Free Trade Agreement Argentina Brazil Paraguay
CFR Senior Fellow Shannon K. O`Neil talks about the trade relations between Argentina and Brazil in the field of foreign affairs. The bloc`s highest decision-making body, the Joint Market Council, provides a high-level forum for the coordination of foreign and economic policies. The chairmanship of the group succeeds its full members every six months, in alphabetical order. The other bodies are the Common Market Group, which coordinates macroeconomic policies; A Trade Commission; a Parliament known as Parlasur, which has an advisory role; and the Structural Convergence Fund, which coordinates regional infrastructure projects. Mercosur is formally a customs union. While a free trade agreement involves a commitment between countries to lower tariffs and other trade rules granting preferential market access, a customs union adds a common external right for imports into the bloc and a commitment by its four members to negotiate trade agreements with third countries. In theory, this means that each country has preferential access to the markets of other members and increased bargaining power in trade agreements, much like for the members of the European Union. In practice, trade within the bloc is entangled in bureaucracy, non-tariff barriers and agreements restricting private trade.
Very few external negotiations have been concluded, so Mercosur is the most closed region in the world, with an average tariff of more than 12%. The only comprehensive free trade agreements signed by Mercosur since its inception in 1994 were with Egypt and Israel, and all Mercosur trade agreements cover less than 10% (calculations based on the World Bank`s Global Development Indicators) of global GDP. The Protocol of Accession of the Caribbean country was signed in 2006 by all the presidents of the Bloc countries. The Uruguayan and Argentine congresses then approved the new member`s membership. The Brazilian Congress did so only in December 2009. However, the Paraguayan Congress did not approve it and therefore made it impossible for the Caribbean nation to fully join. On 29 June 2012, the presidents of Mercosur decreed the Paraguayan suspension until the next presidential elections in April 2013, in response to the summary release of the presidency by Fernando Lugo. A month later, the bloc presidents confirmed their membership in Venezuela and several trade agreements were signed. It was suggested that, with the return of Paraguay, the decision could be reversed by the exercise of its right of veto, which had not been the case.  The decision was controversial. . .