Source: BS
Context: India and the Southern Common Market (MERCOSUR) agreed to deepen their Preferential Trade Agreement (PTA) to boost trade and investment, with both sides aiming to conclude negotiations within one year.
About MERCOSUR (Southern Common Market):
- What It Is?
- MERCOSUR (Mercado Común del Sur) is a regional integration and economic bloc in South America that promotes free trade, customs union, and economic cooperation among member nations. It is one of the most influential trading blocs in the Global South.
- Established In: Formally created on 26 March 1991 through the Treaty of Asunción, later strengthened by the Protocol of Ouro Preto (1994), which gave MERCOSUR a legal personality and institutional framework.
- Headquarters: Montevideo, Uruguay.
- Nations Involved:
- Founding Members: Argentina, Brazil, Paraguay, Uruguay
- Later Joined: Venezuela (membership currently suspended) and Bolivia (acceded in 2023)
- Associate Members: Chile, Peru, Colombia, Ecuador, Guyana, and Suriname
- Official Languages: Spanish and Portuguese.
- Aim: To create a common market that facilitates free movement of goods, services, capital, and people, while reducing regional inequalities, enhancing economic competitiveness, and ensuring democratic governance across South America.
- History & Evolution:
- The 1991 Treaty of Asunción laid the foundation for economic integration.
- The Protocol of Ouro Preto (1994) institutionalised MERCOSUR’s structure and gave it legal status in international law.
- Since 2003, MERCOSUR has pursued external trade agreements with India, the EU, and ASEAN, expanding its global economic presence.
- India–MERCOSUR Framework Agreement (2003) and PTA (2009) provided tariff preferences on select goods, now set for expansion.
- Functions and Mechanisms:
- Trade Liberalisation: Gradual removal of tariffs and non-tariff barriers within the bloc.
- Common External Tariff (CET): Uniform tariff policy for non-member imports.
- Institutional Framework: Includes the Common Market Council (CMC), Common Market Group (CMG), and Trade Commission.
- FOCEM (MERCOSUR Structural Convergence Fund): Established in 2005 to fund projects promoting competitiveness, social cohesion, and reducing economic asymmetries among members.
- Social and Cultural Integration: Promotes cooperation in labour, migration, education, and culture, reflecting “human-faced integration” principles.
