Mercosur nations are looking for a localised automotive supply base

In the short-term, with several of the Mercosur economies facing inflation and economic growth issues at home, it is most likely that the focus of governments will be on domestic concerns rather than Mercosur trade issues. This is already reflected in the automotive industry, where carmakers and suppliers are taking a wait-and-see approach when it comes to investing in Mercosur beyond Brazil

Mercosur or Mercosul is a free trade agreement known informally as the ‘Common Market of the South’. Established in 1991, Mercosur today, with a combined population of 276.8 million, is the fourth largest trading bloc in the world; behind the EU (European Union), NAFTA (North American Free Trade Agreement) and ASEAN (Association of South East Asian Nations). Initially established as a way to create a cohesive trade and economic unit, Mercosur has recently become known as being divisive and inward-looking. The most recent developments of suspending Paraguay as a member country and making Venezuela a full member have been seen as contentious by major trading partners. Many feel that the Mercosur member countries are no longer working as a unit, but are becoming increasingly inward-looking and protectionist. With other countries in the region becoming more open to international trade, without any changes, the future of Mercosur as a competitive trading bloc is becoming increasingly uncertain.