The Mercosur Maze
The Mercosur Maze
A deep dive into Mercosur trade, residency rights & more.
Welcome Avatar! As Bolivia joined as a full Mercosur member this year, it’s a good idea to go over some history and potential benefits of obtaining a Mercosur citizenship versus residency. Let’s dig in.
Start of the Mercosur
On March 26, 1991, Presidents Carlos Menem (Argentina), Fernando Collor de Melo (Brazil), Andrés Rodríguez (Paraguay) and Luis Lacalle Herrera (Uruguay) signed the Treaty of Asunción in the Paraguayan capital, which gave birth to Mercosur.
A few years later in 1994, in Ouro Preto (Brazil), a common external tariff was agreed upon. Today, the Mercosur is a free trade zone with 295 million inhabitants and more than 14 million square kilometres of territory.
This “free trade” has to be seen in brackets because it is only for products produced by the member countries, which is why most imported goods from outside of the Mercosur tend to be a lot more expensive compared to in places like Europe or the US (especially technology etc, which has high import tariffs in the full Mercosur countries, except for Paraguay).
In 1995 the member countries created a Common External Tariff (CET) for third countries or groups of countries, i.e. a Customs Union (CU). The CET was to cover some 9,300 items in the bloc's common tariff nomenclature and came into force.
As of 2024, the core full member countries of the Mercosur are Argentina, Bolivia, Brazil, Paraguay and Uruguay. Venezuela used to be a core member from 2012 but later got suspended after constitutional rights violations under Maduro in 2017.
Associate members are Chile, Colombia, Ecuador, Guyana and Surinam. Panama is currently in talks to become an associate member as well.
This means all of South America is now part of the Mercosur in some capacity, except for the EU territory of French Guyana — yes, this is why France has its longest border not in Europe, but with Brazil.
Trade Union?
In the first decade of its operation, Mercosur achieved good results in terms of its commercial integration.
In 1990, the year before its formation, intra-zone trade, that is, exports from each country to the other members, totalled $8.12 billion dollars, representing 8.9% of its total exports. In 1998, the value of intra-zone exports reached $20.3 billion dollars, equivalent to 25.2% of the total.
At that time, it was thought that Mercosur had great potential for growth, since the percentage of intra-zone trade with the European Union (EU) was over 60%.
Stalled Growth & Cercosur tariffs
But from the early 2000s onwards, the crises that affected both Brazil and Argentina caused these countries to make unilateral decisions, violating the CET, setting quotas and safeguards, specific import duties and non-automatic import licenses, which affected the bloc's intra-zone trade.
This is when the name “Cercosur” (Fenced South) started to pop up, mocking the Mercosur’s lower trade tariffs two of the main member countries started to ignore while implementing additional tariffs on whatever they saw fit.
As a result, in 2022 its share of total exports fell significantly to 10.3%, a level similar to that of 1990 — with an increased value of $45.8 billion dollars. Mercosur remains relevant for Argentina, with 17.5% of its total exports and 41.3% in the case of its industrial manufacturing.
This protectionism is basically a consequence of the high tariff level of the bloc. Initially, the maximum tariff was 20%, but over time, in some areas, such as automobiles, textiles and footwear, a tariff of 35% was reached. This is the maximum ratified by the World Trade Organization (WTO).
These levels were what caused Chile to refuse to join Mercosur as a full member, since at that time its uniform tariff was 11% for all products, a tariff that is currently 6%. In addition, the degree of openness of its economy was and continues to be higher than that of Mercosur. The percentage of imports in Chile's GDP is 34.7%.
From a trade perspective, it is definitely more beneficial for countries to be an “associate member” versus a full member, unless you’re Brazil. They enjoy most of the trade benefits without the implied tariffs and can still go out to sign trade agreements on their own accord.
And more importantly: they enjoy the same residency rights.
Mercosur Residency / Citizenship rights
The residency rights in the Mercosur are generally understood to be similar as in the Schengen zone in Europe: if you’re a citizen, you can live anywhere in the Mercosur countries.
This is true but has some additional particularities that make residency rights less cohesive and secure versus those in the European Union. First off, as with everything in South America, there is a big difference between what is official policy, and what is happening in reality.
On most official government websites information can be hard to find or arbitrary. For example, even despite the fact that Venezuela is officially suspended as a member, Venezuelans can still freely reside within the Mercosur member countries.
On some government websites from associate member sites like Chile however, Venezuela is not included as an option for Mercosur residency. In practice, many Venezuelans do move to Chile. It is unclear if this happens under the Mercosur residency agreement, or under a refugee pretext.
On the websites of Argentina and Brazil, Venezuelans are mentioned as part of the residency agreement. Almost none of the countries except for Argentina, Colombia, Ecuador and Uruguay mention Surinam and Guyana as citizenship options for Mercosur residency, even though their associate member status grants these rights.
These two countries also don’t mention any of these rights on the migration sections of their official websites. My guess is flows are so minimal that it didn’t even cross their minds.
In the table below is an overview of official government website information regarding Mercosur residency, reading from top row country moving to one of the countries in the side bar:
For now, Brazilian and Argentine citizens are the only two nationalities that can directly receive permanent residency in the other country through a bilateral agreement, without having to sit out the two-year temporary residency period first.
Argentina and Uruguay are currently in talks to sign a similar bilateral agreement, which would make direct permanent residency between these two countries a reality, similar to the Schengen residency rights in the EU.
Autist note: if you are interested in obtaining residency in Argentina, I recommend revisiting these articles:
If you already made up your mind, you can contact my recommended immigration attorney directly here by completing the form on the Residency in Argentina page.
Naturalization
In Planting Your Flag in Argentina, the benefits of Argentine citizenship with regards to the residency rights in the other full member and associate Mercosur countries are clear. The same goes for other Mercosur citizenships like Brazil, etc.
But also here we face an incognito: are these residency rights instant, or do they take time in case of naturalization?
There is not much information out there, but on the Argentine Consulate in Rio de Janeiro website we found the following:
“Nationals of Argentina and Brazil” are considered to be persons who have the original nationality of one of those two countries, or nationality acquired through naturalization and who have held said benefit for five years. — Source
So this would indicate that these residency rights would only be the same after holding Mercosur citizenship for five years.
In practice, it is very likely that you will have the same rights directly regardless.
Final Thoughts
There’s a clear break between the residency benefits for all Mercosur member countries versus the trade benefits for full members compared to associate members. Since before the formation of the Mercosur bloc, Brazil was the member country with the largest share of total imports of intra-zone origin.
During the first decade of the bloc's existence, Argentina's trade balance with Mercosur was mostly in surplus, but from 2004 onwards this trend was reversed, with the country recording a trade deficit with the region for most of the period.
The Mercosur has been a great gateway for Argentine companies to flee socialist measures during the years of autonomist nationalism under the Kirchners, and in Brazil and Paraguay Argentine entrepreneurs created a platform to access the rest of the world without the Argentine export tariffs.
Brazil has benefitted greatly as a core member by using its production base for exports to other member countries with relatively low trade barriers, and many of Argentina’s economic wounds have been self-inflicted over time — no other country applied export tariffs, for example.
Breaking free of export tariffs is a first step which Milei is applying gradually. The agro sector still has very high export tariffs, something Brazil never applied.
This soy bean export graph speaks for itself:
If Argentina wants to break free and grow, taking off all export tariffs is a necessary step. Hindsight is 20/20 but Argentina would’ve probably grown more outside of the trade walls of the Mercosur, as an associate member like Chile. As an associate member of the Mercosur, Chile could set its own trade agreements with third countries, without needing approval from other core Mercosur members.
Chile has signed trade agreements with the United States, Canada, Mexico, China and the European Union, just to name a few.
Argentina and Brazil cannot do this on their own and will always need to deliberate with the now 5 full member countries first. Same goes for Bolivia, Paraguay and Uruguay. Meanwhile, associate member countries do have the same residency benefits for their citizens. Seems like the best spot to be in.
From a personal freedom perspective, getting a Mercosur residency or citizenship is an absolute no brainer. It is still relatively easy to obtain a Mercosur citizenship for now, but that might change in the future.
Residency provides you with an ID card that let’s you travel in between countries without the need to show your passport. Citizenship provides you with direct residency rights throughout a whole continent.
See you in the Jungle, anon!
Other ways to get in touch:
X/Twitter: definitely most active here, you can also find me on Instagram but I hardly use that account.
1x1 Consultations: book a 1x1 consultation for more information about obtaining residency, citizenship or investing in Argentina here.
Podcasts: You can find previous appearances on podcasts etc here.
WiFi Agency: My other (paid) blog on how to start a digital agency from A to Z.
Very interesting. I knew about the Mercosur, but not the details of its history and the delicate details of its inner workings. Thanks for sharing this.
So is the Argentina passport the easiest to get ? You’re supposed to be able to ask for it after 2 years of residence right ?
Brazil citizenship is easier to get if you're a couple and give birth there. The parents are automatically entitled to PR and can apply for passport/citizenship after 1 year. I'm surprised you haven't talked about this route.