What Is the Largest Common-Market Agreement in the Americas

The Americas have witnessed the emergence of numerous regional economic agreements over the decades. However, the largest common-market agreement in the Americas is the Mercado Común del Sur, popularly known as Mercosur. It is a South American trade bloc that was created on March 26, 1991, by the Treaty of Asunción. The founding member states of Mercosur were Argentina, Brazil, Paraguay, and Uruguay. Venezuela joined the group in 2012, but its membership was suspended in 2016 due to political issues in the country.

Mercosur is a regional integration initiative aimed at promoting trade liberalization and economic cooperation among its member states. It is considered the fourth-largest trade bloc in the world, after the European Union, the North American Free Trade Agreement, and the Association of Southeast Asian Nations. The primary objective of Mercosur is to create a common market and customs union between its member states.

The common market agreement envisages the elimination of trade barriers and the free movement of goods, services, capital, and persons among member states. To achieve this, Mercosur member states have implemented a common external tariff (CET) on imports from non-member countries. The CET aims to prevent imports from entering the Mercosur market at different rates, leading to the circumvention of tariff barriers. The CET also aims to promote the harmonization of the trade policies of member states.

Mercosur has been successful in promoting trade liberalization among its member states. In 2019, intra-Mercosur trade reached $55.5 billion, representing an increase of 0.7% compared to the previous year. The elimination of tariffs has also led to the development of regional value chains, where companies manufacture parts or components in one country and assemble and finish them in another. This has resulted in increased competitiveness and efficiency in the region`s production processes.

However, Mercosur faces significant challenges, such as the divergent economic interests of its member states. Also, the bloc has been criticized for its lack of flexibility to negotiate with non-member countries, leading to the postponement of several free trade agreements. Critics argue that the CET implemented by Mercosur harms exporting countries that are not members of the bloc and reduces the competitiveness of its member states.

In conclusion, Mercosur is the largest common-market agreement in the Americas, and it aims to promote trade liberalization and economic cooperation among its member states. Although it has been successful in reducing trade barriers and promoting regional value chains, the bloc faces significant challenges, mainly due to the divergent economic interests of its members. Despite these challenges, Mercosur remains a crucial economic integration initiative in the Americas.