Paraguay and Uruguay joined the process and the four countries became signatories to the Treaty of Asunción (1991), which established the Southern Common Market, a trade alliance aimed at boosting the regional economy, moving goods, people among themselves, workforce and capital.

In 2023, the Mercosur had generated a nominal annual gross domestic product (GDP) (PPP) of around 5.7 trillion US dollars,[not verified in body] placing the bloc as the 5th largest economy in the world.

Before the independence of the South American countries, most of their commercial and political ties were mediated by the Spanish Empire, which prohibited significant trade with Brazil.

In September, the governments of Paraguay and Uruguay showed a strong interest in the regional integration process, leading to the full perception by the signatories that a more comprehensive treaty was needed.

The main implications of this free trade zone are: It was defined that during the transition period, the signatory countries would adopt a general regime of origin, a system for resolving disputes and safeguard clauses.

This agreement established a timetable for the creation of a free trade zone among the signatory states and the full members of Mercosur, with a gradual reduction in tariffs.

In this way, these countries were successful in negotiations for the formation of a free trade zone with Mercosur, since an economic complementation agreement, with full compliance with its schedule, is the item required for the rise of a new associate.

[22] On 7 July 2015, the heads of Mercosur having decided to accept Bolivia's request to become a full member country, Bolivian president Evo Morales signed the Brasília protocol.

[24][25] In August 2016, the presidents of Brazil, Argentina, and Paraguay, while present in Rio de Janeiro for the Olympic Games, met to discuss suspending Venezuela from Mercosur.

[31] On 5 August 2017, the foreign ministers of Argentina, Paraguay, Uruguay and Brazil affirmed that Venezuela's membership in Mercosur is suspended indefinitely in response to the "rupture of the democratic order" in that country following the 30 July 2017 Constituent Assembly elections.

The presidents of the four member countries signed a statement expressing concern "for the grave crisis that Venezuela is going through, which is seriously affecting the humanitarian situation and human rights.

Nevertheless, since then Maduro has exercised majority control of the Venezuelan parliament, displacing Juan Guaidó from his oppositional presidency, and thus making a rejoining of Venezuela to Mercosur more critical.

[36] In late April 2023, newly elected President of Brazil Luiz Inácio Lula da Silva pressed new agreements between Mercosur and the EU to stimulate economic development in South America.

As talks progressed, other factors came into play, such as the recent visit by Russian foreign minister Sergey Lavrov to the Brazilian nation the same month; the latter is working on the admission of Brazil and Mercosur to the competing Eurasian Economic Union (EAEU).

Meanwhile, Venezuela that has been shut out of its Mercosur membership in 2016 due to accusations of undemocratic behavior, is attempting to approach the agreement again with a decree to reform the common nomenclature and to revamp its quality standards for export.

[37][38][39] In July 2023, a crisis broke out between Argentina and Paraguay, Bolivia, Uruguay and Brazil over the free navigability of the rivers in the Río de la Plata Basin.

Directly subordinated to the Common Market Group, the work subgroups draw up the minutes of the decisions to submit for the consideration of the council, and study specific Mercosur concerns.

People of Afro-Latin American descent tend to be concentrated in Brazil and Uruguay, with a smaller, but historic Afro-Argentine community in Argentina and an emerging population in Chile, the latter largely of Haitian origin.

The council is the highest-level agency of Mercosur with the authority to conduct its policy, and responsibility for compliance with the objects and time frames set forth in the Asuncion Treaty.

Furthermore, it can initiate practical measures for trade opening, coordination of macroeconomic policies, and negotiation of agreements with nonmember states and international agencies, participating when need be in resolution of controversies under Mercosur.

Directly subordinated to the Common Market Group, the Work Subgroups draw up the minutes of the decisions to submit for the consideration of the council, and conduct studies on specific Mercosur concerns.

The meetings of the Work subgroups will be held quarterly, alternating in every member state, in alphabetical order, or at the Common Market Group Administrative Office.

It will be competent, inter alia, to: follow up on the integration process and keep the respective Congresses informed; Take the necessary steps for the future instatement of a Mercosur Parliament; Organize subcommittees to examine matters relating to the integration process; Submit its recommendations to the Common Market Council and Group as to how the integration process should be conducted and Southern Common Market formed; Make the adjustments necessary to harmonize the laws of the different member states and submit them to the respective Congresses; Establish relationships with private entities in each of the member states, as well as international agencies and bureaus so as to obtain information and specialized assistance with matters of interest; Establish relationships targeting cooperation with Congresses of the nonmember nations and entities involved in regional integration schemes; Subscribe to cooperation and technical assistance accords with public and/or private entities whether domestic, supranational or international.

In this respect, the trade commission can propose a change in the import duty on specific items under common external tariffs, including cases referring to development of new Mercosur production activities.

Any disputes among member states as a result of application, construction, or noncompliance regarding provisions related to education are initially resolved by direct diplomatic negotiations.

[citation needed] Uruguay's Vice-president Danilo Astori said the issue of a free trade agreement with the United States must be dealt and that "opportunities must be built".

The member states are not however obligated to extend to investors in the other nations signatory to the Colonia Protocol the benefits of any treatment, preference or privilege resulting from international accords relating fully or partially to tax matters.

These transfers can be made in freely convertible currency, using the exchange rate prevailing on the market pursuant to the procedures established by the member state receiving the investment.

[68] In 2004, Mercosur signed a cooperation agreement with the Andean Community of Nations trade bloc (CAN) and they published a joint letter of intent for future negotiations towards integrating all of South America.

[71] The bloc comprises a population of more than 270 million people, and the combined gross domestic product of the full-member nations is in excess of US$3.0 trillion a year (Purchasing power parity, PPP) according to International Monetary Fund (IMF) numbers, making Mercosur the fifth-largest economy in the World.