EASING TRADE COSTS WITHIN MERCOSUL

Abstract

The paper describes the joint policy of Brazil and Argentina regarding currency use in bilateral trade. The Local Currency Payment System (SML) framework is investigated as an instrument of reducing trade costs by providing new financial integration mechanisms and its implications according to usual trade issues debate. We cut across different issues related to the SML rationale. Additionally, we describe and analyze the available data for the system, showing that SML use is more common to Brazilian exports than to Argentinean ones.