The Southern Common Market

Mercosur also known as Mercosul, or in English, “southern common market” like the European Union and other commercial pacts or agreements, has had an immensely positive influence on the South American economies. From domestic increases in trade within South America to increasing overall employment between member nations and educational integration, Mercosur undoubtedly impacted South American economies for the better. Politically, it has also proved to be an asset for all South American nations as a medium of exerting political pressure.

Economically, Mercosur has been an enormous helper in spurring internal trade between South American countries. Merchandise trade in Mercosur member countries grew from $10 billion at the cusp of the bloc’s beginning in 1991 to $88 billion in 2010 (Eurostat, PDF). In 2010, Eurostat also reported that Mercosur accounted for 16% of the member’s trade. Exports from the bloc are very diverse, and include a variety from agricultural and industrial to energy. The trade agreements allow access to goods that may be rich in another countries but lacking in theirs. As an example, Venezuela’s introduction to the bloc allowed to buy cheaper foods in exchange for its oil. Another method by which the trade bloc has benefitted its members is by its lending and debt management. During Paraguay’s crisis, Brazil and Argentina offered to relieve its debt by renegotiating its terms. It would be undermining to say that the trade bloc is irrelevant due to its incentives to trade locally in South America. However, although it is irrefutable that the agreement has increased internal economic fluidity, South American exports continue to be the money maker among all South American countries. Nonetheless this claim does not disapprove the fact that intra-Mercosur trade accounted for approximately 16% of its member countries trade.

Where there is economic power, there is political power as well. As a unified economic zone, the South American member countries can dictate as a whole who they offer incentives to. In its recent history Mercosur has denied the United States free trade incentives. Whereas, during the same time engaged in economic talks with China for incentives and tariff breaks. This is a powerful bargaining chip especially when Mercosur includes some of the world’s largest emerging markets. Mercosur also led to the failure of the U.S. led Free Trade Agreement of the Americas which would have united the entire region under one economic agreement and granting the U.S. special deals with South American resources. In this respect, Mercosur is again undoubtedly relevant as an economic agreement. Amongst its economic power it has also been a vessel for other dimensions of politics. In 2007, the Mercosur members pledged to increase focus on human rights and democracy during a summit. American political scientist Riordan Roett, professor and Director of the Western Hemisphere Program at Johns Hopkins University was quoted saying that since Venezuela signed the Protocol of Adhesion in 2006. “Mercosur is no longer about trade” (Mercosur: South America’s Fractious Trade Bloc, Klonsky).

An agreement that spurs economic growth, power and overall advancement is in no way irrelevant. It’s only potential soft spot is that it does not account for as much of South America’s economic activity in the same manner that South Americas exports do. Nonetheless, it does account for 16% which is a considerable amount. In an area with so much potential, not having such an agreement would be illogical. It would hinder the growth of not only the more powerful economies but also the lesser.







Works Cited


Klonsky, Joanna. “Mercosur: South America’s Fractious Trade Bloc.” Council on Foreign Relations. Ed. Stephanie Hanson and Brianna Lee. Council on Foreign Relations, 31 July      2012. Web. 04 Mar.2013.