade incentives
Sale tax regimes
• The customs union
•Strength their common market
• Reduce the need for strong
changes in trade policies among
themselves
Problems to be solved
Different exchange regimes cause exchange rate
imbalance
Changing many times of tarrif and non tarriffs barriers
Add escape clauses to allow members deal with temporary
Economic problems
Increase the businesses´ integration among member countries
Suprantional Institutions

Supranational instititutions with strong political leaders would
give voice to domestic political actors such as labor unions
and small and medium enterprises.
More democratic market

If Brazil remains to be the most economic
power in South America it can benefit
Mercosur members by:
Increasing their exportations to Brazil
But first it is necessary to improve
Mercosur policies
Consolidation of the Mercosur
Integration Process
As a regional and institutionalized subsystem with:
 Economic preferences
 Collective disciplines and rules contemplate the interests of all the member
countries
In would contribute in:
 Political Stability
 Democracy
 Achieving the goal of a bi-regional strategic association with the European
Union
Negative Scenario
2 possibilities for Mercosur´s future



Irrelevance
The trend toward a continuous deterioration of the
integration process and of its image, gradually slipping
into a growing irrelevance as regards the agenda of
critical issues for all or some of the member countries.
Mercosur will continue to exist as a process but its
commitments are diluted and lose effectiveness in the
perspective of citizens, investors and third countries.



Dilution
The trend toward the dilution of Mercosur into an
eventual integration at the hemispheric level with
the FTAA.(Free Trade Area of Americas)
Mercosur as an economic region would survive
but the integration process and its instruments
would be overcome by those adopted at the
hemisphere level.
Conclusion

None of the problems of the Mercosur are
without solutions

A consolidated Mercosur is not in contradiction
with the FTAA

A consolidated Mercosur will be a good way to
achieve the aim of strategic association with the
European Union.
Conclusion

The EU has decided to conclude in a very close future an
association agreement « complete, ambitious and fair » with the
Mercosur based on 3 pillars:

A political and institutional chapter to reinforce the democratic
dialogue and political consultation,

A cooperative chapter to promote economic and social development

A commercial chapter creating a free trade area including a broad
range of sectors from the liberalisation of the trade of goods and
service, to the investments sectors, the public market, the protection
of the right of intellectual property and cooperation towards
concurrence.

Sources
•
http://en.wikipedia.org/wiki/Mercosur
http://www6.miami.edu/eucenter/penafinal.pdf
http://www.europarl.europa.eu/news/expert/infopress_page/026
-11583-284-10-41-903-20061011IPR11557-11-10-2006-2006false/default_fr.htm
http://www.gtnews.com/article/5837.cfm
http://www.inquit.com/article/378/mercosurs-future
•
•
•
•