Mercosur - Another failed move towards regional integration?

On 26 March, 1991, the presidents of Argentina, Brazil, Paraguay and Uruguay signed the Treaty of Asunción (TOA) proclaiming the formation of the 'Mercado Común del Sur' or 'Mercado Común do Sul' (Mercosur). In 1994, the TOA was supplemented by the 'Protócolo de Ouro Preto'. The implementation period started with a schedule of progressive trade liberalisation between 1991 and 1994 followed by the foundation of a Customs Union (CU). Presently, the completion of the Customs Union and the formation of a truly common market with free trade and free flows of factors of production (excluding labour migration explicitly) for the entire region and a system of harmonised macroeconomic and sectoral policies is under discussion. Despite this seemingly progressive evolution of Mercosur there is evidence that the process of economic integration has slowed down in recent years.1 The explanations of this development are ambiguous. Some Latin American analysts claim that international turmoil has caused this change of speed. They point to the Russian moratorium of August 1998 to date the end of an 'entirely successful stage of an original project to create and consolidate a commercial block made up of economies that are not fully developed',2 and presume 'a new phase in relations' between the member states of Mercosur. This new phase might bring even more turbulences but will most certainly end with the successful completion of the common market.