Latin America's Trade Organizations

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As Latin American states vie for economic opportunities, the uncertain potential of regional economic blocs continues to draw attention. Latin America's history is rife with experiments in regional cooperation designed to encourage more local trade and investment, as opposed to being overly reliant on extraregional players such as Europe and the United States. For the most part, these regional groupings have emerged in a flurry of political excitement only to die as economic realities set in, or as the environment shifted. Except for Mexico and Brazil, Latin American countries are mostly small markets dominated by commodity exports with little industrialization and limited domestic consumer markets. As a result, export-oriented commodity industries generally find themselves stuck supplying the manufacturing and industrial hubs of the world, most prominently Europe, the United States and, more recently, China.

This limits compatibility among Latin American countries and in cases like Mercosur, where countries have attempted to form common markets with external tariff structures blocking foreign trade. The same dynamics that have characterized Latin America's trade patterns throughout history exist today. While Mexico and Brazil have been able to cultivate substantial industrial bases, Brazil remains reliant on iron and soybean exports for external revenue sources. Countries throughout Latin America continue to push for regional integration as a way to generate growth and avoid overexposure to foreign markets, but there are numerous hurdles. Some Mercosur members are not confident that the bloc alone can provide enough openings for growth, largely due to tensions within the bloc caused by Argentina's domestic economic problems. As a result, Latin American members of Mercosur will continue to push for outside opportunities.

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