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Venezuela's Membership in MERCOSUR

As a Venezuelan business owner, you are very interested in the fact that Venezuela has recently been accepted as an associate member of MERCOSUR (July, 2004). You need to prepare your operations in view of this new reality.

Develop a plan for your business that will be implemented as Venezuela becomes part of MERCOSUR. Your business plan should include the following:

1. Benefits and drawbacks for the country of Venezuela as a result of their membership in MERCOSUR
2. Benefits and drawbacks for your business as a result of their membership in MERCOSUR
3. What adjustments will need to be made to your business as a result of this?

I need ideas and suggestions to help get me started. Thank you very much!

Solution Preview

1. Develop a plan for your business that will be implemented, as Venezuela becomes part of MERCOSUR. Your business plan should include the following:

a. Benefits and drawbacks for the country of Venezuela as a result of their membership in MERCOSUR

Venezuela was one of three countries that emerged from the collapse of Gran Colombia in 1830 (the others being Colombia and Ecuador). For most of the first half of the 20th century, Venezuela was ruled by generally benevolent military strongmen, who promoted the oil industry and allowed for some social reforms. Democratically elected governments have held sway since 1959. Current concerns include: a polarized political environment, a politicized military, drug-related violence along the Colombian border, increasing internal drug consumption, overdependence on the petroleum industry with its price fluctuations, and irresponsible mining operations that are endangering the rain forest and indigenous peoples (http://www.cia.gov/cia/publications/factbook/geos/ve.html#Issues).

MERCOSUR: Mercosur was created in March 1991 by Argentina, Brazil, Paraguay, and Uruguay. Comprising a population of approximately 200 million and with a combined GDP of about $851 billion, Mercosur is the world's third largest integrated multinational market after NAFTA and the European Union.

Benefits: Mercosur currently functions as a customs union, providing not only for a free trade area but also for the establishment of a common external tariff. Mercosur countries are committed to coordinate macroeconomic policies and to agree on a common foreign trade policy.

Drawbacks: Unlike NAFTA, Mercosur lacks agreements on intellectual property rights and government procurement. ( see for more detail on benefits of joining http://waysandmeans.house.gov/legacy/trade/105cong/7-22-97/7-22heck.htm).
(See attached article "Venezuela" - first article discusses some of the potential barriers, as well as benefits in more detail or visit ...

Solution Summary

This solution explains the benefits and drawbacks for the country of Venezuela as a result of their membership in MERCOSUR. Also, the benefits and drawbacks are explored as a result of their membership in MERCOSUR. The necessary adjustments that a business needs to make to accommodate MERCOSUR are also discussed.

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