Mercosur RIP?

IT WAS such a good idea. In 1991 Brazil and Argentina set aside decades of rivalry and, together with smaller Uruguay and Paraguay, founded Mercosur as a would-be common market. The project went hand-in-hand with a broader opening of inward-looking economies. Diplomats got to work on harmonising trade rules. Cross-border trade and investment boomed.

Yet Mercosur, like the European Union (EU) on which it was modelled, ran into difficulties. Brazil’s devaluation in 1999 caused Argentina to seek, and obtain, emergency restraints on imports from there. Politically negotiated exceptions to the block’s rules became the norm. Nevertheless, a dispute-settlement body and a small secretariat were eventually set up. In 2010 the presidents finally agreed on a common customs code, to avoid outside goods having to pay tariffs more than once.