Why in the news?

  • India and Brazil agreed to expand the scope of the existing preferential trade pact between New Delhi and fthe our South American nations Mercosur bloc to boost economic ties.

MERCOSUR Grouping

  • Full form: Mercado Común del Sur (Spanish) / Mercosul (Portuguese) — meaning Southern Common Market.
  • Established: 1991 through the Treaty of Asunción (entered into force in 1995).
  • Headquarters: Montevideo, Uruguay.
  • Nature: A regional trade bloc and customs union in South America aimed at promoting free trade and regional integration.
  • Objectives
    • Promote free trade and fluid movement of goods, people, and currency among member states.
    • Establish a common external tariff (CET) and adopt a common trade policy toward non-members.
    • Coordinate macroeconomic and sectoral policies (e.g., agriculture, industry, transportation).
    • Strengthen regional competitiveness and collective bargaining power in global trade negotiations.
  • Members
    • Founding Members: Argentina, Brazil, Paraguay, Uruguay
    • Venezuela: Admitted in 2012 but suspended in 2016 for violating democratic norms.
    • Associate Members: Chile, Peru, Colombia, Ecuador, Guyana, and Suriname.
    • Observer States: Mexico, New Zealand.
  • Challenges
    • Asymmetrical economies: Brazil and Argentina dominate, leading to imbalances.
    • Political divergence: Regime changes and domestic policies affect integration.
    • Slow progress on common currency or deeper economic union.
    • Suspensions: Venezuela (2016), Paraguay (temporarily in 2012).
    • Dependence on primary exports and limited industrial complementarity.