MERCOSUR

In the trading zones between the countries Brazil, Argentina, Uruguay, and Paraguay; the purpose of the MERCOSUR in the country is to promote the free trade and establish the fluid movement of goods and peoples, and the currency. The MERCOSUR promises the capabilities in combining the resources to balance the activities of other global economic powers such in United States and European Union. The Venezuela is formerly known as a member of the Andean Community which is another term for the trade bloc, and after the country’s acceptance on the MERCOSUR described the various economic potential.

The Benefits and Drawbacks in Venezuela

The benefits in the country are based on the opening of the typical economic and political issues faced by governments pursuing the different alternative policy reform process (Botto, 2007). On the other hand, the uncertainty in the Venezuela and its status as a member in MERCOSUR is also identified. The political leaders in the country enable to compete with the other countries but there is also a violation of the freedom of speech. And clearly, the Venezuela can destabilize the interregional EU-MERCOSUR political dialogue (Valle, 2008).

The Benefits and Drawbacks in Businesses

The period of the negotiations can create an opening of the treaty. Different ambitions are presented in the creation of the treaty such as the expansion of domestic markets through the integration of the vital prerequisite for the fostering and accelerating the economic development with social justice. In the economic development with social justice can only be achieved in making optimum use of the available resources, preserving the environment, improving the infrastructure, coordinating macroeconomic policy, and ensuring the complementary between the different sectors of the economy which is based on the principles of gradualism, flexibility, and balance.

The business as well as the country has the integration process is an appropriate response to an international environment characterized by a trend toward the large trading bloc and the security of the countries in the international environment. In addition, through the scientific and technological development will be required to modernize the businesses either in production and services and then, improve the living conditions of the country. In establishing the common market in Venezuela permits the free movement of goods, services, and factors of production among the countries by eliminating the customs duties and non-tariff barriers. Through the adaptation of the common external tariff and common trade policy toward the developing countries and will coordinate the positions in the domestic and international economy. In the coordination of the macroeconomic and sectoral policies between the countries in the areas of foreign trade, agriculture, industry, fiscal, and monetary matters, foreign exchange and capital, services, customs, transport, and communications and any other areas that maybe agreed upon between the members. Another great benefit in the country and the businesses is the harmonization of the legislation in the relevant areas to the advancement of the processes in the economic integration (Birch, 2000).

Through the continuous negotiations among the participating countries, there is an increase trade as well as the increasing trade preferences of the products that involved in both manufacturing and agriculture. The relationship of the Venezuela in the other countries might be opposite on the trade balance of Venezuela on other countries. In addition, the free trade treaty can also create various negative effects. One would be the weakening of its position in the negotiation. Second, the compromising the supply of the aluminum, iron, and other materials from the basic goods state companies to the national industries, because of the domestic prices would align themselves with those paid by other nations under the MERCOSUR membership. And third, is the flow of the domestic market with the other traded goods, without attracting the investments and beating the competitiveness of Venezuelan business (Giacalone, 2003). However, Brazil is identified as very beneficial in the country because of its oil exports.

Adjustments

Before stating the adjustments of the business, as a business entrepreneur, there should be an addressing of the problems and challenges. Venezuela is did not diversify the export mix which is a great disadvantage and may affect the domestic market as well as the external shocks in the international market. Thus, the political risk is very in the country along with the Colombia and Ecuador. Therefore, the framework for the series of adjustments should be emphasized. It can start through the macroeconomic reforms and environmental legislation for sustainable development. The public-private partnership is also applicable in removing the barriers for investments, sustaining the scarce resources and environmental quality. Every business should enhance the safety and security, training of the skilled workers, developing the infrastructure, biotechnology methods, and the application in maximizing the profits.

References:

Birch, M., 2000. MERCOSUR: The Road to Economic Integration in the Southern Cone, International Journal of Public Administration, p. 1387, Marcel Dekker, INC.

Botto, M., 2007. The Role of Epistemic Communities in the Makeability of MERCOSUR, GARNET [Online] Available at: http://www.flacso.org.ar/rrii/publicaciones/mercosur-integration.pdf [Accessed 08 March 2010].

Giacalone, R., 2003. Business Politics in Colombia and Venezuela during Free Trade Negotiation between the Andean Community and MERCOSUR [Online] Available at: http://lasa.international.pitt.edu/Lasa2003/GiacaloneRita.pdf [Accessed 08 March 2010].

Valle, V., 2008. Interregionalism: A Case Study of the European Union and MERCOSUR, GARNET [Online] Available at: http://www.garnet-eu.org/fileadmin/documents/working_papers/5108.pdf [Accessed 08 March 2010].

Sources:

MERCOSUR [Online] Available at: http://www.westga.edu/~slopez/ECON4485/Mercosur.ppt [Accessed 08 March 2010].

World Economic Forum, 2000, Facing the Challenges of Responsible Growth and Leadership – MERCOSUR Economic Summit Report [Online] Available at: http://www.weforum.org/pdf/SummitReports/mercosur2000.pdf [Accessed 08 March 2010].