World Geography and Economics

¶ … Geography & Economics Common Market of the South: "Mercado Comun Sur" This work intends to explore Mercosur and understand the goals and objectives, economic significance as well as the advantages and disadvantages for the countries involved and to identify the method used in dispute resolution. Finally, to identify future plans and objectives of Mercosur. Mercado Comun Sur" or, Common Market of the South in English, is a marketing structure composed of four Latin American Countrys who have through complementation agreements, a type of trade agreement, managed to find cohesiveness together.

Argentina and Brazil have long been rivals in the world of trade. However, along with Uruguay and Paraguay established an environment of cohesive streamlined trade and the reward is having a competitive edge in today's volatile and troubled global market. Officially established in 1995, the Common Market of the South operates under the established guidelines of the Assuncion Treaty. I. The Assuncion Treaty: The Assuncion Treaty was signed formally in March of 1991.

The mission of Mercosur is the to establish a "common-market" inclusive of a "common-trade policy" allowing for freedom of movement and benefiting from productivity. The goals of the Assuncion Treaty are as follows: The implementation of the liberalization program, with progressive tariff reductions (linear and automatic), removal of restrictions on non-tariff. Establishment of a Common Trade Tariff that will have the capability to promote competition of a foreign nature from partners of the State. To bring cohesiveness to macro-economic and sector policies.

The Assuncion Treaty is set up on the framework of the "Ouro Preto Protocol" which was signed in 1994. The Ouro Protocol: recognizes the legal existence of the bloc under international law, ascribing it with the authority to negotiate, on its own behalf, agreements with third party countries, groups of countries and international organization." The protocol provides for the legal means of negotiation on its own behalf with other third party countries, by recognizing the bloc under international law. III.

Governance by "Consejo del Mercado Comun": Mercosur, governed by a "Consejo del Mercado Comun," which is, in English, the Common Market Council (CMC). CMC is the governing body that is in charge of any political type decisions; counseling during the process of integration as well as being in charge of resolution of any disputes which arise between the countries.

All disputes are resolved by the general dispute resolution system the "Protocol of Brasilia." In the event that a dispute arises between a private-sector investor and a State Party, then the dispute is resolved through friendly negotiations. However, after a period of six months, the dispute cannot be resolved, an investor may request that the appropriate court of the State Party the "Settlement of Investment Disputes" (ICSID) decide the dispute.

Also, the dispute may be settled by an ad hoc arbitration panel, formed under the "United Nations Commissions on International Trade Law" (UNCITRAL). IV. Advantages and Disadvantages: The disadvantages in the Mercosur are that there are still imported good of importance that are not included in the "Common External Tariff System" (CET) and there are still tariffs applicable in the sugar and automotive industries. Too, there have been recent setbacks with stagnation in trade for the past three years.

However, in spite of the trade stagnation the advantages are clear in that the trade is still four times higher than trade prior to the signing of the Assuncion Treaty in 1991. IV. Dumping Dumping, in economic terms is when producers sell their products for lower prices in foreign markets that in the national market to eliminate competition. One example of violation of the anti-dumping rules of the Mercosur would be if Brazil were to sell a product to the U.S.

For 25% less than the amount charged for the product in Brazil or the other members of Mercosur, then this would be an example of dumping. Secondly, if Argentina sold a product to Germany for less than it charged on the international market, then that would be another example of violation of the trading arrangement of the Mercosur.

Summary and Conclusion: The Mercosur should prove to be profitable for the nations involved in the trading agreement as has been demonstrated by the rise in trade since 1991 which, at the lowest point is still four times higher than trade prior to 1991. The New Zealand Herald in September 24, 2004 news brief stated that the trade.