Venezuela business plan as a Mercosur member
Venezuela entry into free trade zone, referred as Southern Common Market has marked the 5th largest oil exporting country into Mercosur. Venezuela will act as an ordinary member having only a voice and not a vote. According to Venezuelan president, the objective for this entry is economical and political union of an important region of South America. Mercosur has been observed to be failing in integrating fully the participating nation economies. Frequent trade wrangles have been witnessed among the members of Mercosur. Venezuela is known to be a great oil and petrol products producer being the largest sector of export. For this reason, there are high anticipations for gains in diversity on trade in Mercosur. Such an entry has resulted to a conducive environment for business operations. Moreover, this has generated an interest in our taking advantage of the opportunity to this entry and its benefit to our entrepreneurship development in cereals business. In our planning, we will analyze the benefits and drawbacks of operating a cereals business in this environment and the benefits plus drawbacks to the nation as a whole (Hijden, Selsky & Ramirez,2008).
Initiation of Venezuela into becoming a Mercosur member implies that the country‘s free trade can be promoted. Similarly, it means fluid movement of products will be made possible. Mercosur entails trade agreement which is regional existing within Brazil, Paraguay, Argentina or Uruguay, founded in year 1991. Being a member of this trade agreement Venezuela will benefit from freedom to transit production goods, factors or services among the state members. Experiences of customer rights elimination or the lift of restrictions on non-tariff on goods transited will be attractive. Secondly, Venezuela will gain from the common external tariffs plus a common trade policy with other state members of Mercosur. Coordination of international commercial or economic meetings and positions will be promoted.
Thirdly, Venezuela will experience a coordinated sectorial and macro economical policies of state members in relation to industry, monetary system, taxes, foreign trade, transport, and communications, among others. Such agreements will enable free competition among the member states of Mercosur. In addition, member states will be committed in making significant adjustments of their laws within pertinent areas. Such an action would ensure integration process is strengthened hence this serving an advantage to Venezuela since the treaty will be based on reciprocated rights and obligations doctrine of the member states. Similarly, freedom in movement of capital and human resource across the members facilitates the possibilities of international frontiers. Such frontiers are dependant on equal duties and rights being assigned to the signatory countries. In addition, Venezuela will benefit from the concept of the most favored nation. In such a concept, a member country will be enabled to automatically extend any favor, advantage, immunity, entitlement or privilege to other signatories of the treaty given to a product with origins from an intended country. This can only happen after the actual common market formation (Cottier, Kaufmann & Abbott, 2006).
Despite Mercosur offering Venezuela an opportunity to offer free trade within the member states, the process is also disadvantageous to Venezuela. The country's entry into Mercosur has enabled an increased business environment for other countries. Trade operations on this basis are done under social solidarity and not capitalist profit, hence promoting the occurrence of social movements within the region (Milkovic, 2006). Presently, Mercosur is still experiencing the 1990's problems especially between Argentina NAD Brazil competitions, since they exist as the two largest economic partners. Venezuela will face a challenge since Uruguay has threatened to sign a Free Trade Agreement with the US. This has been facilitated by the fact that smaller Mercosur partners have not been enjoying the Mercosur benefits. Similarly, Mercosur has been found to be offering integrations models which magnify regional differences instead of healing them hence being a disadvantage to Venezuela. Mercosur does not seem to offer an alternative in confronting the US domination. Additionally, some nations such as Argentina have enabled Venezuela entry into free trade zone for their own benefit.
Corporations within Argentina are projecting more exports to Venezuela and investing heavily in the country. Industrial or primary products are being used as exchanges for rich energy resources within Venezuela. Another example is Southern Bank which has been entrusted by Mercosur to assist in refinancing member states or countries external benefit. In a certain year, IMF debt was paid by Argentina while at the same time Venezuela purchased the Argentina bonds, thereby balancing the Argentina's reserves (Porrata & Lubrano, 1997). Legitimacy in such debt payments has been questioned by the triangular scheme such that Venezuela lends, payment is made by Argentina while international bankers conduct the debt collection which has been settled severally previously. Mercosur history has revealed a continuous trend of each ruling class capitalist of the nation aiming in its own profitability. With such an environment, majority of the smaller partners continue suffering in misery.
Efficiently Mercosur will offer an outstanding credibility, professionalism, and ethics to our business. Due to association with the Mercosur, expectations are for larger profitability, risks will be spread and there will be an offer for a competitive environmental condition. Cereals business will sustain renowned business methods due to benefits generated from membership to Mercosur. With Mercosur existence, our investment advertisement can be done within the international trading scene. Such an action will ensure support to global foreign entrepreneurship existence. Mercosur will act as our reliable business partner in value addition and business expansion. Problem solutions will be found in an incorporated manner and globally resulting to reliable gains. Operating a cereals business within Venezuela will assist us enjoy free trade zones where the cereal products produced within member states will be treated differently. Such products will have a common external tariff, and they will have a tax rate which is favorable. A safe guard system will be accorded to the products within Venezuela. Such protection will be against threatened damages or damages to the importing nation. However, our cereal business operations can be tampered by inadequate protection of property rights due to aggressive land reforming drives. Also, unpredicted interventions to operations may restrict the free business operations. State led development forms acceleration will lead hinder competition with other cereal dealers (Milkovic, 2006).
In conclusion, it's significant to consider that for our business to thrive, we will need to devise ways of confronting the drawbacks of any business operations. We can steamroll the economy of Venezuela via cheap importation of all our products (Hichling & Friend, 2005). This can be facilitated by the fact that Venezuela is heavily industrialized and has won greatly the international reputations as a superpower of agriculture. To undertake such a step, it's important for our company to become an associate Mercosur member after understanding the benefits and the disadvantages that comes with such an association both to our country and our cereal business. Our organization need to accept the macro economic policies and the gradualism values, balance and flexibility to promote regional integrity
Cottier, T. , Kaufmann, C. & Abbott, F. (2006). International trade and human rights: foundations and conceptual issues. Ann Arbor, Michigan: University of Michigan Publishers.
Hichling, A. & Friend, J. (2005). Planning under pressure: the strategic choice approach. Oxford, U.K: Butter-worth Heinemann.
Hijden, K. ,Selsky, J. & Ramirez, R. (2008). Business planning for turbulent times: new methods for applying scenarios. London, U.K: Earthscan publishers.
Milkovic, D. (2006). New topics in international agricultural trade and development. New Hampshire, U.S.A: Nova Publishers
Porrata, R. & Lubrano, M. (1997). Competition policy and MERCOSUR, Volume 23; : volume 385. Washington, DC: World Bank publishers.