CLAS Working Paper Alcides Costa Vaz "Trade Strategies in the Context of Economic Regionalism: The Case of Mercosur"

Paper No. 4/ June 2003
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This paper is an examination of the development and brief history of the Southern Common Market (Mercosur), an initiative of economic integration among Argentina, Brazil, Uruguay and Paraguay begun in 1991. The author reviews the alliance’s initial goals and its actual path stemming from internal challenges among and within its member states as well as responses to international commercial negotiations. Three stages of Mercosur’s development are reviewed: 1) a transition period from the signing of the Treaty of Asuncion in March, 1991 until the end of 1994; 2) the 1995-98 period marked by a shift from the domestic to the external realm; and 3) the period from 1999 until the present, marked by an unprecedented crisis resulting primarily from pressing domestic economic challenges that largely prevailed over the integration agenda. The author concludes that a regional trade bloc like Mercosur can play an important role in international trade irrespective of the outcomes of continuing World Trade Organization negotiations. But success will hinge on its ability to adapt and shift strategies in response to both internal and external dynamics.