REGIONAL TRADE BLOCKS

Presented By: Aashutosh Gupta (410) Jinal Punjani (419) Sandeep Sayal (421) Aparajita Sharma (422) Pulkit Sinha (423) Rahul Surana (424)

Contents
Introduction to Regional Trade Blocks ASEAN European Union (EU) NAFTA SAARC GCC- Gulf Cooperation Council Mercosur Conclusion

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Introduction to Regional Trade Blocks & ASEAN

- Sandeep Sayal (421)

Regional Trade Blocks

Regional trade blocks are intergovernmental associations that manage and promote trade activities for specific regions of the world. Example : EU,NAFTA, ASEAN, Mercosur, GCC, SAARC, SAFTA, OPEC, etc

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NEED FOR TRADE BLOCS

Compliment Global Trade Protect Intra Regional Trade from outside forces Establish Regional Security Improves the relationship with the neighbouring countries Promotion of specialization in production of certain goods Meeting the demand of neighbouring countries or group members Boosts countries to develop economic alliances to gain buying and selling power

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Demerits of Trade blocs

Price offered within the block is lower as compared to the global prices. Thus, no level playing field Import Quota Limiting the amount of imports so as to ensure domestic consumption of products manufactured in their country/region Custom Delays Establishing Bureacratic formalities Subsidies Barrier Heavy subsidies to protect regional trade Voluntary Boycotts and Technical Barriers

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Regionalization: The Right Balance

ICT has allowed wide information access. Goods and services can move cheaper thanks to cheap transportation and ICT. The world is more borderless. In a flat world, competition searches for lowest cost. Convenience of flows of information, goods, services, and people within the region Relatively similar psychology and national interest within region National borders still have economic meaning. National markets exist and are defined by psychology and politics. National economic and political setbacks can threaten globalization.
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Globalization

Regionalization

Localization

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The paradox has forced countries to form regional blocs

4 December 2013 Source: Wikipedia.com

ASEAN
Association of Southeast Asian Nations Established on 8th August 1967 HQ - Jakarta, Indonesia Founders of ASEAN: Indonesia, Philippines, Malaysia, Singapore, Thailand. Later joined by Brunei, Myanmar, Vietnam, etc. To accelerate the economic growth, social progress and cultural development in the region through joint endeavors; and To promote regional peace and stability through abiding respect for justice and the rule of law. GDP: PPP US $3084 Trillion ; Nominal US $1800 Trillion Functioning Based on 2 principles: 1.Musyaurarah(Consensus). 2.Mufakat(Consultation)
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Regional Inter-governmental Organization

10 members
4.5million sq kms 600+ Million people (growth 2%)

ASEAN Countries at a Glance

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ASEAN Objectives
Political, security, economic, socio-cultural cooperation Enhance peace, security stability Preserve as nuclear weapons free zone Strengthen democracy, protect and promote human rights Single market and production base Promote sustainable development Peace with the world, harmonious environment Develop human resources

Alleviate poverty, narrow development gap

Respond to common threats
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ASEAN: Stages of Development

First 10 years (1967-1976): establishment, solidarity, dialogue partners The next 20 years: (1977-1997): expansion - Brunei (1984); Vietnam (1995); Lao PDR and Myanmar (1997); and Cambodia (1999) The next 10 years: (1998-2007): vision, formalization The next 7 years: (2008-2015): Community building

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ASEAN Economic Blueprints

Single market and production base, Highly competitive economic region, Region of equitable economic development, and Region fully integrated into the global economy Priority Integration Sectors: Agro-based products, Air travel, Automotives, Electronics, Fisheries, Healthcare, etc

ASEAN Free Trade Area Launched in January 1992 To eliminate tariff barriers among South East Asian countries with a view of integrating the ASEAN economies into a single production base and creating a regional market of more than 500 Million people

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Why is ASEAN in the Driving Seat of the Greater East Asia?

ASEAN

Neutral Position

High Bargaining Power

ASEAN is not considered a threat to China, India, Japan, South Korea, Australia, and New Zealand

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Competitive Regional Production Base Smooth flow of Huge market goods, services, and High consumption people under FTA Less competitive Abundance of natural resources Low labor cost Attractive Single Regional Market
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What does ASEAN Integration Mean?

Tariffs will be eliminated and non-tariff barriers will be gradually phased out Rules and regulations will be simplified and harmonized ASEAN investors will be permitted to invest in sectors formerly closed to foreigners and the services sector will also be opened up Applicable international standards and practices are followed, and policies on intellectual property rights and competition are put in place Regional infrastructure will be more developed with the expansion of transportation, telecommunications and energy linkages

All barriers to the free flow of goods, services, capital, and skilled labor are removed

The region will become a more level playing field

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Corporate Trends Supporting ASEAN Integration

Global trends in manufacturing indicate a shift towards adopting flexible production techniques and integrated production chains

It is no longer cost effective for all manufacturing activities to be done in inhouse or in a single country MNCs are integrating their manufacturing activities across several locations MNCs are not only seeking large consumer markets but also regional sites where they can establish efficient production networks

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Regional Production Base

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Potential Cost Savings from ASEAN Integration

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A Balanced Approach is Needed

Benefits to MNCs Targeting more sales volume in the ASEAN market Components procurement on an ASEAN-wide basis More product specialization to achieve economies of scale Greater emphasis on profitability using ASEAN-wide operations

Benefits to Local Companies More export opportunities to ASEAN market ASEAN-wide expansion opportunity for corporate growth strategy Technology and financial support opportunities from MNCs ASEAN-wide pool of talent

A Balanced Approach
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EUROPEAN UNION (EU)

- Pulkit Sinha (423)

The EU Headquarters
Brussels, Belgium

Selected as the headquarters of the European Union because of its centralized location in Europe.
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EU Goals
Is a unique economic and political partnership between 27 European countries. To continue to improve Europes economy by regulating trade and commerce.

To form a single market for Europe's economic resources in which people, goods, services, and capital move among Member States as freely as within one country
As these goals were accomplished, other goals were developed: Environmental movements Regulatory acts Human rights concerns.
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Member Countries of the EU (year of entry)

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The History of the EU

The European Union was set up with the aim of ending the frequent and bloody wars between neighbours, which culminated in the Second World War. In 1950 the European Coal and Steel Community was formed. The founding members of the Community were Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany Aim - eliminating the possibility of further wars between its member states by means of pooling the national heavy industries
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The History of the EU

In 1957, the six countries signed the Treaties of Rome which created the European Economic Community, (EEC) establishing a customs union and the European Atomic Energy Community (Euratom) for cooperation in developing nuclear energy. Denmark, Ireland and the United Kingdom join the European Union on 1 January 1973, raising the number of member states to nine. Greece joined in 1981, Portugal and Spain in 1986
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The History of the EU

In 1986 the Single European Act is signed. This is a treaty which provides the basis for a vast six-year programme aimed at sorting out the problems with the free-flow of trade across EU borders and thus creates the Single Market The European Union was formally established when the Maastricht Treaty came into force on 1 November 1993, and in 1995 Austria, Finland and Sweden joined the newly established EU. In 2002, euro notes and coins replaced national currencies in 12 of the member states. On 1 December 2009, the Lisbon Treaty entered into force and reformed many aspects of the EU.
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EU Institutions
There are 3 main institutions involved in EU legislation:
1.
2.

3.

the European Parliament, which represents the EUs citizens and is directly elected by them; the Council of the European Union, which represents the governments of the individual member countries. It is the EUs main decision-making body the European Commission, which represents the interests of the Union as a whole. 27 Commissioners each responsible for a specific policy area

Two other institutions play vital roles:

the Court of Justice - Highest EU judicial authority, ensures all EU laws are interpreted and applied correctly and uniformly the Court of Auditors checks the financing of the EU's activities.

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The powers and responsibilities of all of these institutions are laid down in the Treaties.

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Money and the EU

Revenue/Income- The EU obtains revenue not only from contributions from member countries but also from import duties on products from outside the EU and a percentage of the valueadded tax levied by each country. Expenditure - The EU budget pays for a vast array of activities from rural development and environmental protection to protection of external borders and promotion of human rights.
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EU Facts and Figures

GDP (12,268,387 million 2010) 7% of the worlds population EU's trade with the rest of the world accounts for around 20% of global exports and imports EU is the worlds biggest exporter and the second-biggest importer. Unemployment has increased in the wake of the recent economic and financial crisis and now stands at 7.5% in the EU.
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Joining the EU
is a complex procedure Any country that satisfies the Copenhagen criteria can apply. Copenhagen criteria - Membership requires that candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights, respect for and protection of minorities, the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union. Submit a membership application to the Council If the Commissions opinion is positive the country must implement EU rules and regulations in all areas. 31 4 December 2013

Addressing Global Challenges

Peace & Security
Works for global peace and security alongside the United States and multilateral organizations including NATO and the United Nations. Undertakes humanitarian and peacekeeping missions and has provided military forces for crisis management around the globe.

Counterterrorism & Homeland Security

Taken steps to improve intelligence sharing, enhance law enforcement and judicial cooperation, curtail terrorist financing. Boosts trade and transport security to support the struggle against terrorism.
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Addressing Global Challenges

Democracy & Human Rights
Works globally for free elections and open democratic processes. Fights racism and intolerance at home and abroad. Campaigns globally against capital punishment.

Development Assistance & Humanitarian Relief

The EU and its Member States are the worlds largest aid donor, providing 55% of total official development assistance. Provides billions of dollars in humanitarian aid to more than 100 countries in response to crises and natural disasters.

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Addressing Global Challenges

Trade
European Commission represents all 27 EU Member States before the World Trade Organization. Supports free trade and open markets, within the rules-based structure of the WTO, to promote growth and jobs in both industrialized and developing countries. The world's most open market for products and commodities from developing countries 40% of all EU imports are from developing countries.

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Addressing Global Challenges

Environmental Protection
A leader in global efforts to protect the environment, maintaining rigorous and comprehensive systems at home. Plays a key role in developing and implementing international agreements, such as the Kyoto Protocol on Climate Change. Executing a cap and trade system to reduce greenhouse gas emissions

Takes the lead in the fight against global warming with the adoption of binding energy targets (cutting 20% of the EUs greenhouse gas emissions by 2020).
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Comparison of Growth in GDP EU vs US

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NAFTA (North American Free Trade Agreement)

By Rahul Surana Roll No: 424

Introduction
An agreement signed by the governments of (a trilateral block in North America): Canada Mexico United States Eased restrictions on commerce between the members by providing duty-free trade on multiple classes of goods and introducing new regulations to encourage cross-border corporate investment. The agreement came into force on January 1, 1994. In terms of combined GDP of its members, as of 2010 it is the largest trade block.

It has two Supplements: NAAEC (North American Agreement on Environmental Cooperation) NAALC (North American Agreement on Labour Cooperation)

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Chronology of Events
1988: Canada and United States signed the Canada-United States Free Trade Agreement. American Government then entered into a similar treaty with Mexican Government.

Canada was asked to join the treaty in order to preserve its perceived gains under the 1988 deal.
The agreement was signed by:
U.S President: George H.W. Bush Canadian Prime Minister: Brian Mulroney Mexican President: Carlos Salinas
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Objectives
To eliminate trade barriers & facilitate the cross-border movements of goods and services between the parties To promote conditions of fair competition To substantially increase investment opportunities To provide adequate and effective protection & enforcement of intellectual property rights in each territory To create effective procedures for the implementation and application of this agreement ,for its joint administration & for resolution of disputes To establish a framework for further trilateral, regional and multilateral co-operation to expand and enhance benefits of this agreement
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NAFTA's Winners And Losers

Mexico: Increase in US Investments in Mexico. Significant increase in FDI in Mexico Export of US Parts to Mexico: Cheap Labour Advantage Corporate Investment: Mexican Middle Class vs. China Migration of Workers from Mexico

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NAFTA's Winners And Losers

Canada:
U.S. investment in automotive production Increases in oil exports to the U.S. and the rest of the world Increases in shipment of beef, agricultural, wood and paper products to the U.S. Export of mineral and mining products, which have fared well in U.S. markets. Sectors such as Steel and Processed food has been hit due to U.S Imports U.S. investment provided higher-paying jobs: This added to the ranks of the Canadian middle class and increased the level of secondary education in the population. It also provided jobs for the wave of immigrants from India and Pakistan who are currently residing in Canada.
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NAFTA's Winners And Losers

United States: MNCs have benefited the because of cheap labour and new investment options.

Jobs have been substituted by Canadians and Mexicans.

Overall Impact: Between 1993 and 2006, trade among NAFTA partners climbed 197%, from $297 billion to $883 billion. U.S. exports to NAFTA partners grew 157%, versus 108% to the rest of the world in the same period. Daily NAFTA trade in 2006 reached $2.4 billion. U.S. manufacturing output rose 63% from 1993-2006, compared to an increase of 37% from 1980-1993. 4 December 2013

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South Asian Association for Regional Cooperation (SAARC)

- Aparajita Sharma (422)

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SAARC
Came into existence in 1985 with the adoption of its Charter at the first Summit in Dhaka (7- 8 December 1985) Seven South Asian countries Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka Headquarters Kathmandu , Nepal First adopted by Bangladesh under President Ziaur Rahman Current Secretaries General - Fathimath Dhiyana Saeed
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Seven Member Countries

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Principles
Respect for sovereignty, territorial integrity, political equality and independence of all members states Non-interference in the internal matters is one of its objectives Cooperation for mutual benefit All decisions to be taken unanimously and need a quorum of all eight members All bilateral issues to be kept aside and only multilateral(involving many countries) issues to be discussed without being prejudiced by bilateral issues
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16 Areas of Cooperation
Agriculture and rural Biotechnology Culture Energy Environment Economy and trade Finance Funding mechanism Human resource development Poverty alleviation People to people contact Security aspects Social development Science and technology Communications, tourism
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Members at a Glance

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Objective
To promote the welfare of the people of south asia and to improve their quality of life To accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potential To promote and strengthen selective self-reliance among the countries of south Asia To contribute to mutual trust, understanding and appreciation of one another's problems

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Objective
To promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields To strengthen cooperation with other developing countries To strengthen cooperation among themselves in international forums on matters of common interest To cooperate with international and regional organisations with similar aims and purposes

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Administrative setup
Summits held annually, represented by head of the states The Council of Ministers comprising Foreign Ministers, meets at least twice a year Formulating policy, reviewing progress of regional cooperation, identifying new areas of cooperation The Standing Committee comprising Foreign Secretaries, monitors and coordinates SAARC programmes of cooperation, approves projects including their financing and mobilizes regional and external resources. It meets as often as necessary and reports to the Council of Ministers The Committee on Economic Cooperation consisting of Secretaries of Commerce oversees regional cooperation in the economic field
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SAPTA
South Asian Preferential Trade Arrangement Deals with Tariffs, Paratariffs, Non-Tariff Measures and Direct Trade Measures In December 1991, the Sixth Summit held in Colombo member countires agreed to formulate an agreement to establish a SAARC Preferential Arrangement (SAPTA) by 1997. Agreement on SAPTA was signed on 11 April 1993 and entered into force on 7 December 1995
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SAPTA
The basic principles underlying SAPTA are: overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account their respective level of economic and industrial development, the pattern of their external trade, and trade and tariff policies and systems; negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews; recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favour; and inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.

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Trade Concessions Number of Products covered and the Depth of Preferential Tariff Concessions agreed to by SAARC Member States in the first three rounds of trade negotiations under SAPTA

Country

# Products

Bangladesh
Bhutan India Maldives Nepal Pakistan

572
266 2402 390 425 685

Depth of concessions 10% -15% 10-20% 10-100% 5-15% 10-15% 10-30%

Sri Lanka
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211`
4951

10-75%
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TOTAL

South Asian Free Trade Area (SAFTA)

SAPTA first step towards the transition to a South Asian Free Trade Area (SAFTA) leading subsequently towards a Customs Union, Common Market and Economic Union. The Agreement on South Asian Free Trade Area (SAFTA) was signed on 6 January 2004 during the Twelfth SAARC Summit in Islamabad. The Agreement into force from 1 January 2006 Trade Liberalisation Programme scheduled for completion in ten years by 2016, the customs duties on products from the region will be progressively reduced. under an early harvest programme for the Least Developed Member States, India, Pakistan and Sri Lanka are to bring down their customs duties to 0-5 % by 1 January 2009 for the products from such Member States. The Least Developed Member States are expected to benefit from additional measures under the special and differential treatment accorded to them under the Agreement.
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South Asian Economic Union

Eleventh Summit (Kathmandu, 4-6 January 2002) - economic cooperation Leaders agreed to accelerate cooperation in the core areas of trade, finance and investment to realise the goal of an integrated South Asian economy in a step-by-step manner.

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16th SAARC summit

Held in Thimpu, Bhutan Main issue Climate Change
Bhutanese Prime Minister and the newly elected Chairman of SAARC Jigmi Y. Thinley said the summit has achieved their agenda of regional cooperation with the signing of the Thimphu Statement on Climate Change.

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Current Issues
Working toward creation of SAFTA Leading subsequently, towards a Customs Union, Common Market and Economic Union. Technical Committee on Transport Agreement on Investment Agreement on avoidance of double taxation Standards, quality and control group

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Gulf Co-operation Council (GCC)

- Jinal Punjani (419)

Introduction - GCC
The Cooperation Council for the Arab States of the Gulf, also known as the Gulf Cooperation Council (GCC) is a political and economic union of the Arab states bordering the Persian Gulf and located on or near the Arabian Peninsula. Member Countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and united Arab Emirates. Jordan and Morocco have been invited to join the council It was created on 25 May 1981 and the unified economic agreement between the countries of the GCC was signed on 11 November 1981 in Abu Dhabi. These countries are often referred to as The GCC States 4 December 2013

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Objectives
Formulating similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation, and administration; Fostering scientific and technical progress in industry, mining, agriculture, water and animal resources;
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Establishing a common currency by 2010. Setting up joint ventures and scientific research centres; Unified military presence (peninsula shield force) Encouraging cooperation of the private sector; Strengthening ties between their peoples;
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Features and key developments

Oman announced in December 2006 it would not be able to meet the target date for establishing the common currency The UAE announced their withdrawal from the monetary union project in May 2009. The name Khaleeji has been proposed as a name for this currency This area has some of the fastest growing economies in the world including Abu Dhabi Investment Authority, retain over $900 billion in assets. The region is also an emerging hotspot for events The leaders of the Council have come under fire for doing too little to combat the economic downturn Recovery plans have been criticized
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Related States
Iraq
The associate membership of Iraq was discontinued after the invasion of Kuwait. There is a very low possibility of Iraqi accession to the GCC

Yemen
Yemen is in negotiations for GCC membership, and hopes to join by 2016 The Council issued directives that Yemen would have the same rights and obligations

Jordan & Morocco

In May 2011 requests by Jordan and Mor occo to join were welcomed by the members of the GCC The current members see them as strong potential allies
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Organisations
Patent Office
The GCC Patent Office was approved in 1992 and established in Riyadh A GCC Patent cannot co-exist with a national application in any of the member states A GCC common market was launched on 1 January 2008. National treatment to all GCC firms and citizens in any other GCC country A customs union was declared in 2003 Kuwait, Saudi Arabia, Bahrain and Qatar on 15 December 2009 announced the creation of a Monetary Council Oman and the UAE later announced their withdrawal of the proposed currency until further notice.

Common Market

Monetary Council

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Financial and Monetary Integration

The GCCs financial sector is dominated by banking, with relatively high concentration among domestic players. In all six countries, the largest five banks are domestic and account for 50 to 80 percent of total banking sector assets. Islamic banks have become an important source of intermediation, controlling on average 24 % of the regions banking system assets. NBFCs have limited presence in the GCC
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Financial and Monetary Integration

Financial Markets
vary in regulatory regimes and in the level of openness to foreign participation There is evidence, however, of increased financial sector integration in the GCC

Financial Sector
Little impetus at the GCC level for coordination of strategies Weaknesses

Establishment of a monetary union

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The GCC Economic Outlook 2012

With a recession now on the cards in Europe, global growth will slow to 3.2 percent next year. Oil markets are likely to weaken GCC real GDP growth is expected to surge to 7 percent in 2011 on the back of increased oil production and soaring oil revenues. Although government spending has risen sharply and oil prices are expected to decline, GCC states (except Bahrain) are still projected to run healthy fiscal and current account surpluses in 2012
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The World Economy

Increased risk and uncertainty Global growth will slow Oil market outlook

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Implications for the GCC

A more risky and challenging environment Tighter global financial conditions

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Implications
Continuation of loose monetary policy and exchange rate peg Current account surpluses will boost external assets

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Global Challenges for the GCC countries

Collective oil reserves

Existing skill base for workers

Education and innovation

Leadership and Governance

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Mercosur/Mercosul

Southern Common Market

- Aashutosh Gupta (410)

Introduction
Mercosur takes its name from Mercado Comun Del Sur (Spanish for Common Market of the South). It is also sometimes referred to as the Southern Cone Common Market. The bloc comprises a population of more than 270 million people, and the combined Gross Domestic Product of the full-member nations is in excess of US$3.0 trillion a year according to International Monetary Fund numbers, making Mercosur the fifthlargest economy in the World. It is the fourth-largest trading bloc after the European Union
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A Brief History
1991- Treaty of Asuncion- free trade zone by 1994

1994- Treaty of Ouro Preto- further solidified Mercosur

December 2004- signed a cooperation agreement and a joint letter of intention for future negotiations with the Andean Community trade bloc (CAN) to potentially unite South America economically. Mercosur does not, however, show interest in joining the Free Trade Area of the Americas. Today, Mercosur is the largest trading bloc in South America and the fourth largest economy in the world.
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MERCOSUR FACTFILE
Establishment: Treaty of Asuncion, 26 March 1991 Protocol of Ouro Preto, 16 December 1994 Number of Countries: 4 Members: Argentina, Brazil, Paraguay, Uruguay Associate Members: Bolivia, Chile, Colombia, Ecuador, Peru, Venezula Headquarter: Montevideo, Uruguay Official languages: Spanish, Portuguese Combined GDP: US$ 3 trillion

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LEADING TRADE BLOCK OF South America

Interests
Mercosurs primary interest is eliminating obstacles to internal trade. Also attempts to balance the activities of other global economic powers such as NAFTA and the EU. Enlarge the national markets to be more competitive both at the regional and global level. Build a common ground of political stability and democracy with the idea of competing and negotiating together at the global level.

Objectives
The Southern Common Market promotes: 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 with regard to non-member states or groups of states. 3) Coordination of macroeconomic and sectorial policies of member states relating to foreign trade, agriculture, industry, taxes and any others they may agree on, in order to ensure free competition between member states 4) The commitment by the member states to make the necessary adjustments to their laws in pertinent areas to allow for the strengthening of the integration process
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Structure
The Asuncion Treaty and Ouro Preto Protocol established the basis for the institutional Mercosur structure, creating the Common Market Council and the Common Market Group, both of which are to function at the outset of the transition phase. Common Market Council Common Market Group

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Common Market Council

Highest-level agency of Mercosur with authority to conduct its policy, and responsibility for compliance with the objects and time frames set forth in the Asuncion Treaty. The Council is composed of the Ministries of Foreign Affairs and the Economy of all five countries Member states preside over the Council in rotating alphabetical order, for 6-month periods. Meetings: Council members shall meet whenever necessary, but at least once a year
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Common Market Group

The Group is the executive body of Mercosur, and is coordinated by the Ministries of Foreign Affairs of the member states. Its basic duties are to cause compliance with the Asuncion Treaty and to take resolutions required for implementation of the decisions made by the Council Composition: The Common Market Group shall be made up of four permanent members and four alternates from each member state, representing the following public agencies (i) the Ministry of Foreign Affairs (ii) the Ministry of Economy and (iii) the Central Bank Meetings: The Common Market Group will meet ordinarily at least once every quarter in the member states Decision Making: Common Market Group decisions shall be made by consensus, with the representation of all member states
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Free trade zones

The member nations can have commercial free-trade zones, industrial free-trade zones, export processing zones, and special customs areas, all of which target providing merchandise marketed or produced in these areas with treatment different from that afforded in their respective customs territories Tariffs Safeguards Incentives Creation
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Issues

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Issues Contd.
1). When Brazil's car industry became increasingly competitive, aided by the devaluation of its currency in 1999, Argentina responded by imposing tariffs on Brazilian steel imports. The spat was resolved in December 2000 when the two countries signed a bilateral agreement to end the crisis. 2). In 2006, Argentina and the bloc's smallest country Uruguay clashed over plans to build two large pulp mills along the border - the biggest foreign investments Uruguay had ever attracted. Argentina said it feared pollution and the impact on tourism and fishing. The matter went to the International Court of Justice (ICJ), which ruled in favor of Uruguay. Argentina pledged to continue its fight against the mills.
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Issues Contd.
3). The bloc's smaller members, Paraguay and Uruguay, complain of restricted access to markets in Argentina and Brazil and have sought to set up bilateral trade deals outside Mercosur. The organization's rules forbid this. 4). Negotiations on a planned, US-backed Free Trade Area of the Americas (FTAA) are similarly mired, with some

Mercosur leaders rejecting US free-market policies.

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Trade in Goods

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EU27 Merchandise Trade with Mercosur by product

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Trade in Commercial Services

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Foreign Direct Investment

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Challenges ahead
To deepen the process of integration. To strengthen the institutional arrangement of the Custom Union To maintain the regional process of economic growth To consolidate the economic and political stability of Member States To continue the process of structural reforms within Member States

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Future
Mercosur, the "Common Market of the South" is an economic initiative that offers promise of economic development. Begun in 1991 as an economic agreement between four nations in the Southern Cone, Mercosur made large gains in regional trade during its initial years. As the global economy began lagging at the turn of the century, proponents for Mercosur have had a more difficult time arguing its benefits. Should Mercosur survive this test, it could emerge stronger and continue to expand along the same lines politically and militarily as the European Union.
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Thank You
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