The South American free trade zone Mercosur -- comprised of Brazil, Argentina, Paraguay and Uruguay, with Venezuela set to join -- is often touted as a beacon of regional economic strength and a bulwark against the dominance of the U.S.-backed North American Free Trade Agreement. But a recent protectionist streak in Brazil, Mercosur's most powerful member, has provoked debate over whether the bloc is as egalitarian and beneficial to South America's emerging economies as it has long been cracked up to be.
The most recent incident is Brazil's announcement earlier this month that it intends to impose a 30 percent tax increase on cars imported into the country unless a minimum of 65 percent of their components were manufactured within Mercosur.
While it might make sense to hike taxes on imports from the United States, Asia or Europe, the announcement raised significant concerns in Uruguay, whose auto industry depends on sales to Brazil, but also on parts imported from outside Mercosur.