Mercosur Regional Trade Organization
The Mercosur regional trade organization formed in 1991 to establish a common market and a common trade policy toward outside nations. Mercosur takes its name from Mercado Común del Sur (Spanish for “Common Market of the South”). It is also sometimes referred to as the Southern Cone Common Market. [More info]
Facts on Mercosur
- Since its inception Mercosur has continued to grow and pursue a wider role in world trade.
- A fundamental part of Mercosur is a common external tariff (CET), a complex schedule of taxes that apply to imports from nonmember countries.
- Organization focuses on creating a larger internal market for goods and services produced by Mercosur partners.
Economic Development Stages of Mercosur
The organization has its origins in a trade treaty signed by Argentina and Brazil in 1986. In 1990 these countries joined with Uruguay and Paraguay to form a free-trade zone, which allows unrestricted trade between the four countries.
In 1995 the member nations formed a customs union, in which they agreed to reduce or eliminate trade barriers between member countries and adopt a common trade policy toward outside nations. In 2012 Venezuela became a full member of Mercosur after being an associate member since 2004. Venezuela’s entry raised the combined annual gross domestic product of Mercosur to $1 trillion.
Additionally, in 1995 the organization began working with the European Union (EU) in an attempt to forge a free trade agreement between the two groups.
Chile became an associate member of Mercosur in 1996, with Bolivia (1997), Peru (2003), Colombia (2004), and Ecuador (2004) achieving the same status in ensuing years. In 2004 Mercosur joined with the Andean Community to form the South American Community of Nations, bringing wider economic integration to the continent. The alliance became the world’s third largest trading bloc, behind the EU and the economies of the countries party to the North American Free Trade Agreement (NAFTA).