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A Comparative Analysis of Integration Efforts in Europe and South America
Unformatted Document Text:  tariffs, the Mercosur nations agreed to finalize the Treaty of Asunción with a custom union in 1994 that would be further negotiated in into a true common market (Roett, 1999). The Mercosur group responded to the initial open market reforms with a fair amount of success. Intraregional trade increased by nearly 200% from 1991-1995 while the foreign trade with the bloc increased by 80% during the same period (Munck, 2001). But the initially optimism and fast-track implementation has worn off as each nation has begun to drag its feet at the idea of deeper integration. New negotiations are needed to disable the remaining barriers to trade such as taxes, tariffs, and industry standards. There is still a great variance in import quotas which excludes any type of truly unified common external tariff. It seems as if the goal to form a true common market has run into a brick wall and is stuck in a weak customs union. Problems have arisen with the still unfulfilled goal of eliminating all internal tariffs. The economic superpowers of the group, Brazil and Argentina, seem hesitant to fully commit themselves and leave their industries unprotected. Argentina enacted some labor protection measures to help recover from the economic crisis of 2001. Many of these measures remain in place. These barriers, along with those in other member states, prohibit the free flow of resources, capitol and labor within the region that a true common market would embrace. Other member nations’ commitments are in doubt as well. Associate members Colombia and Peru have currently negotiated bi-lateral free trade agreements with the United States. These nations need to first prove their commitment to Mercosur before they start other negotiations. Negotiating agreements with both the US and Mercosur at the same time gives the impression that these associate nations are simply looking for the best trade agreement without any real thought to regional integration. These bi-lateral agreements, although negotiated with Mercosur approval, have a negative impact on Mercosur ’s ability to flex its collective power and to negotiate trade agreements as a unified bloc. This collective power will help to correct a disadvantage that many South American states have experienced in trade negotiations. The individual States must negotiate with developed States with a weakened position. But if further integration can be achieved, Mercosur can negotiate on equal footing with external trade partners. Without this collective power, one of the prominent reasons for further unification starts to lose its appeal. 22

Authors: Hardt, Brian.
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background image
tariffs, the
Mercosur
nations agreed to finalize the Treaty of Asunción with a custom union in 1994 that would be
further negotiated in into a true common market (Roett, 1999). The
Mercosur
group responded to the initial open
market reforms with a fair amount of success. Intraregional trade increased by nearly 200% from 1991-1995
while the foreign trade with the bloc increased by 80% during the same period (Munck, 2001). But the initially
optimism and fast-track implementation has worn off as each nation has begun to drag its feet at the idea of
deeper integration. New negotiations are needed to disable the remaining barriers to trade such as taxes, tariffs,
and industry standards. There is still a great variance in import quotas which excludes any type of truly unified
common external tariff. It seems as if the goal to form a true common market has run into a brick wall and is
stuck in a weak customs union.
Problems have arisen with the still unfulfilled goal of eliminating all internal tariffs. The economic
superpowers of the group, Brazil and Argentina, seem hesitant to fully commit themselves and leave their
industries unprotected. Argentina enacted some labor protection measures to help recover from the economic
crisis of 2001. Many of these measures remain in place. These barriers, along with those in other member states,
prohibit the free flow of resources, capitol and labor within the region that a true common market would embrace.
Other member nations’ commitments are in doubt as well. Associate members Colombia and Peru have currently
negotiated bi-lateral free trade agreements with the United States. These nations need to first prove their
commitment to Mercosur before they start other negotiations. Negotiating agreements with both the US and
Mercosur at the same time gives the impression that these associate nations are simply looking for the best trade
agreement without any real thought to regional integration. These bi-lateral agreements, although negotiated with
Mercosur
approval, have a negative impact on
Mercosur
’s ability to flex its collective power and to negotiate
trade agreements as a unified bloc. This collective power will help to correct a disadvantage that many South
American states have experienced in trade negotiations. The individual States must negotiate with developed
States with a weakened position. But if further integration can be achieved, Mercosur can negotiate on equal
footing with external trade partners. Without this collective power, one of the prominent reasons for further
unification starts to lose its appeal.
22


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