Mercosur (or Mercado Común del Sur) is a South American regional trade bloc and customs union, established as an institution to promote economic integration and free trade among its members. It was created on March 26, 1991, by Argentina, Brazil, Paraguay, and Uruguay with the signing of the Treaty of Asunción. The bloc emerged from a desire to enhance economic cooperation, stabilize economies facing challenges like inflation and foreign debt, and cement a rapprochement between longtime rivals Argentina and Brazil. The initial problem it solved was the lack of a unified regional market and the historical rivalry between its two largest economies.
Mercosur functions as a customs union, formalized by the 1994 Protocol of Ouro Preto, which mandates the free movement of goods, capital, services, and people among member states. A key mechanism is the Common External Tariff (CET), a common duty applied to imports from non-member countries, which currently averages 11.5 percent. The bloc's highest decision-making body is the Common Market Council, which oversees policy implementation. Mercosur connects to the broader concept of regional integration, similar to the European Union (EU), and its members are authorized to live and work anywhere within the bloc. Related institutions include the Permanent Court of Arbitration and the Mercosur Parliament (PARLASUR), both established in the mid-2000s.
The bloc has seen recent changes, notably the provisional application of the trade pillar of the EU-Mercosur Partnership Agreement on May 1, 2026, after two decades of negotiations. This agreement, which eliminates tariffs on a high percentage of goods traded between the two blocs, represents the largest free trade deal for Mercosur since its inception. The core structure and the CET mechanism have stayed the same, but the membership has changed: Venezuela, which joined in 2012, was suspended indefinitely in 2017 for violating the Ushuaia Protocol on Democratic Commitment. Conversely, Bolivia became a full member in November 2023.