Mercosur

Mercado Común del Sur Mercado Comum do Sul Southern Common Market Coat of arms Motto Nuestro Norte es el Sur  (Spanish) Nosso norte é o Sul  (Portuguese) "Our North is the South" Full members (Argentina, Brazil, Paraguay and Uruguay) Headquarters Montevideo Largest city São Paulo Official languages 2 Portuguese Spanish Ethnic groups  60% White 35% Multiracial 5% Black 1% Amerindian1 Membership 4 Argentina Brazil Paraguay Uruguay Government Intergovernmental  -  Presidency Argentina (pro tempore) Establishment  -  Treaty of Asunción 26 March 1991   -  Protocol of Ouro Preto 16 December 1994  Area  -  Total 12,781,179 km2 (2nd1) 4,934,841 sq mi  Population  -  2008 estimate 267,386,382 (4th1)  -  Density 20.86/km2 (154th1) 54/sq mi GDP (PPP)  estimate  -  Total U$ 2.895 trillion (5th1)  -  Per capita U$ 10,858 (70th1) HDI (2007) 0.827 (high) (50th1) Currency 4 Argentine peso (ARS) Brazilian real (BRL) Paraguayan guaraní (PYG) Uruguayan peso (UYU) 1 If Mercosur considered as a single entity.

Mercosur or Mercosul (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul, English: Southern Common Market) is a Regional Trade Agreement (RTA) between Argentina, Brazil, Paraguay and Uruguay founded in 1991 by the Treaty of Asunción, 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, people, and currency. The official languages are Portuguese and Spanish.^[1]

Mercosur origins trace back to 1985 when Presidents Raúl Alfonsín of Argentina and José Sarney of Brazil signed the Argentina-Brazil Integration and Economics Cooperation Program or PICE (Portuguese: Programa de Integração e Cooperação Econômica Argentina-Brasil, Spanish: Programa de Integración y Cooperación Económica Argentina-Brasil).^[2] The program also proposed the Gaucho as a currency for regional trade.

Bolivia, Chile, Colombia, Ecuador and Peru currently have associate member status. Venezuela signed a membership agreement on 17 June 2006^[3], but before becoming a full member its entry has yet to be ratified by the Congress of Paraguay^[4]. The founding of the Mercosur Parliament was agreed at the December 2004 presidential summit. It should have 18 representatives from each country by 2010, regardless of population.^[5] Israel is currently the only non-South American free trade partner.^[6]

Member states

Andes in Argentina.

Mercosur is composed of 4 sovereign member states: Argentina, Brazil, Paraguay, and Uruguay.

Geography

The territory of Mercosur consists of the combined territories of its 4 member states. The territory of Mercosur is not the same as that of South America, as parts of the continent are outside Mercosur, such as Peru, Colombia and Chile.

Including the overseas territories of member states, Mercosur experiences most types of climate from Arctic to tropical, rendering meteorological averages for Mercosur as a whole meaningless. The majority of the population lives in areas with a subtropical climate (Uruguay, Southern Paraguay, Northeastern Argentina and Southern and Southeastern Brazil), or a tropical climate (Northeastern Brazil).

Demographics

Girls of European descent in Uruguay.

The combined population of all 4 member states has been estimated at 242,032,800 as of July 2009. The most populous country of Mercosur is, by a significant margin, Brazil (191,241,714). The remaining member states' populations are, in decreasing order: Argentina (40,482,000), Paraguay (6,831,306), and Uruguay (3,477,780). The population density is of 22.0/km² (57/sq mi) in Brazil, 19.4/km² (50.2/sq mi) in Uruguay, 15.6/km² (40.4/sq mi) in Paraguay, and 14.3/km² (37/sq mi) in Argentina. The largest cities of Mercosur are São Paulo, Buenos Aires, and Rio de Janeiro. The White population is the majority in Brazil, Argentina and Uruguay while the Mestizo population is majority in Paraguay.

Languages

Among the many languages and dialects used in Mercosur, it has 2 official and working languages: Portuguese (more than 190 million) and Spanish (more than 50 million). Brazil is the only Portuguese-speaking country in Mercosur and in the Americas, as it formerly was part of Portuguese America. Argentina, Paraguay, and Uruguay were part of Spanish America.

Objectives

Mercosur's ceremony, and the flags of Argentina, Brazil, Paraguay, Uruguay, and Venezuela.

The Southern Common Market promotes:

• The free transit of production goods, services and factors between the member states with inter alia, the elimination of customs rights and lifting of nontariff restrictions on the transit of goods or any other measures with similar effects;
• Fixing of a common external tariff (TEC) and adopting of a common trade policy with regard to nonmember states or groups of states, and the coordination of positions in regional and international commercial and economic meetings;
• Coordination of macroeconomic and sectorial policies of member states relating to foreign trade, agriculture, industry, taxes, monetary system, exchange and capital, services, customs, transport and communications, and any others they may agree on, in order to ensure free competition between member states;
• The commitment by the member states to make the necessary adjustments to their laws in pertinent areas to allow for the strengthening of the integration process. The Asunción Treaty is based on the doctrine of the reciprocal rights and obligations of the member states. Mercosur initially targeted free-trade zones, then customs unification and, finally, a common market, where in addition to customs unification the free movement of manpower and capital across the member nations' international frontiers is possible, and depends on equal rights and duties being granted to all signatory countries. During the transition period, as a result of the chronological differences in actual implementation of trade liberalization by the member states, the rights and obligations of each party will initially be equivalent but not necessarily equal. In addition to the reciprocity doctrine, the Asunción Treaty also contains provisions regarding the most-favored nation concept, according to which the member nations undertake to automatically extend, after actual formation of the common market, to the other Treaty signatories any advantage, favor, entitlement, immunity or privilege granted to a product originating from or intended for countries that are not party to ALADI.

Institutional structure

Headquarters of Mercosur, in the city of Montevideo, Uruguay.

The Asunción Treaty and Ouro Preto Protocol established the basis for the institutional Mercosur structure, creating the Common Market Council and the Common Market Group, both of which are to function at the outset of the transition phase. As provided for in this Treaty, before establishing the common market the member nations must call a special meeting in order to determine the definitive institutional structure for the public agencies managing Mercosur, as well as define the specific functions of each agency and the decision making process.

Common Market Council

The Council is the highest-level agency of Mercosur with authority to conduct its policy, and responsibility for compliance with the objects and time frames set forth in the Asuncion Treaty. The Council is composed of the Ministers of Foreign Affairs and the Economy (or the equivalent) of all five countries. Member states preside over the Council in rotating alphabetical order, for 6-month periods. Meetings: Councilmembers shall meet whenever necessary, but at least once a year. The presidents of the member nations shall partake of the annual Common Market Council meeting whenever possible. Decision Making: Council decisions shall be made by consensus, with representation of all member states.

Common Market Group

The Group is the executive body of Mercosur, and is coordinated by the Ministries of Foreign Affairs of the member states. Its basic duties are to cause compliance with the Asuncion Treaty and to take resolutions required for implementation of the decisions made by the Council. Furthermore, it can initiate practical measures for trade opening, coordination of macroeconomic policies, and negotiation of agreements with nonmember states and international agencies, participating when need be in resolution of controversies under Mercosur. It has the authority to organize, coordinate and supervise Work Subgroups and to call special meetings to deal with issues of interest. Composition: The Common Market Group shall be made up of four permanent members and four alternates from each member state, representing the following public agencies: (i) the Ministry of Foreign Affairs; (ii) the Ministry of Economy, or the equivalent (from industry, foreign affairs and/or economic coordination); and (iii) the Central Bank. The members of the Common Market Group appointed by a given member state will constitute the National Section of the Common Market Group for that particular nation. Meetings: The Common Market Group will meet ordinarily at least once every quarter in the member states, in rotating alphabetical order. Special meetings may be freely called at any time, at any previously scheduled place. The meetings will be coordinated by the Head of the Delegation of the host member state. Decision Making: Common Market Group decisions shall be made by consensus, with the representation of all member states. The official Mercosur languages will be Portuguese and Spanish, and the official version of all work papers will be prepared in the language of the country hosting the meeting.

Mercosur/Mercosul's flag in the city of Brasília, Brazil.

Administrative and Socioeconomic

The Administrative Office will keep documents and issue the Mercosur official bulletin in both Portuguese and Spanish, and will also be charged with communicating the activities of the Common Market Group so as to allow for the maximum disclosure of decisions and the relevant documentation. The Socioeconomic Advisory Forum is consultative by nature, and represents the various socioeconomic sectors of the member nations.

Work Subgroups

Directly subordinated to the Common Market Group, the Work Subgroups draw up the minutes of the decisions to be submitted for the consideration of the Council, and conduct studies on specific Mercosur concerns. Currently, the Work Subgroups are the following: Commercial Matters; Customs Matters; Technical Standards; Tax and Monetary Policies Relating to Trade; Land Transport; Sea Transport; Industrial and Technology Policies; Agricultural Policy; Energy Policy; Coordination of Macroeconomic Policies; and Labor, Employment and Social Security Matters. Meetings. The meetings of the Work subgroups will be held quarterly, alternating in every member state, in alphabetical order, or at the Common Market Group Administrative Office. Activities will be carried out by the Work Subgroups in two stages: preparatory and conclusive. In the preparatory stage, the members of the Work Subgroups may request the participation of representatives from the private sector of each member state. The decision-making stage is reserved exclusively for official representatives of the member states. Representatives from the Private Sector. The delegations of representatives from the private sector in the preparatory stage of the Work Subgroup activities will have a maximum of three representatives for each member state directly involved in any of the stages of the production, distribution or consumption process for the products that fall within the scope of the subgroup's activities.

Joint Parliamentary Committee

Presidents during the Mercosur's ceremony in Córdoba, Argentina.

The Committee will have both an advisory and decision-making nature, with powers to submit proposals as well. It will be competent, inter alia, to: follow up on the integration process and keep the respective Congresses informed; Take the necessary steps for the future instatement of a Mercosur parliament; Organize subcommittees to examine matters relating to the integration process; Submit its recommendations to the Common Market Council and Group as to how the integration process should be conducted and Southern Common Market formed; Make the adjustments necessary to harmonize the laws of the different member states and submit them to the respective Congresses; Establish relationships with private entities in each of the member states, as well as international agencies and bureaus so as to obtain information and specialized assistance with matters of interest: Establish relationships targeting cooperation with Congresses of the nonmember nations and entities involved in regional integration schemes; Subscribe to cooperation and technical assistance accords with public and/or private entities whether domestic, supranational or international. The Committee will be composed of a maximum of 64 acting parliamentary members, 16 per member state, and an equal number of alternates, appointed by the Congress to which they pertain, and with a term of office of at least two years. The meetings shall be conducted by a directors' board consisting of four Presidents (one for each member state). The Committee will ordinarily meet twice a year, and extraordinarily whenever summoned by any of its five Presidents. Meetings are to be held in the territory of each member state on a successive and alternating basis. Decision Making: Meetings of the Joint Parliamentary Committee will only be valid when attended by parliamentary delegations from all member states. Decisions by the Joint Parliamentary Committee will be made by consensus vote of the majority of the members accredited by the respective Congresses of each member state. Portuguese and Spanish are the official languages of the Joint Parliamentary Committee.

Trade Commission

GDP by Mercosur's members and associated.

The Trade Commission will assist the Mercosur executive body, always striving to apply the instruments of common trade policy agreed to by the member states for operation of the customs unification. Additionally, the commission should also follow up on the development of issues and matters related to common trade policies, the intra-Mercosur trade and trade with other countries. The commission will have five actual members and four alternates, with each member nation's indicating a member. The Trade Commission shall exert every effort to apply common trade policy instruments such as: Trade agreements with other countries or international entities; Administrative/commercial product lists; Final adaptation system for Mercosur customs unification; Origin system; Free-trade zone system, special customs areas and export processing zones; System to discourage unfair trade practices; Elimination and harmonization of tariff restrictions; Nonmember country safeguard systems; Customs coordination and harmonization; Consumer protection systems; and Export incentive harmonization.

Furthermore, the trade commission should speak out regarding the issues raised by the member states regarding application and compliance with common offshore tariffs and other common trade policy instruments. The commission shall meet at least once a month, as well as whenever asked to by the Mercosur executive agency or by a member state. The commission can take decisions entailing administration and application of trade policies adopted under Southern Common Market, and whenever necessary submit proposals to the executive body regarding regulation of the areas under its authority; additionally, it can propose new guidelines or modify those in existence in Mercosur trade and customs matters. In this respect, the trade commission can propose a change in the import duty on specific items under common external tariffs, including cases referring to development of new Mercosur production activities. In order to better achieve its objectives, the trade commission can create technical committees targeting direction and supervision of the work it engages in. It can also adopt internal operating regulations. Proposals and decisions of the trade commission will be taken by a consensus of the representatives indicated by each member nation. Any disputes ensuing from the application, interpretation or compliance with the acts issued by the trade commission are to be referred to the Mercosur executive body, and should be resolved using the directives set forth in the Dispute Resolution System adopted under Southern Common Market.

International jurisdiction over contractual matters

Court of Mercosur, in the city of Asunción, Paraguay.

The rules on litigation jurisdiction over contractual matters will apply to disputes arising from civil or commercial international contracts between private-law legal entities or individuals provided that: They are domiciled or headquartered in different member states: At least one of the parties to the contract is domiciled or headquartered in any member state and, additionally, has made a choice of jurisdiction in favor of a court in one of the member states. In this case, there must be a reasonable connection between the jurisdiction chosen and the controversy. The scope of the application of the international jurisdiction guidelines over contractual matters excludes the following: Legal relationships between bankrupt entities/individuals and their creditors and any other analogous proceedings (especially concordatas composition with creditors); Matters under agreements involving family and succession law; Social security contracts; Administrative contracts; Employment contracts; Consumer sales contracts; Transport contracts; Insurance policies; and Rights in rem.

Choice of Jurisdiction

Courts in member nations to whose jurisdiction the contracted parties have agreed to submit the matter in writing will have jurisdiction to settle controversies stemming from civil or commercial international contracts.

Agreement of Choice

The jurisdiction can be agreed on at the time the contract is signed, during the life of the contract, or even when the dispute actually arises. The validity and effects of the choice of venue will be governed by the law of the member nations that normally have jurisdiction to hear the case, always resorting to the law most favorable to the validity of the contract. Whether or not jurisdiction is chosen, such jurisdiction will be prorogated in favor of the courts of the member state where the proceedings are in fact filed, provided the respondent voluntarily allows this in an affirmative and unfeigned way.

Subsidiary Jurisdiction

Mercosur's map.

Should the contracted parties not reach an agreement regarding the courts competent to settle disputes, the member state chosen by the plaintiff of the case in point will have jurisdiction: The court of the place where the contract is to be performed; or The court of the domicile of the respondent; or The court of the domicile or headquarters of the claimant when the latter can show that it has done its part. For purposes of item (i) above the place of performance of the contract will be the member state where the obligations on which the claim is based have been or should be performed, taking into consideration the following: For contracts involving certain specific items, the place where they existed at the time of contract signing; For contracts involving specific items according to their type, the place of domicile of the debtor at the time of contract signing; For contracts involving fungible items, the place of domicile of the debtor at the time of conclusion of the contract; and For service rendering contracts:

• If in regard to items, the place where they were at the time of contract signing;

• If effectiveness is related to any special place, the place where they were to produce effects;

• In all other cases, the place of domicile of the debtor at the time of contract signing. For purposes of application of second item above for determination of the domicile of the respondent in a contractual dispute involving individuals, the following will be taken into consideration: The habitual residence: On a subsidiary basis, the central place of business; and In the absence of any such considerations, the place where found, meaning the actual residence. When dealing with a legal entity, the determination of the domicile will be based on where the administrative headquarters have been set up. The claim plaintiff can, as an alternative, file in any of the places where the legal entity has branches, establishments, agencies or any other type of representation. Legal entities headquartered in any member state that have concluded contracts with any other member state can be sued in the courts of this latter state should there be any dispute as to the construction and implementation of the obligations regulated by contract. In the event there is a codefendant, a suit on contractual matters can be adjudicated with the courts of jurisdiction in the territory of the domicile of any of the parties to the litigation. Additionally, any claims entailing personal collateral rights or intervention of nonmember states in contractual obligations can be filed with the court hearing the main proceeding.

Counterclaims

In the event of there being a counterclaim based on any act or fact that served as the basis for the main proceeding, the courts hearing the main proceeding will be competent to hear any counterclaims that may arise.

Immigration

Brazilian Passport.

Brazil has introduced a new temporary residency program for citizens of Argentina, Bolivia, Chile, Paraguay, and Uruguay. Under the new program, eligible citizens of these countries will benefit from a simplified application process, which can be completed from within Brazil. If successful, they will receive two-year residency status, after which they will be eligible for permanent residency.

Eligible citizens of the Mercosur member countries (Argentina, Paraguay, and Uruguay) and two Mercosur "associated countries" (Chile and Bolivia) can now apply for a special two-year temporary residency program in Brazil using a simplified application process. The new program was introduced by a government decree published on October 8, 2009, but administrative delays prevented the new program from being implemented until now.

Under the new program, natural-born citizens of these countries, or individuals who have held citizenship in these countries for at least five years, plus their legal dependents (regardless of nationality), may obtain temporary residency status in Brazil that will remain valid for two years. The temporary residency program is not linked to a specific employer, and from an immigration perspective, these residents are eligible to work for any employer in Brazil. After the first two years, the candidate is eligible for permanent residency.

Nationals of these five countries may apply for this residency program abroad at a Brazilian consular post or from within Brazil to the Brazilian Federal Police. Applicants must demonstrate their identity, citizenship, and good character by presenting documents requested by immigration authorities, such as: passports, identity cards, or nationality certificates issued by their country of origin's consular post; birth certificates; marriage certificates (if applicable); declarations of criminal clearance or criminal clearance certificates; and registration fees.^[7]

According to Brazilian Labour Department, between 2005 and july, 2009 entered in Brazil: 3,083 Argentines, 1,303 Venezuelans, 1,168 Chileans, 476 Bolivians, 314 Uruguayans, 159 Paraguayans.^[8]

Educational Integration

University of São Paulo, located in the city of São Paulo, Brazil. Is the most important university in the region of Mercosur.^[9][10]

Based on the premise that education is a fundamental factor in the regional integration process, educational courses at the primary or junior high level, provided that they do not entail technical studies, will be recognized by member states as being on the same level for all member nations. Likewise, in order to permit continuing education, certificates proving course conclusion issued by an official institution accredited in one of the member states will be valid in all other member states. Nontechnical primary and junior high level studies that have not been completed will be accredited by any member state, thereby allowing course conclusion in another member nation. Studies will be completed using an equivalency table to determine the level achieved.

Regional Technical Commission

In order to harmonize the mechanisms favoring accreditation of studies undertaken in any member nation in any other member nation, and to resolve any situations that may not be covered by the equivalency table, a Regional Technical Commission will be created. This Commission will include delegations from the ministries of education of each member nation, and will meet whenever at least two member states think it necessary to convene. The meeting sites will be established on a rotating basis. Any disputes that arise among the member states as a result of application, construction or noncompliance regarding the provisions related to education will be initially resolved by direct diplomatic negotiations. Should the countries not reach an accord or should the dispute be only partially resolved, then the procedures set forth in the Dispute Resolution System will be resorted to. Should the member nations enter into a bilateral convention or accord whose provisions are more favorable to their students, the member states in question can apply whichever provisions they consider most advantageous.

Free Trade Zones

The Province of Tierra del Fuego in Argentina has a free-trade zone.

The member nations can have commercial free-trade zones, industrial free-trade zones, export processing zones, and special customs areas, all of which target providing merchandise marketed or produced in these areas with treatment different from that afforded in their respective customs territories.

Tariffs

The member states can assess merchandise from these areas with the common external tariff used for Mercosur merchandise, or, in the case of certain special products, the domestic tariff prevailing in each individual state. In this way, the products from the free-trade zones can have the more favorable tax treatment established under Southern Common Market, given to the merchandise produced in the normal customs zones of each member state or, in the case of certain special products, can have the normal customs treatment prevailing in each nation.

Safeguards

Products produced or marketed in the free-trade zones of each member nation will be eligible for the safeguard system whenever this entails an increase not provided for in imports, but capable of causing damages or threatened damages to the importer country.

Incentives

The city of Manaus, Brazil, has a free-trade zone.

In the event of the producing nation's granting special incentives for production from the free-trade zones that are not compatible with the corresponding guidelines established under the General Agreement on Tariffs and Trade (GATT), the member nation can make any adjustments needed to return the situation to equilibrium.

Creation of FTZs

The member nations agreed that any free-trade zones that in August 1994 were already in operation could operate normally under Mercosur, along with any that are set up in light of legal guidelines prevailing or in course in Congress during this same time period. This means that a member nation can no longer create new free-trade zones that are more privileged.

Manaus and Tierra del Fuego FTZs

The actual implementation of Mercosur will not affect the special Manaus, Brazil, and Tierra del Fuego, Argentina, free-trade zones organized in light of their special geographic situations. These two free-trade zones may continue normal operations until 2013.

Reciprocal Promotion and Protection

Celso Amorim (Ministry of Foreign Affairs of Brazil), Luiz Inácio Lula da Silva (President of Brazil), Sérgio Cabral (Governor of the State of Rio de Janeiro) during the Leadership of Mercosur/Mercosul.

The nations subscribing to the Asunción Treaty consider that the creation and maintenance of conditions favorable to individual or corporate investments for the jurisdiction of one of the member states in the territory of another state is essential to intensify the economic cooperation targeted so as to accelerate the integration process among all four member states. In this context, Argentina, Uruguay, Paraguay and Brazil signed on January 1, 1994 in the city of Colonia del Sacramento, Uruguay, the Colonia Protocol for the Reciprocal Promotion and Protection of Mercosur Investments (Colonia Protocol). It was established in this protocol that investments under Mercosur by investors resident or domiciled in the territory of any member state will be entitled to treatment no less favorable than that accorded by the other member state to national investors or nonmember states.

Investors

For purposes of construction of the Colonia Protocol, investors are considered to be: Individuals that are citizens of any of the member nations or that reside there on a permanent basis or are domiciled there, with due regard for legislation prevailing in such territory; Legal entities organized pursuant to the legislation of one of the member nations that are headquartered there; and Legal entities organized in the territory where the investment is made, actually and directly or indirectly controlled by the legal entities or individuals mentioned above.

Investments

The term investment includes all types of assets such as: movable or immovable property, such as rights in rem and guarantee in rem rights; Shares, corporate holdings and any other type of corporate participations; Credit instruments and rights that may have an economic value; Intellectual property rights or materials, Including copyrights and industrial property rights such as patents, industrial drawings, trademarks, commercial names, technical procedures, know-how and goodwill; Economic concessions involving public law, such as research, cultivation, extraction or natural resource exploration concessions.

Freedom to invest

Brazil-Uruguay International Border.

The nation receiving the investment cannot avail itself of unjustified or discriminatory means capable of restricting the investor's freedom to manage, maintain, use, enjoy and dispose of its investments.

Tax Issues

The member states are not however obligated to extend to investors in the other nations signatory to the Colonia Protocol the benefits of any treatment, preference or privilege resulting from international accords relating fully or partially to tax matters.

Exceptions

In addition, the member nations can temporarily establish a list of exceptions where the new treatment will not yet prevail. In this way, the various member nations decided to except the following economic sectors: Argentina: ownership of real estate on the frontier strip, air transportation, naval industry, nuclear plants, uranium mining, insurance and fishery; Brazil: mineral prospection and mining; use of hydraulic energy; health care; television and radio broadcasting and telecommunications in general, acquisition or leasing of rural properties; participation in the financial intermediation, insurance, social security and capitalization systems; chartering and cabotage as well as inland navigation; Paraguay: ownership of real property on the frontier strip; communications, including radio and television broadcasting; air, sea and land transportation; electricity, water and telephone services; prospecting for hydrocarbons and strategic minerals; import and refining of petroleum derivates and postal services; and Uruguay: electricity; hydrocarbons; basic petrochemicals, atomic energy; prospecting for strategic minerals; financial intermediation; railways, telecommunications; radio broadcasting; press and audiovisual means.

Landmark of the Three Borders - Argentina, Brazil, and Paraguay, in Iguazu Falls.

Expropriation and Compensation

The member nations undertook to do nothing to nationalize or expropriate investments in their territories that pertain to investors from the signatory countries, unless such measures are taken based on public need. In such case, nothing discriminatory can be done, but everything must be implemented by due legal process. Compensation for the investment holder that is expropriated or nationalized should be both adequate and effective, and made in advance, based on the real investment value determined at the time the decision is publicly announced by the proper authorities. This payment will be updated until actual payment, and the affected investor will receive interest.

Transfers

The original member state investors will be ensured free transfer of their investments and any earnings thereon. These transfers can be made in freely convertible currency, using the exchange rate prevailing on the market pursuant to the procedures established by the member state receiving the investment. Member nations cannot adopt any exchange measures restricting free transfer of the funds invested or from activities exercised in their respective territories.

Role and potential

Mercosur member states have a standardised passport design, with the name of the member state, Coat of Arms and with the words "Mercosur" given in their official language(s) at the top; in this case that of Uruguay.

Some South Americans see Mercosur as giving the capability to combine resources to balance the activities of other global economic powers, especially the North American Free Trade Agreement (NAFTA) and the European Union.^[11] The organization could also potentially pre-empt the Free Trade Area of the Americas (FTAA);^[12] however, over half of the current Mercosur member countries rejected the FTAA proposal at the IV Cumbre de las Américas (IV Summit of the Americas) in Argentina in 2005.

The development of Mercosur was arguably weakened by the collapse of the Argentine economy in 2001 and it has still seen internal conflicts over trade policy, between Brazil and Argentina, Argentina and Uruguay, Paraguay and Brazil, etc. In addition, many obstacles are to be addressed before the development of a common currency in Mercosur.^[13]

In 2004 it signed a cooperation agreement with the Andean Community of Nations trade bloc (CAN) and they published a joint letter of intention for future negotiations towards integrating all of South America.^[14] The prospect of increased political integration within the organization, as per the European Union and advocated by some, is still uncertain.^[15] Bolivia, also a member of CAN and an associate member of Mercosur before the UNASUR process started, plays a crucial part in relations, says Marion Hörmann, since Bolivia is traditionally seen as a mediator between the Andean countries and the rest of South America. Regional Integration: Key Role for Bolivia

The bloc comprises a population of more than 270 million people, and the combined Gross Domestic Product of the full-member nations is in excess of US$3.0 trillion a year (Purchasing power parity, PPP) according to International Monetary Fund (IMF) numbers, making Mercosur the fifth largest economy in the World. It is the fourth largest trading bloc after the European Union.^[16]

The working of Mercosur has not met with universal approval within interested countries. Chile has to a certain extent preferred to pursue bilateral agreements with trading partners, and there have been calls from Uruguayan politicians for this example to be followed.^[17]

FTA with third parties

Mercosur summit in 2006.

Recently, with the new cooperation agreement with Mercosur, the Andean Community gained four new associate members: Argentina, Brazil, Paraguay and Uruguay. These four Mercosur members were granted associate membership by the Andean Council of Foreign Ministers meeting in an enlarged session with the Commission (of the Andean Community) on 7 July 2005. This move reciprocates the actions of Mercosur which granted associate membership to all the Andean Community nations by virtue of the Economic Complementarity Agreements (Free Trade Agreements) signed between the CAN and individual Mercosur members.^[18]

Colombian president Álvaro Uribe signed a free trade agreement with Mercosur in December 2005, giving Colombian products preferential access to a market of 230 million people. Colombian entrepreneurs will also be able to import materials and capital goods from Mercosur at lower costs due to reduced tariffs resulting from the agreement.^[19]

The agreement's asymmetry clauses favor Colombia because it allows the gradual and progressive reduction of tariffs and likewise gives Colombia the opportunity to gradually reform its production system to adapt it to the requirements of the future negotiations within the scheme of Mercosur and the Union of South American Nations. Mercosur signed a free trade agreement with Israel in Uruguay in December 2007.^[20][21]

Venezuela

Mercosur is divided in member, associate member, and observer.

Venezuela applied for membership, but its entry has not been ratified by Paraguay, although it was ratified by Argentina, Brazil and Uruguay.^[22] Venezuela's is considered a key member of the Mercosur due to its energy resources, such as natural gas and oil. And because is an important economic market to Brazil, due the balance of trade be favorable to Brazil.^[23][24]

Ratification process in Brazil

The process was approved by the Brazilian Government, the Chamber of Deputies and the Senate. In May 2007, the Brazilian Senate asked Venezuela to reconsider the non-renewal of RCTV's license, an oppositionist television network. Venezuelan president Hugo Chávez responded by accusing the Brazilian Congress of being subservient to interests of the United States.^[25] The leader of the Brazilian Social Democracy Party in the Senate, senator Arthur Virgílio, stated that the party will try to prevent Venezuela's entry in Mercosur.^[26] On December 18, 2008, the Brazilian Chamber of Deputies approved by 265 votes, 61 against and 6 abstentions, Venezuela's bid for membership in Mercosur.^[27] The bill was forwarded to the Brazilian Senate, where it was still pending as of 31 May 2009, though Brazilian President Luiz Inácio Lula da Silva said he expected final approval by September.^[28] However, some members of the Senate condemned Hugo Chávez's alleged attacks on freedom of the press and expression in Venezuela. One senator Flexa Riberio said, "The Brazilian Senate needs to send a strong message in support of the reestablishment of full democracy in Venezuela."^[29] The decision could further delay Venezuela's entry into Mercosur.

In September 2009 President Luiz Inácio Lula da Silva said that he is confident the Senate will approve the entry of Venezuela and added that "There is no Senate opposition to the entry of Venezuela into Mercosur. What exists is a natural process of discussion of the senators who want to evaluate the pros and cons of the enlargement of Mercosur with Venezuela's entry." According to Lula, the expansion of the organisation will especially benefit the northern states of Brazil. The ambassador of Brazil in Caracas, Antonio Simões was called to Brasília to meet with 81 senators and explain the benefits of Venezuela's entry into Mercosur for Brazil.^[30]

On December 15, 2009, the Brazilian Senate ratified the Venezuela's entry in Mercosur.^[31]

Ratification process in Paraguay

The government of Paraguay supports Venezuela's entry into Mercosur however this process is complicated by opposition from the right-wing Colorado Party which until 2008 had ruled Paraguay for 61 years and controls the upper house whose support is needed to pass the bill.^[32] On March 4, 2009, the External Relations Commission of the Paraguayan Chamber of Senators could not approve a recommendation for Venezuela's bid for membership in Mercosur.^[33] The bill was later withdrawn by the Paraguayan government after it feared defeat in the Congress, after several legislators questioned Hugo Chávez's "commitment to democracy" following the closure of several media outlets in Venezuela.^[34] President Lugo called on Congress to avoid “prejudices” and not limit a country of millions of souls “to an only name”, after a June 2010 political agreement between the President’s coalition and the Colorado party that renewed speakers at the Senate and the Lower House. ^[4]

Members

Division of Mercosur.

The following countries are full members, in the process of becoming full members, associate members or observers.^[35]

Full members

• Argentina
• Brazil
• Paraguay
• Uruguay
• Venezuela (depending on the Congress of Paraguay for admission)^[4]

Associate members

• Bolivia
• Chile
• Colombia
• Ecuador
• Peru

Observers

• Mexico

See also

• Andean Community
• Union of South American Nations (UNASUR)
• Bolivarian Alliance for the Americas
• Central American Common Market
• Free Trade Area of the Americas
• Customs Union
• Trade bloc
• Gaucho (currency)
• Pedro Bordaberry#Misgivings about Mercosur

Further reading

• Samuel A. Arieti, The Role of MERCOSUR as a Vehicle for Latin American Integration, Chicago Journal of International Law, vol. 6 (2005/2006), pp. 761–773.

References

External links

• Mercosur Official Website
• Radio Mercosur - Website and radio online

Mercosur · Mercosul  (Southern Common Market) Full Members Argentina · Brazil · Paraguay · Uruguay Becoming Full Members Venezuela Associate members Bolivia · Chile · Colombia · Ecuador · Peru Observers Mexico

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