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Political features


Regarding the political features, there are differences in the political relations between the members and the applied policies depending on the period of the organization. During the transition period (1991-1994) there were some broken rules between the members, mainly between Argentina and Brazil due to the first one accumulated growing trade deficits with Brazil, whose political consequences tried to be administered with a flexible approach, for example, Brazil accepted the rise of statistical rate from Argentina from 3% to 10%, which was banned on the Treaty of Asunción. During the consolidation period (1995-1998), as known as “markets era”, there were several contrasts between the policies taken by some members; there was a sustained increase in economic interdependence, a widening gap between the commitments adopted and their effective implementation, as well as a negative politicization since the press interpreted that some member states were driven only by their interests and by development in the private sector. Also, during this period, an increasing amount of pending issues regarding the chosen goals and policies began to accumulate, so the credibility of MERCOSUR began to decline, as for example, the agreed customs code never entered into force and new exceptions for the common tariff were created; the negotiations with the Andean Community and Mexico failed and some of them, such as the accession of Mexico as an associated state, were still pending. (Bouzas, R., 2001) During the “turbulence period” (1998-2001) one of the main reasons for the political and economic troubles was the devaluation of Brazilian currency in January 1999, as well as the economic recession of Argentina in 1998, which affected negatively to the exchanges (Vázquez, M., 2018). Also, during this time some members set protectionist policies over some products, just as they applied the antidumping rights (Bouzas, R., 2001)  the dumping is commercial practice that consists of selling a product below the market price, sometimes even below the cost of production, with the aim of gaining market share or even monopolizing it (TIBA, 2018). 

Regarding the relations between MERCOSUR-EU, since 1999 Mercosur has been negotiating agreements with the European Union, but due to disagreements in trade policies or among some members, the agreements of the last 20 years have failed. However, this year, on June 28, MERCOSUR and EU have been signed a free trade agreement, in which the EU will able to export most of its products to these four countries without paying tariffs, whether in industrial or agri-food sectors, saving 4,000 million euros. (El Economista, 2019) The agreement will boost the export of European industrial products by eliminating tariffs of 35% for vehicles, between 14% and 18% for car components, between 14% and 20% for machinery, up to 18% for vehicles. chemicals, up to 14% for pharmaceuticals, 35% for textiles and footwear or 26% for knitted fabrics, as well as the EU agri-food sector will benefit from the reduction of Mercosur's high tariffs on chocolates and confectionery (20%), wines (27%), spirits (20% to 35%) and soft drinks (20% to 35%). Moreover, it will open up new opportunities in Mercosur for European companies that participate in government public tenders or that provide computer, telecommunications or transport services, among others; this agreement includes provisions for the parties to meet high standards in environmental and labor matters, as both parties undertake to effectively implement the Paris agreement against climate change, as well as there is an agreement on trade and sustainable development, which will cover the Forest conservation, respect for labor rights and the promotion of responsible business conduct. (El Economista, 2019)

References:

Bouzas, R. (2001). El Mercosur diez años después: ¿proceso de aprendizaje o dejà vu?. Desarrollo económico, 41, 162, 179-200. Retrieved from https://www.jstor.org/stable/3455985?read-now=1&seq=1#page_scan_tab_contents 

TIBA (2018, November 13) ¿Qué son los derechos antidumping?. Retrieved from https://www.tibagroup.com/es/antidumping

El Economista (2019, June 28) La UE y Mercosur logran un acuerdo comercial tras veinte años de negociación. El Economista. Retrieved from: https://www.eleconomista.es/economia/noticias/9967541/06/19/La-UE-y-Mercosur-logran-un-acuerdo-comercial-tras-veinte-anos-de-negociacion.html 

El Economista (2019, June 28) Claves del acuerdo de asociación entre la UE y Mercosur para 780 millones de personas. El Economista. Retrieved from https://www.eleconomista.es/economia/noticias/9967676/06/19/Claves-del-acuerdo-de-asociacion-entre-la-UE-y-Mercosur-para-780-millones-de-personas.html

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