Abstract

This paper examines how Mercosur, the World Trade Organization (WTO) and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) have promoted stable and sustainable trade practices in the Americas since 2000. It compares their varying and overlapping roles: Mercosur as a regional customs union managing internal asymmetries and external negotiations, the WTO as a global rule-making body facing institutional challenges but advancing environmental agreements, and ECLAC as a UN commission providing research and policy guidance. The paper discusses how these organisations have connected trade with social development and environmental concerns, highlighting their achievements as well as their ongoing limitations.

Introduction

Regional integration in South America has often been shaped by competing national interests, asymmetries in economic development and external pressures from global trade partners. Mercosur, also known as the Southern Common Market, was created in 1991 and represents the most ambitious attempt to consolidate economic cooperation across the Southern Cone. As a customs union, its stated goals extend beyond free trade to include convergence in infrastructure, social policy and sustainable development. Over time, Mercosur has become both a platform for cooperation and a site of persistent conflict, reflecting the tension between national protectionism and regional liberalisation. The World Trade Organization (WTO) is the leading group that establishes rules for trade between countries. It includes 164 countries who are members that work together to create trade agreements, make sure all members follow the rules and settle disagreements when they occur. Since 2000, the WTO has also started focusing on sustainable development, trying to connect trade with protecting the environment and helping less privileged countries grow their economies. At the same time, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has acted as an intellectual and policy-shaping body in the region. Though it lacks the authority to impose trade rules, ECLAC has influenced integration through research, structuralist theories and policy guidance. Its emphasis on reducing dependency on external markets, encouraging regional supply chains and linking social development to trade has shaped the way governments think about economic stability and sustainability. They all vary strategically – one grounded in regional cooperation, another in global rule-making, and the third in policy advice and long term development perspectives – but together, they all contribute to shaping trade in Latin and South America.

Mercosur

The Southern Common Market was founded in 1991 and has been an essential actor in the coordination of goods, services and factors of production across the Americas. Funded by its member states – Brazil, Argentina, Paraguay and Uruguay – as a customs union, it has become South America’s largest trade block. Since the 2000s, it has become known as Mercosur and expanded its members by including Bolivia and Venezuela, now suspended, as well as establishing the Fund for the Structural Convergence of Mercosur (FOCEM) in 2004 to address the development gaps between its members. Aside from internal efforts, Mercosur has also pushed for major external trade negotiations. The most notable of these has been with the EU, Mercosur’s largest trade partner. However, negotiations have been shelved due to environmental issues such as deforestation of the Amazon rainforest. Mercosur has maintained its high tariffs, sanitary regulations and quotas, which benefitted domestic industry but constrained growth and liberalisation.

Mercosur demonstrates both the promise and fragility of regional integration in South America. On one hand, it has built institutional frameworks such as the CET, Olivos Protocol and FOCEM, which contribute to predictability, dispute resolution and social investment. On the other, its credibility is weakened by tariff exceptions, uneven development and the repeated stalling of external agreements with the EU. The environmental dimension further complicates negotiations, as sustainability has become a decisive factor in shaping trade policy. Overall, Mercosur’s trajectory highlights the tension between the ideals of integration and the realities of political economy. It remains a central actor in South American trade and governance, but its future effectiveness will depend on reconciling internal asymmetries with external demands for stability and sustainability.

INSTITUTIONAL MANDATES & OBJECTIVES

Mercosur aims primarily to create a common market through its member states by lowering trade barriers and ensuring sanitary and technical regulations (UNCTAD, 2017). At the time of its creation in 1991, the primary goal was to promote economic growth across its member states, but the challenges faced since then, notably since the 2000s, have expanded the organisation’s objectives. A major example of this was the creation of the structural convergence fund FOCEM, which aimed to reduce developmental disparity between nations by directing regional infrastructure projects. The infrastructure projects include transportation infrastructure, such as bridges and highways, as well as housing. In Paraguay, for example, FOCEM enabled the construction of roads across Guaira, San Pedro and Concepcion (The Asunción Times, 2025). The budget for FOCEM was roughly $300 million in 2024 where Brazil contributed the most (60%), followed by Argentina (30%), Paraguay (5%) and Uruguay (5%) (CFR, 2025).

TRADE LIBERALISATION & STABILITY

In practice, Mercosur has worked towards stability by liberalising trade both within the bloc and with external partners. Mercosur depends on the common external tariff (CET), though its legitimacy wanes due to numerous exceptions to the policy. Laens and Terra (2005) call it an “imperfect customs union” due to its partial effectiveness but limited stability. An example of these exceptions is the continued exclusion of computing and telecommunications goods as capital goods (Laens & Terra, 2005). This conflict occurs when smaller members like Uruguay and Paraguay push for the lowest possible tariffs as means for their domestic industries to stay competitive. Alternatively, Brazil pursues the highest possible tariffs to preserve Brazilian producers’ dominance in those exported industries. These kinds of exceptions stem from the bilateral agreements previously signed in 1995, allowing members to pursue their national interests. To address these inconsistencies, the ratifying body of Mercosur, called the Council of the Common Market (CMC), reformed its dispute resolution system through the 2002 Olivos Protocol. This replaced the weak, ad hoc settlement system with a standing diplomatic body called the Permanent Review Tribunal (TPR). This stronger organisation improved the predictability of intra-block trade. As Arnold and Rittberger (2013) note, this marked a “significant advance in the legalization of Mercosur’s trade framework” (Arnold & Rittberger, 2013).

Beyond internal liberalisation, Mercosur has also sought stability through external negotiations, notably with the EU. Talks began in 1999 with the aim to create the world’s largest interregional trade agreement (Elliott et al., 2024). One phase of the negotiations led to talks of eliminating 95% of tariffs on EU imports to Mercosur countries, cutting duty revenue by $4.5 billion (Bethmann & Garcia, 2022). However, these negotiations would be stalled time and time again. A political deal on the core trade text was first reached in 2019, but ratification stalled over environmental concerns (Steinberg, 2024). The latest texts were politically concluded in December of 2024. The EU then forwarded the agreement to legal review and translation before signature and ratification (European Commission, 2024). Parts of the agreement have been ratified as of 3 September, 2025 (European Commission, 2025). If the remaining parts are ratified, it would be the largest inter-regional agreement by coverage.

ENVIRONMENTAL SUSTAINABILITY

Since 2000, Mercosur has built a legal and policy layer for the environment inside its trade project. The anchor is the Framework Agreement on the Environment (CMC Decision No. 02/01, 2001). It says trade and environmental policy must complement each other to secure sustainable development and tasks Mercosur bodies to act together. Mercosur then created the Meeting of Environment Ministers (RMMA) to propose coordinated policies to the Council (CMC Decision No. 19/03, 2003). Its internal rules were later approved in 2010 (CMC Decision No. 18/10, 2010). RMMA works alongside the working subgroup on the environment, known as SGT-6, as the technical body. Scholarly work also describes RMMA and SGT-6 collaborating to set priorities for the Mercosur Environmental Agenda and to feed recommendations up the chain.

SOCIAL & DEVELOPMENTAL IMPACT

Mercosur has tried to level the playing field among members by funding infrastructure and social projects through FOCEM. Since 2006, FOCEM has backed 51 projects in areas such as roads, rail, water access, housing and health research, particularly in Paraguay and Uruguay (UP Mercosur, 2021). At the December 2024 meeting, Mercosur approved over $49 million in new FOCEM investments for Brazil, Paraguay and Uruguay (Mercosur, 2024). The fund supports more vulnerable regions, allocating resources based on criteria such as human development index and integration potential. This helps the continent’s less-developed economies engage with the more-developed economies more fairly, especially benefitting rural and socially disadvantaged communities. While industrial growth often focuses on Brazil and Argentina, FOCEM is one mechanism through which Mercosur attempts to make trade more socially inclusive.

World Trade Organization

The World Trade Organization (WTO) was started in 1995 and took over the former system called the General Agreement on Tariffs and Trade (GATT). The WTO is the largest international organisation regulating trading between countries. There are 164 countries as members, and it covers over 98% of all the trade worldwide. The WTO helps countries make trade deals, makes sure all the countries follow the rules and settles arguments when countries disagree about trade. Since 2000, people have been discussing how trade affects the environment and the growth of poorer countries. The WTO has had some problems, however. The stalled Doha Development Agenda and the stalled Appellate Body, obstructed by member country disagreements, are two infamous examples of the WTO’s failings (Hoekman, 2020). Even with these issues, the WTO is still critical for ensuring fair trade globally and contributing towards environmental protections.

PURPOSE & GOALS

The WTO’s focus is to ensure trade between countries is fair and works smoothly. It has three main avenues for keeping global trade in check. First, it facilitates discussions and negotiations to lower tariffs or create new terms for trading. One example is the Doha Round, which began in 2001 to enable poorer countries to sell their goods more competitively in the global market. Second, the WTO monitors countries to ensure they adhere to the trade rules they agreed to. There are numerous agreements depending on the type of trade, but the most important are the Global Agreement on Tariffs and Trade (GATT) for goods like clothing and food, the Global Agreement on Trade in Services (GATS) and Trade-Related Aspects of Intellectual Property Rights (TRIPS) which coveres intellectual property such as inventions and music. Third, the WTO has a system called the Dispute Settlement Body (DSB) that acts like a court for trade disputes. Countries can bring their issues to the DSB and receive binding legal decisions.

TRADE INTEGRATION & STABILITY

The WTO operates on two key principles to ensure global trade is fair: Most Favored Nation (MFN) and National Treatment. MFN means that if a country gives one WTO member a good trade deal, like lower taxes on imports, it has to provide the same deal to all other members. National Treatment says that once goods from another country are in your country, you have to treat them the same as goods made at home. These rules are supposed to keep trade smooth and fair for all (WTO, 2022). These rules turn out differently in reality. One major project initiated by the WTO in 2001, known as the Doha Development Agenda, aimed to assist poorer countries by reducing farm subsidies, financial support provided by governments to farmers, and facilitating the export of their products. However, negotiations have stalled due to disagreements between richer countries and growing economies (Hoekman, 2020). Another crucial aspect of the WTO is its dispute settlement system, often referred to as its “crown jewel” due to its effectiveness in ensuring countries adhere to trade rules. However, the system has been stalled due to the US ending the appointment of new judges to the Appellate Body, resulting in numerous disputes failing to reach a resolution (Bacchus, 2021). In the Americas, the WTO has been transformational: countries like Brazil and Mexico have utilised the dispute system to combat US farm subsidies that unfairly hinder their ability to export goods. This is only one example of many that shows the WTO’s role in maintaining stable trade relations in the region (WTO Case Law Index, 2024).

ENVIRONMENTAL SUSTAINABILITY

Since 2000, the WTO has focused more on protecting the environment. There is a group within the WTO – the Committee on Trade and Environment (CTE) – where countries discuss how trade rules can work while also taking care of the planet (WTO, 2023). A significant advancement was the Fisheries Subsidies Agreement established in 2022. It was the first WTO deal dedicated to environmental protection. This agreement says countries cannot fund illegal fishing that harms the oceans, such as unreported fishing or fishing using methods that break international laws. By 2025, over 70 countries, including the US, Canada and Argentina, have signed on to this deal, and it is nearly fully active (WTO, 2025). The WTO is also working on other projects to help the environment. The Trade and Environmental Sustainability Structured Discussions (TESSD) and the Dialogue on Plastics Pollution (DPP) work to fix trade practices that harm the environment, such as by prohibiting excessive plastic waste (WTO, 2023). In the Americas, these efforts are making a noticeable difference; for example, Argentina signed the Fisheries Subsidies Agreement in 2025, demonstrating that its trade group, Mercosur, is becoming more invested in global environmental goals. The US and Canada are also using WTO rules to push for things like taxes on products that cause a lot of pollution, contributing to tackling climate change (Elliott et al., 2024).

SOCIOECONOMIC IMPACT

Additionally, the WTO has influenced social development by helping poorer countries access fairer and bigger opportunities. An example of this is the Doha Declaration on Public Health, which allows nations like Brazil to produce cheaper medicines for diseases like HIV and AIDS, improving healthcare for many. Through programmes like Aid for Trade, the WTO also supports small farmers and women-led businesses in regions such as Latin America, providing them with improved opportunities to access global markets. These efforts demonstrate how trade rules can impact everyday issues such as health, jobs and equality, despite challenges.

United Nations’ Economic Commission for Latin America and the Caribbean

The United Nations’ ECLAC was founded in 1948 as one of the five United Nations Regional Commissions. Its primary goal is to foster sustainable and equitable economic and social development in South America and the Caribbean.

ECLAC does not directly contribute to policy decisions as they are not a trade-governing body with authority over South American or Caribbean nations. Instead, as a United Nations regional commission, its role is characterised largely by research, analysis and advising countries on economic development, including trade policy. It promotes regional integration and cooperation through data, analysis and recommendations, which have heavily influenced economic thought in the region.

Historically, ECLAC has served as a driver of economic thought, having been dubbed an “idea factory” throughout the 20th century. Shaping development strategy through its structuralist and “centre-periphery” theories, ECLAC encouraged industrialisation by advocating for Import Substitution Industrialisation (ISI), which promoted domestic production to reduce dependency upon the importation of foreign goods. ECLAC also pushed for a regional market to enable economies of scale, reduce external dependency and facilitate intra-regional trade, leading to initiatives such as the Latin American Free Trade Agreement (LAFTA).

FUNCTIONS OF THE SECRETARIAT

The secretariat of the ECLAC fulfils a wide range of responsibilities that give the institution both breadth and influence. It provides substantive secretariat services and documentation for the Commission and its subsidiary bodies; undertakes studies, research and other support activities within the Commission’s mandate; and promotes economic and social development through regional and subregional cooperation and integration. Additionally, it gathers, organises, interprets and disseminates information and data relating to the region’s development; provides advisory services to governments at their request; and plans, organises and executes programmes of technical cooperation. The secretariat also formulates and promotes development cooperation activities and projects of regional and subregional scope; acts as an executing agency for such projects; and organises conferences, intergovernmental meetings and expert workshops. Beyond these tasks, it assists in bringing a regional perspective to global problems and forums while also introducing global concerns into regional and subregional discussions. Finally, it coordinates ECLAC activities with those of other UN departments, specialised agencies and intergovernmental organisations to prevent duplication and ensure complementarity in the exchange of information.

ECLAC’S GUIDANCE ON TRADE & INTEGRATION IN SOUTH AMERICA

Recent reports reveal that the region’s external sector has experienced shifting dynamics. In 2024, the current account deficit is projected to widen, largely driven by increasing interest payments abroad, which comprise about 50% of total income account debits (ECLAC, 2024). At the same time, however, the goods trade balance has shown signs of improvement: it is moving toward a surplus, while the services account deficit is narrowing, largely due to a recovery in tourism and lower transport costs (ECLAC, 2024).

Perhaps one of the most significant developments is the strong inflow of foreign direct investment (FDI). FDI, which remains the region’s main source of external financing, surged by 56% between late 2023 and early 2024, reaching around 3.2% of GDP (ECLAC, 2024). These inflows helped bolster international reserves – now roughly 0.7% of regional GDP – even as dependence on borrowing from international markets grew (ECLAC, 2024).

While not explicitly tied to intra-regional trade policy, these trends point toward ECLAC’s broader perspective on integration. By encouraging deeper regional cooperation, ECLAC promotes the idea that South American economies can reduce their reliance on conditional external financing, stabilise trade balances and strengthen intra-regional supply chains. The institution has long advised that building stronger regional economic linkages can help buffer countries against external shocks, currency volatility and the burdens tied to servicing foreign debt.

AUTHORITY & LIMITATIONS

ECLAC’s authority stems primarily from its position within the United Nations and its capacity to produce research, analysis and policy recommendations. It does not directly regulate trade nor does it possess the mandate to impose legislation upon South American or Caribbean nations. Rather, its influence has been exerted historically through the dissemination of ideas, frameworks and methodologies that regional governments often adopt when shaping their own trade policies.

This authority, though indirect, has been meaningful. ECLAC’s methodologies have helped shape the economic models pursued by South American countries in different eras, influencing debates over industrialisation, integration and fiscal policy. At the same time, ultimate decision-making power still rests with governments themselves or with broader international bodies such as the World Trade Organization (WTO), which act as decisive regulators in global trade.

FLUCTUATIONS IN INFLUENCE

ECLAC’s influence has not been constant; rather, it has fluctuated over time depending on political, economic and ideological shifts within the region. For instance, during the 1990s, many South American nations turned toward neoliberal reforms inspired by the “Washington Consensus”. These reforms, emphasising market liberalisation, deregulation and privatisation, represented a departure from ECLAC’s earlier emphasis on state-led development and regional integration. During this period, the organisation’s influence diminished as governments sought guidance from international financial institutions like the IMF and World Bank.

In more recent years, however, ECLAC has regained relevance as countries have confronted new challenges such as external debt burdens, climate change, inequality and the need for resilient regional supply chains. Its analyses of trade balances, FDI inflows and structural vulnerabilities continue to provide policymakers with tools to assess long-term stability rather than relying solely on short-term growth strategies. This resurgence shows the enduring value of ECLAC’s role as a research-driven institution, even without formal governing authority.

BROADER IMPACT ON ECONOMIC & SOCIAL PROSPERITY

The overarching impact of ECLAC lies in how its ideas and recommendations have enabled South American nations to pursue more sustainable and inclusive forms of prosperity. By highlighting the dangers of overreliance on external markets and debt, and by consistently advocating for stronger regional linkages, ECLAC has given governments a framework to navigate crises while fostering social development. Its emphasis on promoting intra-regional trade, diversifying production and strengthening social protections has contributed to efforts in reducing inequality, building middle classes and stabilising economic cycles.

Moreover, ECLAC has consistently underscored the importance of equitable social advancement. Its analyses advocate for policies that expand access to education, healthcare and social security, ensuring that economic growth translates into meaningful improvements in living standards for all segments of society (ECLAC, 2024). By addressing structural inequalities, including gender disparities and regional imbalances, the commission promotes a vision of development that is inclusive and just.

Sustainability is equally central to ECLAC’s guidance. Beyond economic metrics, the commission encourages integrating environmental considerations into development strategies, promoting green technologies, sustainable agriculture and low-carbon energy solutions. By aligning economic growth with environmental protection, ECLAC supports policies that preserve natural resources, reduce vulnerability to climate change and ensure long-term resilience for both urban and rural communities (ECLAC, 2024).

In combining social equity with environmental sustainability, ECLAC provides a holistic framework for development. Its recommendations encourage policymakers to adopt strategies that simultaneously foster economic stability, protect the environment and promote social inclusion. Although the outcomes have varied by country and by decade, ECLAC’s contributions remain embedded in the policymaking fabric of Latin America. Its work underscores the importance of thinking beyond short-term fixes and instead crafting strategies that recognise both the region’s vulnerabilities and its potential for collective resilience. By balancing economic development with social progress, ECLAC continues to shape a vision of Latin America and the Caribbean that is better equipped to prosper in a complex global economy.

Conclusion

Since 2000, efforts to establish stable and mutually beneficial trade in South America and the Caribbean have involved Mercosur, the WTO and ECLAC, each with distinct but overlapping roles. Mercosur has promoted regional integration and social investment through mechanisms like the CET, dispute resolution reforms and FOCEM-funded infrastructure, yet its effectiveness has been constrained by tariff exceptions, internal asymmetries and stalled external agreements with the EU. The WTO provides global rules and a dispute settlement framework that underpins trade stability, supports poorer countries through initiatives like the Doha Declaration and increasingly integrates environmental considerations, but institutional paralysis and stalled negotiations have limited its impact. ECLAC, though lacking regulatory authority, has shaped regional economic thinking by advocating for sustainable development, inclusive growth and stronger intra-regional linkages, guiding policymakers toward long-term resilience rather than short-term gains. Collectively, these institutions demonstrate both the potential and limits of coordinated trade policy: Mercosur enforces regional agreements, the WTO anchors global norms and ECLAC frames developmental priorities. Their overlapping strengths highlight the necessity of combining rule-based stability, social inclusion and environmental sustainability, while their weaknesses underscore how political, economic and structural disparities can undermine even well-intentioned integration efforts.

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