The major objective of the Latin American Union is to promote, project, and protect the economic, cultural heritage, social development, and political stability of the member states. The members will abide by the agendas of the union and, thus, work towards achieving set goals for the well-being of the South American population (Ryan & Luciana, 2020). The union will adopt the Chilean peso as the main currency for trade among all of its members. However, it should be noted that the members are not supposed to take part or involve in other unions that have the same agenda as the Latin American Union. In this case, therefore, all members will equally benefit from the activities of the union without bias.
Member states for the union will strictly involve countries from South America that have mutual ideologies pertaining to social and economic development. The union involves countries such as Chile, Guyana, Uruguay, Argentina, Suriname, Brazil, Colombia, Paraguay, and Peru. The selected countries produce related products, lie in the same geographical region, and have good relations. All members shall present representatives at the union assembly to ensure communication of concerns from their home governments. However, the majority of the partakers have the higher authority to decide whether to expel a certain member who involves in violation of the terms of the agreement (Ryan & Luciana, 2020). The union adopts Spanish as the main language for the union as it is the most popular language in the region. However, all members can use their country’s official language with the aid of translators. The membership to the union will be reviewed per decade, though an unsatisfied member can opt to leave the union at any time.
The union’s congress will consist of agents from all the member countries and meet in the normal assembly once every after two years. More so, the major functions of the congress will include the adoption of the budget, defining the union’s general direction, and welcoming the new member countries. It will also carry out electing and appointing the member representatives to the offices of the union chairman, vice chairman, and heads of the union sub-organizations. The union will also include more auxiliary organizations, such as the adhesions commission, responsible for encouraging member states to adhere to the union agendas.
Likewise, the candidacies commission will be responsible for scrutinizing the candidacy’s validity with consideration of its historical and geographical divisions. According to David (2019), the commissions will ensure observance of the administrative guidelines by the union members. The secondary organization will act as the pillar supporting the union to ensure that all member states act accordingly to the set terms and conditions.
Terms of Trade
The union will develop common markets for all the goods and services produced by the member states. In this case, member states willing to purchase products from fellow members can do that at a subsidized rate. The union will emphasize the removal of regional embargos of trade and taxes to emphasize home trade among members (Tom, 2021). More so, the union will select international markets and standard prices for the products produced by the members to ensure the stabilization of regional prices and, thus, reduce competition. This is significant in ensuring that all the members access the international market and are able to sell their products at set rates (Ryan, 2020).
The union will mainly aim at uplifting regional trade conditions and dynamics by ensuring countries such as Chile, Argentina, and Uruguay producing related products such as copper ore do not engage in wasteful competition. The unification of producers of a common product can help standardize the market dynamics in the context of world prices and terms of trade. In this, small producers of such products like Paraguay will have better grounds for competing in the market with stabilized processes and prices. The trade balance is created as the excellent companies in a given country do not dictate prices with the intention of outcompeting the growing firms.
The use of the same peso will eliminate the exchange costs and rates of fluctuations within the Latin region. The business and consumers, both in the better and weak economies, will be protected from the costly fluctuations in the international currency markets. This is because, in certain states, their currencies are undermined, reject investment, and result in economic instability. David (2019) asserts that a single currency increases transparency in the prices, and thus, firms can access cheap raw materials, and also consumers can buy affordable goods. It is clear that currently, there is a need to exchange local currencies, which leads to extra risk, and costs, as well as the absence of pellucidity in relations between states. The adoption of a uniform currency will make carrying out business and participating in the union less risky, cheaper, and easier (Ryan, 2020). The same currency makes it easier to compare prices which promotes investment and trade of all types among member states.
Politics and Corruption
Given that Latin America is a region characterized by political instabilities and high levels of corruption, the union will enforce the creation of international checks. The incidences of poor political practices will be checked by all the member states, and thus, countries whose leaders do not strongly engage in reforming the political environment are condemned. More so, the union will organize a joint military force to support the member states. The union army will encounter political instabilities in the form of wars and drug cartels. The unified force will help strengthen the security forces of the affected states (Tom, 2021).
Moreover, the union will design strict regulations regarding corruption, and hence, any representative or their parties that take part in such activities will be legally apprehended. It should be noted that members of the union have different standards; for instance, Chile has a high standard and better economy compared to Guyana. In this, support from the union will be limited depending on the level of contribution and significance of the member states (Lyon, 2017). This will base on the mandatory contribution set depending on the capacity of each member. For certain activities, such as copper ore mining in Chile, its companies are expected to have more influence compared to other countries.
In summary, the Latin American Union will be fundamental in improving the economic, social, and political environment of the Latin region. The improvement of trade will boost the member countries due to the various checks and balances provided. The fact that most of the member states are providing related products gives room for the success of the union due to the need to unify companies into a single entity that dictates better terms of trade to eliminate unnecessary competition both locally and internationally. Also, the use of the same currents is essential for the reduction of fluctuation rates, given the high levels of inflation in Latin America. In this, producers and consumers can create stable product prices. Likewise, involvement in political affairs will help reduce corruption incidence and create stability in the region which boosts economic development.
David, L. (2019). Latin America Hangs On to Its Economic Gloom. Wall Street Journal. Web.
Lyon, M. (2017). Latin, Asian Nations Pursue Free Trade Without U.S. Wall Street Journal. Web.
Ryan, D., & Luciana, M. (2020). Covid-19’s Economic Fallout Batters Latin America. Wall street Journal. Web.
Tom, F. (2021). Germany’s Economy, Once Europe’s Engine, Is Holding It Back. Wall Street Journal. Web.