Mercosur and its Global Effects

It's obvious that trade agreements substantially benefit the members involved. However, many people seem to forget to consider how certain trade agreements affect members outside of the agreement. While researching the trade agreement Mercosur, I found several countries it hinders, rather then benefits. Mercosur is an economic and political agreement established in 1991. This agreement is between Argentina, Brazil, Paraguay, Uruguay, and Venezuela. The agreements intended purpose is to promote the free movement of goods, services and people through member states, with its ultimate goal of full South American economic integration. Regardless of its intent, Mercosur primarily focuses its efforts on eliminating high tariffs.

The biggest problem with Mercosur is it restricts trade with non-members. Many countries want to see the agreement terminated because they feel it will drive its members to open up trade with the rest of the world. Mercosur has blocked trade with the United States and China, with the intention of limiting cheap Chinese imports.

Aside from Mercosur creating issues for non member countries, Mercosur is also beginning to create problems between members. Brazil and Argentina had a serious issue with car manufacturers. Brazil car industry became increasingly competitive, mostly because of the devaluation of their currency. Argentina created a retaliatory tariff on Brazilian steel imports and the feud magnified. Argentina also fought with Uruguay over plans to build factories that would pollute Argentina, impacting tourism. Feuds between Mercosur members are not uncommon, and often make the trade agreement an unhealthy situation for all members involved.

I think Mercosur needs to return to its core values or disband. This trade agreement cuts off trade with a large portion of the world. A direct effect of Mercosur restricting trade is it limits the flow of technology and ideas between nations, as well as prohibits members from acquiring recourses from areas other than Latin America. I believe these members could enter into a more organized and beneficial trade agreement with other nations.