Participation of Venezuela in Mercosur

VENEZUELA'S PARTICIPATION IN THE MERCOSUR

Carlos Mora Vanegas

In this paper we examine what it means to penetrate Venezuela, belonging to Mercosur.

BASIC CONSIDERATIONS, SCOPE

In analyzing the issue, it is necessary to venture into the basic objectives of Mercosur, in this regard through seminars, workshops on this topic conducted by the Graduate Program in Market Specialization at the University of Carabobo, noted that, the basic objective of the Common Market is to increase the efficiency and competitiveness of the economies involved expanding the current size of their markets and accelerating economic development through the efficient use of available resources. The preservation of the environment, improved communications, macroeconomic policy coordination and complementation of the different sectors of their economies. On the other hand, the formation of a common market is an appropriate response to the consolidation of large economic areas in the world and the need for adequate international insertion.

Advantage

• The elimination of tariff barriers within a common market implies that some goods and services (initially produced or imported members from third countries) are now supplied by a partner country, although this is less efficient as a producer worldwide. This occurs because the exporting country enjoys protection in the importing country's market due to the common external tariff.

• In the case of some commodities, the supply of a partner country can replace imports from the rest of the world and further fully or partially replace inefficient domestic production.

• If one partner has lower unit costs at the world price plus the common tariff, its exports go to replace imports from the rest of the world and the union lowers local market prices.

• Simultaneously, the partner country's producers replace the rest of the world, producing more efficiently, as providers of the market.

• In addition, it is verified a loss of tariff revenue that is transferred to domestic consumers, who now pay a lower price, and domestic producers export partner, who sell their produce at higher prices than international.

• Replacement socially less costly production around the world by the partner's inefficient, resulting in a transfer of tariff revenue to the producers in that country, is known as trade diversion.

• The creation of a common market takes advantage derived from different comparative and relative factor endowments and different needs for raw materials to produce each good.

• Greater variety of goods available to final consumers, which represents an increase in their welfare, increased competition that involves, among other things, higher quality goods and services, lower prices and a more efficient allocation of resources, a significant saving of resources initially allocated to the customs departments, better intra-regional allocation of resources, reduced costs of transportation and communication by the physical integration of the states.

• Strengthen the commercial, political, scientific, academic, cultural, etc.., All of which departed considerably from the possibility of conflicts between countries (a clear example of this is reflected between the rivalry between Brazil and Argentina, which lasted for decades).

Disadvantages

• The creation of MERCOSUR made progress on two parallel tracks that did not necessarily have the same dynamic: on the one side was progressive and automatic reduction of tariffs and nontariff barriers to trade, on the other was the harmonization of macroeconomic and sectoral policies that are automatic and requires agreement, negotiations and commitments from governments.

• Policy coordination is not only abstention on the part of governments to implement certain policies, but also means taking joint action to eliminate asymmetries between different economies (usually caused by government actions or malformations market) who are at odds with producers from different countries.

• The creation of a Common Market, as opposed to a free trade area, including the adoption of a Common External Tariff (CET) against third countries. It was extremely important that the definition is taken as reference to the country with the lowest tariff. Otherwise MERCOSUR had been closed to the rest of the world, which makes the trade diversion effect to prevail over the building. On the other hand, if you set a high common tariff for countries with lower tariff level MC appears as an inferior alternative to the free trade area, that can buy foreign goods at prices close to international prices.

• One of the major obstacles faced by economies are high labor costs, even if the wages paid are low. Achieving greater labor flexibility is a prerequisite for reducing unemployment and increasing the competitiveness of MERCOSUR countries.

Maria Eugenia Soria, a participant in the International Trade professor told us about that since Venezuela has decided to withdraw from the CAN and G3, binding to an alliance MERCOSUR can be empowering for the country, consider that the member countries of MERCOSUR use a common external tariff to compete in equality with other countries in terms of barriers.

Remember that MERCOSUR is made up of two of the largest and strongest South American powers Brazil and Argentina are Good political relations that President Chavez is now the president of Argentina Kischner and Vasquez of Uruguay and Brazil's Lula are precisely ideological or political.

On the other hand is an opportunity to expand and explore new horizons, since our country throughout its history has made alliances in general with Caribbean countries and Central America but had not taken as allies to countries further south the continent. It is important to note also that Venezuela is seeking to be a member in Mercosur, not as observers but now as a claimant in this South American economic bloc. To do this, you should still gather and commit to a set of requirements that are necessary to be accepted into the Southern Common Market, however at times the president of Venezuela has been mentioned that the market will need some adjustments, This divergence at this time may be vital to the acceptance or rejection of our country in MERCOSUR. Now that there is some friction between Uruguay and Argentina over the construction of two paper mills in Uruguay that threatens the environment according to the Argentines, hence the importance of Venezuela is sincere and seriously engage with the guidelines required by the alliance.

At times having no tariff barriers, the MERCOSUR countries could provide, ie import items or products that are currently imported from other countries, thus we get the same except that at lower costs.

Venezuela has going for its privileged geographical position limits have the Caribbean Sea and the Atlantic Ocean and a hydrocarbon wealth gives it a very special attraction for the Southern Common Market.