Mercosur

The Southern Common Market (commonly known by abbreviation Mercosur in Spanish and Mercosul in Portuguese) is a South American trade bloc established by the Treaty of Asunción in 1991 and Protocol of Ouro Preto in 1994. Its full members are Argentina, Bolivia, Brazil, Paraguay, and Uruguay. Venezuela is a full member but has been suspended since 1 December 2016. Chile, Colombia, Ecuador, Guyana, Panama, Peru, and Suriname are associate countries.

Mercosur's origins are linked to the discussions for the constitution of a regional economic market for Latin America, which go back to the treaty that established the Latin American Free Trade Association in 1960, which was succeeded by the Latin American Integration Association in the 1980s. At the time, Argentina and Brazil made progress in the matter, signing the Iguaçu Declaration (1985), which established a bilateral commission, which was followed by a series of trade agreements the following year. The Integration, Cooperation and Development Treaty, signed between both countries in 1988, set the goal of establishing a common market, which other Latin American countries could join. Paraguay and Uruguay joined the process and the four countries became signatories to the Treaty of Asunción (1991), which established the Southern Common Market, a trade alliance aimed at boosting the regional economy, moving goods, people among themselves, workforce and capital. Initially a free trade zone was established, in which the signatory countries would not tax or restrict each other's imports. As of 1 January 1995, this area became a customs union, in which all signatories could charge the same quotas on imports from other countries (common external tariff). The following year, Bolivia and Chile acquired membership status. Other Latin American nations have expressed interest in joining the group.

Mercosur's purpose is to promote free trade within the zone and the fluid movement of goods, people, and currency. Since its foundation, Mercosur's functions have been updated and amended many times; it currently confines itself to a customs union, in which there is free intra-zone trade and a common trade policy between member countries. Beyond trade, Mercosur prioritizes deeper regional integration by enabling the free movement of people across borders, supported through its December 2014 agreement with the International Organization for Migration. In 2023, the Mercosur had generated a nominal annual gross domestic product (GDP) (PPP) of around 5.7 trillion US dollars,^{[not verified in body]} placing the bloc as the 5th largest economy in the world. The bloc places high on the human development index.

Before the independence of the South American countries, most of their commercial and political ties were mediated by the Spanish Empire, which prohibited significant trade with Brazil. In the 19th century, the process of political emancipation in South America accentuated the various competing interests of the countries of the region. They often found themselves at war, such as the Cisplatine War, the independence of the Republic of Uruguay, the Uruguayan Great War, the Ragamuffin War, the dispute between unitaries and federalists in Argentina and the Paraguayan War.

In 1941, in the middle of the Second World War, Brazil and Argentina for the first time tried to create a Customs Union between their economies. However, this did not happen due to the countries' diplomatic differences in relation to Axis policies, after the attack on Pearl Harbor. With the end of the war, the need for interaction between nations became imminent and, consequently, economic blocs formed. In Latin America, however, there was no union that obtained satisfactory results.

In December 1985, Brazilian President José Sarney and Argentine President Raúl Alfonsín signed the Iguaçu Declaration, the basis for economic integration of the so-called Southern Cone. Both countries had just come out of a dictatorial period and were facing the need to redirect their economies to the outside and globalized world.

Both countries had contracted a large external debt during the period of the military governments and did not enjoy credit abroad. There was a great need for investment in the countries, but no money. This common situation made them both realize the mutual need. Shortly after the signing of the Iguaçu Declaration in February 1986, Argentina declared its intention of a "preferential association" with Brazil. In a private home in Don Torcuato, there was a meeting to discuss the matter. The discussion, lasting two days, took place in an atmosphere of exchanging ideas and stating positions regarding the status of the area's economy.

After a few weeks, Brazil invited Argentina to a similar meeting, in Itaipava, also in a private residence. This signaled acceptance of the Argentine initiative and the formation of an agreement, with the objective of promoting the economic development of both countries and integrating them into the world. Out of this meeting came the Argentina-Brazil Integration and Economics Cooperation Program or PICE (Portuguese: Programa de Integração e Cooperação Econômica Argentina-Brasil, Spanish: Programa de Integración y Cooperación Económica Argentina-Brasil). Protocol Number 20 of the program proposed the Gaucho as a currency for regional trade. For many, the idea of integration in South America seemed more like an abstraction, owing to various unsuccessful experiences in the past. However, this was perceived as different.