Mercosur. The Mercosur economic bloc

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O Southern Common MarketMercosur – it is an economic bloc, that is, an agreement made by some countries to facilitate trade and economic relations between them, with the aim of increasing development and integration. In the case of this bloc, the agreement involves countries in South America, including Brazil. It was founded in 1991 by the Treaty of Asuncion.

Mercosur member countries are divided into two categories: effective members and the one of associate members. In addition to these two groups, there are also observer members, who are countries that are not actually part of Mercosur, but that follow the progress of the bloc. Mexico and New Zealand.

The effective members of Mercosur are: Brazil, Argentina, Paraguay, Uruguay (members who founded the bloc) and Venezuela (2012)**. These countries participate in all major agreements and have greater trade integration.

Mercosur associate members are: Chile, Bolivia, Peru, Ecuador, Colombia, Guyana and Suriname. They do not fully participate in the bloc, only taking part in some agreements. Associate members also do not have the power to vote on the most important decisions of the bloc.

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Look at the map below and see the countries that participate in Mercosur:

Map with members who are part of Mercosur
Map with members who are part of Mercosur*

The main feature of Mercosur is the adoption of Common External Tariff, which causes this block to be called Customs union. This tariff is only fully adopted by the bloc's permanent members and is one of the factors that make Mercosur an important bloc for the South American region.

And what is the Common External Tariff?

The Common External Tariff, also called the TEC, is a standardized price for commercial exchanges. With it, countries “agree” to place the same price on the same product they sell to those who are not part of the bloc. This avoids competition between them, in addition to facilitating exchanges between them, as the TEC is more expensive for countries that are not members of Mercosur.

For example: if the United States wants to buy corn from Brazil, the price of this product must be the same as the corn offered by Paraguay. Thus, there will be no competition between these two countries on this product, preventing one of them from losing out.

Because of these characteristics, Mercosur has become a very important bloc for integration of the countries of South America, which, before its foundation, did not have a very commercial relationship. great. Today, for example, Brazil is the main exporter to its neighbors, which was not the case before.

*New Zealand does not appear on the map as it is part of Oceania.

** Venezuela was suspended from Mercosur indefinitely in December 2016.


By Rodolfo Alves Pena
Graduated in Geography

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