The date was January 31, 1998.
Around 2,000 world leaders were congregated in the Swiss ski resort of Davos for the World Economic Forum. The list included German Chancellor Helmut Kohl, United Nations Secretary-General Kofi Annan, and the United States’ First Lady Hillary Clinton.
It was when then-Argentinian president Carlos Menem introduced an ambitious idea: a common currency for Mercosur.
“We’re following the European Union’s steps”, said Menem. “But, what took [Europe] almost 50 years, it would take us a tenth of that time”. Going by the expressions of the Brazilian officials and other South American representatives in the audience, the statement came as a surprise. It would take another four years for the euro to start circulating. Twenty years later, Mercosur could not be any further from having a common currency.
Menem’s speech, nonetheless, symbolizes the hope and illusion that characterized the bloc’s first decade of existence.
Mercosur, the Common Market of the South, was officially founded as a free trade zone in March 1991 when Menem and neighboring presidents Fernando Collor (Brazil), Andrés Rodríguez (Paraguay), and Luis Alberto Lacalle (Uruguay) signed the Treaty of Asunción.
In December 1994, the bloc went from “being in a relationship to getting married,” says Nicolás Albertoni, an Uruguayan researcher at the University of Southern California, describing the signing of the Protocol of Ouro Preto. Mercosur had officially become a customs union.
But despite various efforts during the 27 years that followed, Mercosur is far from being a perfect marriage. Some argue that divorce looks like the only viable solution. The bloc never truly became a common market, as its name suggests. It is not even a fully-functioning customs union: the incapacity to reach free trade deals with major economies evidences that. So, why hasn’t Mercosur taken off?