The Southern Common Market – Mercosur – began to form in 1988, when Brazil and Argentina closed agreements that provided for the reduction of customs tariffs between them.
Block history
In 1991, with the accession of Paraguay and Uruguay , the Asunción treaty was signed, officializing the existence of Mercosur. In the 1990s, Chile and Bolivia also signed association agreements with Mercosur, becoming privileged trade partners in the common market.
Other countries became associate members: Peru , in 2003, and Colombia and Ecuador , in 2004, Suriname and Guyana in 2015.
In 2006, Venezuela signed the Mercosur accession protocol; his entry into the bloc was approved by the Senate of Uruguay, Argentina and Brazil.
For years, Venezuela has unsuccessfully waited for the approval of the Paraguayan Senate to become a member state. In 2012, Venezuela definitely joined the bloc, a fact that generated great controversy, since it did not have the Paraguayan approval, because, weeks before, Paraguay had been suspended from the bloc, due to the rupture of the democratic order with the impeachment of the then President Fernando Lugo.
However, in July 2013 Paraguay returns as a member country after electing its new president and in December 2016 Venezuela was suspended from the bloc for non-compliance with the rules.
- Member countries: Argentina, Brazil, Uruguay and Paraguay
- Associated countries: Bolivia, Chile, Peru, Colombia and Ecuador, Guyana and Suriname.
One of the objectives of Mercosur is to expand trade between member countries, especially between the two strongest economies: Brazil and Argentina .
Brazil in Mercosur
According to cancermatters, the Brazilian industrial park is more complete than the Argentine one. As a result, Brazil produces a greater quantity of goods (production goods and consumer goods). The wages of Brazilian workers are lower than the wages of Argentine workers, and the cost of energy in Brazil is lower, since a large part of Brazilian electricity is generated in hydroelectric plants.
Due to the lower cost, in many sectors, Brazilian products have more competitive prices than those of similar Argentines; the result is a greater advantage in selling these products in Argentina. This fact generated, in several situations, disagreements between the two States regarding the commercial tariffs adopted.
Brazil exports mainly industrialized products to Argentina, with the exception of coffee and iron ore.
Argentina exports oil and agricultural products to Brazil, such as wheat and fruits. Industrialized products are concentrated in the automobile sector.
Argentina, in turn, has significant advantages over Brazil in many agricultural products, such as: high natural fertility of the Argentine pampas, favorable climate for the cultivation of the most varied cereals and typical fruits of temperate climate (grape, apple, dried fruit) ) with much lower production costs.
It is important to note that the effective integration of the Mercosur economic center depends on an efficient transport and communications infrastructure.
In the south of Brazil, this infrastructure comprises the road connection between Paraguay and the port of Paranaguá (PR), which facilitates the flow of Paraguayan production towards Brazil and foreign markets. The port of Rio Grande (RS) is used to transport agricultural exports from Uruguay.
Among the transport projects are the Paraguay-Paraná waterway, to transport minerals and soy to the platinum countries; the highway linking São Paulo to Buenos Aires; and the road connection between the port of Rio Grande and the port of Antofagasta, in northern Chile, transporting Mercosur products to the Pacific Ocean.
