As Mercosur celebrates its thirtieth anniversary, the customs union finds itself in an identity crisis that is testing the boundaries of integration. Argentina, Brazil, Paraguay and Uruguay each have their own view of what Mercosur is and what it should become.
In a bid to fight inflation and improve industrial competitiveness, Brazil just announced a unilateral 10% reduction on 87% of its tariff lines. Argentina has agreed to the common tariff reduction but has been backtracking on negotiated liberalisation. Uruguay is keen to kick off negotiations of a bilateral trade agreement with China whilst Paraguay is grasping the impact of its lost GSP status.
Have the Mercosur Customs Union reached its limit? Are governments testing the boundaries as part of a tit-for-tat leading to a reform of the bloc? What are the consequences of the agreement with the European Union?