Mercosur

Mercosur Introduction The Sectoral Commission for MERCOSUR (COMISEC) was created on April 1, 1991 by Executive Decree No. 176/991. It is made up of: Government Representatives and Delegates from the Office of Planning and Budget Chamber of Industry of Uruguay National Chamber of Commerce Mercantile Chamber of Uruguay Unions (PIT/CNT) Rural Association of Uruguay Rural Federation of Uruguay Agrarian Cooperatives Association State-owned Enterprises This decree entrusts COMISEC with the following functions: a) Advise the Executive Branch as regards the adoption of internal measures aimed at the application, pursuit and evaluation of the process of regional integration. b) Coordinate and supervise the performance of the subcommittees. c) Obtain and disseminate information on integration.

For its part, Decree 175/991 dated April 1, 1991, created the Inter-Ministry Committee on MERCOSUR and gave the Director of the MERCOSUR Sectoral Commission authority to do the following: a) Plan and propose, to the Inter-Ministry Committee, measures necessary for the orchestration of the internal aspects of the Common Market, paying special attention to the reconversion of economic activities and the adaptation of the country to the common market. b) Carry out the necessary surveys, and to request the corresponding technical assistance. Uruguay was the first country within MERCOSUR that developed this institutional structure – which is foreseen in the constitution – so that the different sectors involved could participate in the integration process. Some Argentine Provinces and some Brazilian States have implemented institutional mechanisms in which the presence of their own social and economic agents is participatory. Paraguay has just recently created, under the Ministry of Integration, the National Committee on Integration and has invited government representatives (ministries), business groups and unions to participate. One of the goals of COMISEC is to improve the knowledge of the productive sectors and to create mechanisms for the dissemination of information throughout the country.

In sum, COMISEC is an working environment where the Uruguayan civil society can be represented in order to best pursue, understand, and disseminate, in a timely manner, the key topics that are relevant to Uruguay’s future with regard to its insertion in MERCOSUR. As Uruguayans, we all have our concerns especially when we think of the size of our partners, Argentina and Brazil. However, we have already been associated with these countries for many years through preferential commercial agreements. MERCOSUR and Its Origins The Common Market of the South (MERCOSUR) is an ambitious economic integration project in which Argentina, Brazil, Paraguay and Uruguay find themselves engaged. Its principal objectives are: to improve the economies of their countries by making them more efficient and competitive and by enlarging their markets and accelerating their economic development by means of a more efficient use of available resources; to preserve the environment; to improve communications; to coordinate macroeconomic policies; and to harmonize the different sectors of the economies of the member countries. The Beginnings of the MERCOSUR Integration Process In the 1970s, Uruguay strengthened its commercial relationship with Brazil by way of the Commercial Expansion Protocol (PEC), and with Argentina by way of the Argentine-Uruguayan Economic Cooperation Agreement (CAUCE).

Between 1984 and 1989 Argentina and Brazil signed twenty-four bilateral protocols with the purpose of improving trade. Integration efforts date back to 1985 when the Foz de Iguaz Declaration was signed creating the High Level Bilateral Commission for the integration of Argentina and Brazil. Around the end of 1990, Argentina and Brazil signed, and registered with ALADI, an Agreement on Economic Cooperation (Acuerdo de Complementacin Econmica) that systematized and deepened pre-existing bilateral commercial agreements. Around mid-1990, representatives of both countries met with authorities of Uruguay and Paraguay. It was then that these two countries expressed their firm aspiration to take part in the bilateral process already underway.

At this point it was decided that an agreement among all four countries to create a common market should be signed. On March 26, 1991 the Treaty of Asuncin was signed by the four countries. This Treaty should not be seen as the final creation treaty of the Common Market of the South, but as an instrument, of international character, intended to make the implementation of the Common Market possible. The Treaty of Asuncin is an economic integration agreement with regional vocation, which remains open to the accession of the other ALADI members. By virtue of what is established in Article 10 of Annex I of the Treaty of Asuncin, on November 29, 1991, the four countries signed an Agreement of Economic Cooperation under the legal framework of ALADI.

It bears number 18, and entered into force on that date. In December 1994 an additional Protocol to the Asuncin Treaty was signed in relation to the institutional structure of Mercosur and called the Ouro Preto Protocol. Principal indicators of MERCOSUR members (as of 1993) Argentina Brazil Paraguay Uruguay Population (in millions) 32.6 147.3 4.3 2.9 Land Area (thousands of km2) 2.767.0 8.512.0 407.0 177.5 GNP (thousands of $US) 255.326 413.122 7.005 13.144 Per capita GNP ($US) 7.832 2.805 1.629 4.532 Foreign Trade Exports 13.091 39.101 725 1.647 Imports 16.787 25.695 1.478 2.249 Balance (3.696) 13.406 (753) (602) Source: Our own, based on data from Working Subgroup No. 10 (Basic Macroeconomic Indicators) and MERCOSUR, Statistical Report, volume 1, 1993 14. Can Uruguay leave MERCOSUR? Legally, there are no impediments, and the Treaty of Asuncin anticipates that any of the Member States may desire to pull out of the treaty.

Politically, leaving MERCOSUR would bring about significant difficulties. It is a well-known fact that the four national economies are closely interrelated. In the case of Uruguay, 44% of its exports and a similar percentage of its imports are MERCOSUR-based. This gives an idea of what Uruguays situation would be, should it not belong to MERCOSUR. Moreover, in a growing globalized economy, negotiations are carried out between large economic blocks, and the opportunities for independent action by our country are very slim. 25.

Is Uruguay prepared to participate fully in MERCOSUR? There is a long history, both within the public and private sectors, of efforts made towards integration that started around 1960 when ALALC was created by the Treaty of Montevideo. Since then, Uruguay has been a staunch supporter of regional integration. This commitment has earned Uruguay the right to be the seat of the two principal regional organizations: ALADI and MERCOSUR. This is both a distinction and a privilege. 29. How does the mechanism for the annual reduction of import duties function? Argentina and Brazil granted an initial reduction on January 1, 1995.

In January 1996 the reduction was of 25%. Further reductions will be: 50% by January 1997; 75% by January 1998; and duties will be completely eliminated by January 1, 1999. For Paraguay and Uruguay the scale is similar except that it runs one year longer. That is to say that the initial reduction started on January 1, 1996 and the successive reductions to 25%, 50% and 75% are scheduled for January 1997, January 1998 and January 1999, respectively. Total elimination of duties will be on January 1, 2000.

This system is called Final Adaptation Regime to the Customs Union. The reductions are …