Mercosur Map

Member states: Argentina, Brazil, Paraguay, Uruguay and Venezuela.

Associate states: Bolivia, Chile, Colombia, Ecuador and Peru.

Mercosur (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul, English: Southern Common Market) was 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, peoples, and currency.

Comprising Argentina, Paraguay, Uruguay, Venezuela and Brazil, the Southern Common Market - MERCOSUR represents a total population of 270 million individuals, living in an area larger than the total surface of the european continent, covering more than 13 million square kilometers. In 2006, the total Gross Domestic Products (GDP) of these five nations was approximately US$ 2.42 trillion.

Brazil has a territory of 8.5 million square kilometers and 189 million inhabitants, as well as the largest economy within MERCOSUR; its projected GDP for 2007 is expected to be on the order of US$ 1.620 trillion, and its commercial trade balance for this same period was estimated at more than US$ 10 billion. Brazil's per capita income is about US$ 9, 108.00.

Argentina, the second largest MERCOSUR nation, has 2.8 million square kilometers in area. The Argentine economy has been one of the fastest growing in the last few years, posting an average 8% growth yearly since 2003. Its 2006 GDP was US$ 215 billion, distributed among approximately 40 million inhabitants. This gives Argentina a per capita income of US$ 5, 400.00.

Mercosur Flag

Paraguay, with 406 thousand square kilometers and a population of 6.2 million, had a 2006 GDP of US$ 28.4 billion, and a growing economy.

Uruguay in turn has the smallest population, calculated at some 3.5 million inhabitants, and the smallest territory in MERCOSUR - 177 thousand square kilometers; As an important international financial center, Uruguay has a highly dynamic economy, and generated a 2006 GDP of approximately US$ 34 billion. Uruguay's per capita income is about US$ 9, 900.00.

Venezuela became a member in 2005 with its population of 28 million and GDP $176.4 billion. Venezuela's is considered a key member of the Mercosur due to its energy resources.

Objectives of the Mercosur

-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 Asuncion 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 Asuncion 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.