India-MERCOSUR

Prime Minister Narendra Modi recently visited Brazil and Argentina as part of his five-nation tour (July 2-9, covering Ghana, Trinidad and Tobago, Argentina, Brazil, and Namibia), with a key focus on expanding the India-MERCOSUR Preferential Trade Agreement (PTA). This initiative aims to increase and diversify trade with Latin American countries, particularly in light of US tariff impositions.

About MERCOSUR:

• Definition: MERCOSUR (Southern Common Market) is a Latin American regional integration process.
• Founding Members: Initially established by Argentina, Brazil, Paraguay, and Uruguay.
• Current Status: While Venezuela and Bolivia have been associated or full members at different times, they are currently noted as not being full, active members (Venezuela is suspended, Bolivia became a full member in July 2024. Bolivia has a term of up to 4 years to incorporate the normative acquis of the bloc.
• Global Standing: It is the fourth-largest integrated market or trade bloc globally, following the European Union (EU), NAFTA (now USMCA), and ASEAN.

India-MERCOSUR Preferential Trade Agreement (PTA):

• Signing and Effect: The India-MERCOSUR PTA was signed in January 2004 and came into effect from June 2009.
• Purpose of PTA: A PTA aims to eliminate or reduce tariffs on a limited number of goods, making it less comprehensive than a Free Trade Agreement (FTA).
• Tariff Concessions:
  • Both sides offered tariff concessions ranging from 10% to 100%.
  • India provided concessions on 450 tariff lines.
  • The Latin American trade bloc offered concessions on 452 tariff lines.
• Expansion Discussions: India and MERCOSUR have been discussing the expansion of this existing PTA for some time, but progress has been slow.
• Trade Volume (FY 2024-25):
  • India’s exports to MERCOSUR countries: $8.12 billion.
  • India’s imports from MERCOSUR countries: $9.36 billion.
• Dominant Partner: Among MERCOSUR nations, India’s largest share of trade is with Brazil.