Mercosur: A Common Market or an Incomplete Customs Union?

Abstract

Globalization and, more broadly, trade liberalization have accumulated into a complicated network of bilateral and multilateral international agreements aiming to decrease traditional and non-traditional barriers to trade. One of the most successful models of economic integration is the European Union (EU), which is known as a common market. A common market is the deepest form of economic integration: the free movement of goods, capital, and labour. The EU served as a significant source of inspiration for Mercosur, the Southern Common Market, a Latin American initiative which aims to increase the region’s bargaining power abroad while further increasing its regional integration. Despite its ambitions, Mercosur faces several persistent challenges which prevent meaningful reduction in trade barriers and damage its credibility. This paper analyzes the systematic challenges inhibiting successful trade liberalization in Latin America.