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Mercosur: the dilemma between the customs union and a free trade area

Author

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  • Honorio Kume
  • Guida Piani

Abstract

In 2001, the government of Argentina – facing a major economic crisis – took a rather controversial decision and reduced the tariff rates of all capital goods to zero. This became a main source of conflict with Brazil, the only country of Mercosur that produces such goods. This paper discusses two possible scenarios for the resolution of this issue. In the first one, the countries would opt for the maintenance of the customs union. The authors present some suggestions for the rebuilding of the Common External Tariff (CET), by which the countries would take a middle course acceptable to all. The other possible outcome would be a step back in the direction of a free trade area, with no CET at all. JEL Classification: F13, F15.

Suggested Citation

  • Honorio Kume & Guida Piani, 2005. "Mercosur: the dilemma between the customs union and a free trade area," Brazilian Journal of Political Economy, Center of Political Economy, vol. 25(4), pages 370-390.
    • Handle: RePEc:ekm:repojs:v:25:y:2005:i:4:p:370-390:id:648
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/648/645
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    More about this item

    Keywords

    Mercosur; Regional Integration; Tariff;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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