PECULARITIES OF INTEGRATION PROCESSES IN THE MERCOSUR FRAMEWORK

Klochan E.

Supervisor: Ivanenko I.A., PhD, docent, DonNUET

Modern economic relations are characterized by growth of integration processes. International economic integration is a process of association and cross structural convergence of national economies which cause an occurrence of a common market space, creation of international forms of managing, increase of interdependence of industrial complexes, more and more wide coordination of economic policy and common regulation on the basis of interstate agreements. Research of relations between countries-participants of MERCOSUR is rather actual, because this block is one of the most fast-growing and influential in the world and gives impulse for further integration processes rising among developing countries. So, MERCOSUR shows the main tendencies of integration processes between countries of transitional economy. The aim of the research is to find out the main tasks of MERCOSUR and to analyze the lever of their achievement, effectiveness of integration process.

MERCOSUR (Southern common market) is a political and economic bloc in South America, which includes Argentina, Brazil, Paraguay and Uruguay as full members, and Bolivia and Chile as associated members. The aim of the block is to achieve a common market where free movement of goods, services, capital and people is complemented by a common external tariff and policy co-operation among its countries-members. The block is the 4^th largest economy in the world coming after the EU, the NAFTA and Japan; it has a total GDP of around 1 trillion US dollars and a population of 210 million people.The Union has become the most influential commercial and economic alliance of developing countries, but the first years of block existence have been more successful than recent times.

Asunción Treaty on MERCOSUR creation assumed the abolition of all the tariffs and the non-tariff barriers in trade between countries-participants, as well as the introduction of a common external tariff. MERCOSUR customs union, which had became practically the first such a union in South America, entered into force on January 1, 1995. The rates of creating of customs union are unexampled in world practice, because it took 4 years. However, it should be noted that the elimination of duties in mutual trade and common external tariff do not cover all goods, so the customs union forming is not complete. A certain number of goods in mutual trade between countries-member of MERCOSUR are not exempted from tariffs. These products are fixed in the lists of exceptions, because they are not considered as sufficiently competitive. MERCOSUR sets such a transitional period for eliminating fees. Thus, liberalized torus trade covers 90% of the goods customs nomenclature (10% included in the lists of exceptions). By 2000, the regime of free trade has been supposed to engulf the mutual exchange of goods. But some exceptions still exist, and occasionally one or another country imposes non-tariff barriers. The same time we should note that the trade between countries-participants has been activated in 8 times in period from 1991 till 2008. External tariff are applied to 85% of the goods of agreed customs nomenclature. Every country has a list of exceptions to the external tariff, in which there are more points than in the lists of mutual trade. Lists of exceptions of the external tariff were planned to be cancelled by 2006, but in 2005 it was decided to be extended until 2011. One of the significant weaknesses of the MERCOSUR customs union is the fact that the union still does not have a customs code and the practice of double imposition of customs duties. For example, when the goods were imported from third country to one of the countries-members of MERCOSUR, and then they are sold to another country, it is subject to increase the taxes twice. The mechanism of distribution of customs duty incomes is also not produced.

The governing bodies of MERCOSUR consist of intergovernmental structures such as the Common Market Council (its members include the Ministers of Foreign Affairs and Economics), and the Common Market Group, (it consists of four officials from each country). But these structures haven’t been supranational, and haven’t had a wide influence on countries-participants. The beginning of creation of supranational bodies such as the Parliament of MERCOSUR and the Supreme Arbitration Court in recent times can be pointed. Decisions of the governing bodies are not strictly required. The basis for decision making is consensus. Generally, MERCOSUR governments are decentralized and do not always have an effective organizational structure.

MERCOSUR signed foreign trade preferential agreements with various countries, such as India, Israel, as well as with other economic. It was signed the Agreement on economic cooperation and negotiations on a free trade zone between MERCOSUR and EU.

Illegible organizational structure of the customs union and weaknesses of control mechanisms did not allow countries-members of MERCOSUR to overcome contradictions in economic sphere. The development of the Customs Union had strengthened the influence of its leader - Brazil, which became the center of attraction for other countries, which aspired to the regional integration, which included reducing of the level of economic dependence on the United States.

Now MERCOSUR works under the questions of integration deepening and distribution into the area of investment, monetary and general economic policy. Argentina and Brazil decided to eliminate the use of the U.S. dollar in international payments. New scheme of calculation, using the Brazilian real and Argentine peso, came in force since the end of 2008. This incident shows desire of the leaders of Latin America to protect national economies from the U.S. financial system.

So, after the analysis of the situation of the MERCOSUR integration level, we had come to conclusion that countries-participants of this block should systemize the level of taxes, tariff and non-tariff barriers, make equal rights and duties for every country-participant of alliance, make institutions of real monitoring of MERCOSUR actions. All these actions will prove the situation in this block and make it really strong alliance of fast developing countries with strict rules and mechanisms of mutual aid for every country-participant.

References:

1. Международная интеграция: Учебное пособие/ под ред. О.Б.Чернеги. – 2-е изд., обновл. и доп. – Донецк: «Каштан», 2009. – 350 с.

2. http://mercosur.int