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Transcript

Good morning!!

we are students of Quilmes University:

Our main objective is to analyze the benefits and consequences and how the affect the Mercosur members:

A Regional Integration Agreement is defined as any policy designed to reduce trade barriers between countries which are contiguous or even close to each other.

Normally we can find 4 different types of RIA:

  • Free trade zone (FTZ).
  • Customs union (CU).
  • Common Market (CM)
  • Currency Union or Monetary Union (MU).

-In 1988, Uruguay decided to sign up too and was included into the cooperation agreement trough the Act of Alvorada.

- Basically, the main objectives of the treaty were:

1. The free transit of produced goods, services and factors among the member states.

2. Fixing of a common external tariff (CET) and adopting of a common trade policy ;

3. Coordination of macroeconomic and sectorial policies of member states

4. The commitment by the member states to make the necessary adjustments to their laws in pertinent areas.

Some benefits and consequences of Mercosur:

The evolution of the intra trade in Mercosur from 1990 to 2008 has constantly increased (about a 100% in that period).

Main conclusions:

  • The main objective of the Mercosur, the creation of a Custom Union, is still unconcluded. It wasn´t possible to define a common custom tariff and even more, a common commercial policy among the members.
  • Besides the huge potential of the integrated market, the size differences among local economies make it more difficult to receive an equal distribution of Direct Foreign Investing.

Some challenges for the next years will be related to change this consequences and generate more coordination mechanism and incentives to encourage a deep integration in Mercosur.

Thank you very much for your attention!!!

Final oral presentation

Cecilia Von der Heyde

Jennifer Bresciani

María Laura Albornoz

This presentation will be organized in 3 sections:

Secondly, we will give you some South American background in integration processes

In the first, we will show RIA´s main characteristics

Finally, with the information available, we´ll show the benefits and consequences of the integration process for the Mercosur members.

Even though there is a significant growth in trade, the productive complementation processes are still week.

Furthermore, the is some evidence which shows that the most industry concentration is settled on the biggest economies. This situation cut the hopes of the little economies to achieve the main gold of increasing the trade levels.

The coordination mechanism that have been worked regionally to advance with the complementation processes were managed by the global productive networks. If affected some small and medium size companies which were not able to develop the nexus with global buyers to promote its own inclusion in global networks. In these cases, the market operates badly and in cases some companies disappeared.

-Finally, in 1994, was signed the Protocol of Ouro Preto where the Mercosur (as it’s known now) were launched

-Since that moment up to now, 2 more countries were included to the Mercosur Area: Venezuela, in 2006, and Bolivia, in 2013.

-The first background about an integration agreement was found in 1986 with the PICE (or in English Exchange Program and Economic Cooperation)

The main objective was to create the perfect stage to reach a well balanced growth of bilateral commerce and a deeper intra-industry trade.

- In 1991 Argentina, Brazil, Uruguay and Paraguay signed the Asunción Treaty, which adopted the name of Mercosur. It settled the basic institutional structure and established the adoption of a Free Trade Area.

Mercosur, benefits and consequences

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