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862 Words Nov 17th, 2012 4 Pages
Mercosur: Present and Future
Xiao Li
Brenau University

Mercosur: Present and Future Background Mercosur, known as the Common Market of the South, was founded by Paraguay, Uruguay, Brazil and Argentina under the Treaty of Asuncion signed in March 1991, which was amended and updated by the 1994 Treaty of Ouro Preto, it took effect on January 1, 1995 and formalised a customs union (Connolly, 1999). Mercosur’s headquarter is in Montevideo, Uruguay . Several other countries were admitted as associate members including Chile, Bolivia, Colombia and Peru. Venezuela is currently in the process of integrating into the bloc and it will become a full member once all members’ parliaments
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The integration process is very slow, and major constraints are as follows. First, there are many differences among the member states. Since member states and associate countries of Mercosur are all developing countries in different levels of economic development, there are contradictions and frictions among them. Since it was established in 1995, conflicts and disputes within Mercosur have continued without interruption, which has a direct impact on the overall objectives of Mercosur and hinders the integration process. Besides, severe market competition and self-interest also make it difficult for them to harmonize macroeconomic policies (Valente, 2011). The lack of a more formal mechanism for settling disputes and seeking balanced development in free trade is a problem that confronts the leaders of the Mercosur countries. Second, differentiation within Mercosur has become increasingly evident and coordination on macroeconomic policies needs to be strengthened. In recent years, the economic crisis in Latin America and other factors causes some member states to seek solutions to get rid of the crisis on their own. For example, in order to get rid of the over-reliance on the Mercosur, Uruguay decided to hold free trade negotiations with the United States alone hoping to find a bigger export markets in the United States to revive its

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