On August 5, the Southern Common Market, Mercosur, suspended Venezuela's membership for violating democratic principles and failing to comply with trade obligations adopted since its incorporation into the bloc in 2012. Mercosur members stated that Venezuela will remain suspended until democratic order and stability is achieved in the country.
Mercosur is the largest free trade area and customs union in South America. Aside from Venezuela, membership includes Argentina, Brazil, Paraguay, and Uruguay, with Bolivia in the process of becoming a full member. Intra-Mercosur trade is tariff-free except for certain sectors. Mercosur also has comprehensive trade agreements with neighboring South American countries such as Chile and Colombia, as well as Free Trade Agreements and other preferential trade agreements with Mexico, Israel, and the Southern African Customs Union, among others. Mercosur also has engaged in longstanding FTA negotiations with the EU.
Mercosur has suffered numerous political and institutional challenges which have significantly damaged the trade bloc's sustainability. In 2012, Mercosur suspended Paraguay's membership for having impeached then president, Fernando Lugo. Shortly thereafter, Argentina, Uruguay and Brazil made the decision to bypass Paraguay and allow Venezuela to enter the bloc, despite criticism over Paraguay's suspension. Since Venezuela joined, corruption and lack of proper democratic institutions steered the country's growth into economic chaos. And while Paraguay re-entered Mercosur shortly after, internal divisions within the bloc have since then remained. Furthermore, longtime trade disputes between Argentina and Brazil have led to delayed imports and retaliatory barriers.
Officials have stated that Venezuela's suspension will not affect Mercosur's trade and migration policies. Members also have indicated that the suspension would not undermine Mercosur's trade talks with other economies, including Mercosur's agenda toward finalizing trade negotiations with the EU. Regardless, whether Mercosur will be affected by the ousting of Venezuela is uncertain.