Southern Cone Common Market: Mercosur Marketing Since

Southern Cone Common Market: Mercosur

Marketing

Since the signing of the Assucion treaty signed in 1991, the hoped for benefits for the countries in the Mercosur have not been completely realized for all involved. This work will concentrate on the marketing and trade issues of each country in the region.

The Southern Cone Common Market is a Latin American trade organization that is called Mercosur and was established in 1991 for the purpose of increasing the cooperation in economic efforts in the member countries. Member countries are Argentina, Brazil, Bolivia, Chile, Uruguay, Paraguay and Peru. The economies are different from country to country inside the Mercosur region. Brazil and Argentina were originally at odds and had been for many years top competitors preceding entrance into Mercosur. The goals in Mercosur are gradual elimination of tariffs between the member nations. Since the 1991 signing of the Assuncion Treat trade between the member countries has increased dramatically. The Assuncion Treaty was signed to establish a "common-trade market allowing for freedom of movement between countries and in order to benefit from an increased productivity.

The economy in Chile is based on mineral export, which can be credited for one-half of all exports of Chile. Chile is the largest producer of copper in the world and agriculture is the basis for ten percent of the national wealth in Chile. . The main exports are petroleum, wheat, capital goods, spare parts and raw materials. Chile has a severe problem with producing adequate food supply for the country

Peru's economy is based on agriculture in coffee, cotton, sugarcane, rice, wheat, potatoes, corn, plantains, coca; poultry, beef, dairy products, wool; fish. Industries are agriculture, mining and quarrying, manufacturing, construction, transport, services. Peru's natural resources are copper, silver, gold, petroleum, timber, fish, iron ore, coal, phosphate, potash, hydropower, natural gas. Peru's exports consist of fish and fish products, gold, copper, zinc, crude petroleum and byproducts, lead, coffee, sugar, cotton. Imports are machinery, transport equipment, foodstuffs, petroleum, iron and steel, chemicals, pharmaceuticals.

Uruguay began its fourth year of recession in the year 2002. The marketing and financial costs have affected access of Dairy Products to the Brazilian market. Problems exists in the paper industry due to costs because of excess of customs bureaucratic procedures, regulation on regional transportation and delays at border due to restrictions at times. Value Added tax and corporation income tax 12% OF FOB value, disadvantage regarding local producers. Other barriers import licenses, surveillance over imports or restrictions on trade-related financial practices.

Brazil: One of the largest economies in the world. Agriculture, mining and manufacturing as well as service are well developed. Approximately 1/2 of Brazils workforce is employed in the agriculture sector. Main crops are coffee, citrus fruit, soybeans, sugarcane, rice, corn, cocoa, cotton tobacco and bananas. Livestock of which cattle, pigs and sheep are more numerous. Timber is also an important export but there are problems in this area due to the illegal harvesting of timber. Brazil is the world's largest producer of both coffee and citrus juice. Brazil has a vast store of minerals including iron ore, quartz, chrome, iron ore, manganese, industrial diamonds, gem stones, gold, nickel tin, bauxite, uranium and platinum. Brazil is the largest iron ore producer in the world. Manufacturing industries include textiles, chemicals, shoes, food products, steel, motor vehicles, ships and machinery. Electricity is water powered with untapped hydroelectric potential extensive in the Amazon basin.

Bolivia is one of poorest in Latin America with illegal growing of coca (cocaine source) Only other major crops are coffee, cotton, soybeans, corn, sugarcane, rice, potatoes and wheat. Industry contains only processing and small-scale type manufacturing. Import: chemical, petroleum and consumer goods Tin mines are closing due to competition from Southeast Asia. Bolivia became an associate member of Southern cone Common Market 1996.

Paraguay's workers are by more than 1/2 employed in agriculture and forestry. Less than 15% employed in industry/mining. Paraguay's crops are cotton, sugarcane, soybeans, corn, wheat, tobacco, cassava and fruits, with cattle being important to the economy. . Paraguay has underground smuggling, money laundering and trafficking of Bolivian cocaine market sector. There are only minimal modes of travel due to the lack in road and rail systems. The river is used as the only real method of moving goods from place to place. Leading exports for Paraguay are soybeans, meat, feed, cotton, oils, vehicles, consumer goods, tobacco, petroleum products, and electrical machinery. Customs duties furnish an important part of the country's revenues, but are significantly under-collected due to smuggling.

Argentina's economic troubles caused a drop in tourism to by the rate of 90%. Argentina which has suffered more restrictions in trade than other areas detected a link between foreign ownership, process industry affiliation and intensity of restrictions. Argentina complaints are as follows: plastics 71.4%, footwear 66.7%, other food products 63.6%, machinery and tractors 52.5%, freight and insurance 201 out of 412, custom expenses 197 out of 412, labeling requirements 196 cumbersome or excessive custom procedures 145, prior inspection 132, testing and inspection requisites 129, and lastly complaining about the Brazil: non-tariff barriers.

Attempts to Improve of Conditions:

Paraguay, Bolivia, Argentina, Brazil and Uruguay have proposed to straighten and deepened the Parana waterway to improve conditions in the region however there were no other noted attempts at correcting some of the problems at this time.

Conclusion:

The problems in the different countries in Mercosur are noted and particularly noted in the work of Kwan Kim and Seok-Hyeon Kim in their 2003 work entitled "Financial Cooperation in East Asia; Possibilities and Prospects with reference to Other Regional Experiences where stated is that:

Full integration of Mercosur's internal market would increase the efficiency of the firms as a consequence of the increased size of the market and more intense competition. The benefits of deep integration would become widespread when tariff and non-tariff restrictions are removed and investments in infrastructure would reduce the costs of natural frontiers Regarding the internal borders of Mercosur, the removal of tariffs already accomplished brought along an asymmetrical distribution of benefits. The impacts on different regions were different given their heterogeneous factor endowments and geographical characteristics.