Trade agreements and partnerships have become increasingly vital in recent years amid a fluctuating global economy. South America, as one of the world`s fastest-growing regions, has attracted attention from various countries looking to engage in trade negotiations with its member states. As such, it is essential to delve into the various trade agreements that have been signed in South America and their impact on the economy.
One of the most significant trade agreements in South America is the Mercosur, or Southern Common Market. Mercosur is a trade bloc founded in 1991, consisting of five member countries: Brazil, Argentina, Uruguay, Paraguay, and Venezuela. Together, these countries have a combined population of around 290 million people and a combined GDP of over $2.5 trillion. The bloc`s main objective is to create a common market among its member states, allowing the free movement of goods, services, and people.
With the Mercosur, trade between member countries is facilitated, and non-tariff barriers on trade eliminated, resulting in increased trade volumes and economic growth. However, the bloc has been criticized for being slow and inefficient in making trade deals. For instance, it took more than twenty years to negotiate a free trade agreement with the European Union (EU), which was finally inked in 2019. The agreement is expected to boost economic growth in South America, particularly Brazil and Argentina, as the EU is one of the world`s largest trading blocks.
Apart from the Mercosur, South America also has other trade agreements with other countries and regions worldwide. For instance, in 2016, Colombia, Chile, Peru, and Mexico signed the Pacific Alliance, a trade pact aimed at promoting economic integration in the region. The Alliance focuses on reducing trade barriers between member states and increasing investment flows among its members. The pact has already seen its member states prosper economically, with the combined GDP of the four countries amounting to $2.1tn.
Another trade agreement affecting South America is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP is a free trade pact between 11 countries, including Japan, Canada, Singapore, and Australia, and is seen as an alternative to the now-defunct Trans-Pacific Partnership (TPP) agreement. The agreement has led to increased trade volumes between its member states, with the total GDP of its member states accounting for 13% of global GDP.
In conclusion, South America has always been an attractive region for trade partnerships, and various trade agreements have been signed to facilitate it. The Mercosur has been the most significant trade agreement among South American countries, while the Pacific Alliance and the CPTPP have boosted trade partnerships with other regions worldwide. The trade agreements have not only facilitated trade between member states but also increased economic growth and development in the region. As such, South America remains a key region for any country looking to expand its trade partnerships.