MERCOSUR:

A short while after the creation of the European Coal and Steel Community (1954) and the European Economic Community (1957), Latin America was already beginning  to take its first steps towards regional integration. The treaty that created the Latin American Free Trade Association (ALALC), signed in 1960,  provided for  the creation  of a free-trade zone,  by means of periodical and selective negotiations between its member states. The ALALC trade opening program developed reasonably well in its first years but  lost impetus in 1965 and almost came to a complete standstill in the 1970s.

The Latin American Integration Association, created  in 1980  to  replace ALALC, used  other means  to attempt member state integration. In place of the free- trade zone established by ALALC, an economic preference  zone was established creating conditions favorable to the growth of bilateral initiatives, as a prelude to  the institution of plurilateral relationships in Latin America.

Under  the ALADI system Brazil  and Argentina  signed  in  1986 twelve commercial protocols, which brought the two countries closer. After the adhesion of Paraguay and Uruguay a new  treaty was signed by all four countries on March  26, 1991 to be  known as the Southern Common Market (MERCOSUR).

The  trade opening program  targeted  the  end  of duty  and other nontariff restrictions on trading between Argentina and Brazil by December 3  1, 1994, and by December 3  1,1995  for trade with Uruguay and Paraguay, Trade between the  four member countries has grown sharply. In  the period 1990-1994,  the value of intraregional trade nearly  tripled,  from US$4.1 billion to US$10.7 billion. This growth partly reflects the progress made under  the Trade Liberalisation Program, as well as the gradual elimination of non-tariff restraints  to reciprocal trade and an increase  in trade and production initiatives among entrepreneurs in the region.

In 1994,  intraregional exports  increased for the fifth consecutive year,  to  nearly one-fifth of the combined value of exports of the four countries, well up from a level of under 9 per cent in 1990. This and the recent performance confirms the trend in which MERCOSUR has consolidated its position as the principal, trading partner  of Paraguay and Uruguay  and  the  principal market  for
Argentine exports.

The impact of  the  creation of MERCOSUR has also been reflected in  the increasing -flow of  intraregional investments. Macroeconomic  stability  in Argentina, together with the strong  economic growth seen  in  the last four years in this country, has created incentives for both investors  in the sub-region and multinational corporations. In respoilse  to the opportunities afforded by a larger economic market, multinational corporations have formed partnerships with entrepreneurs  in the sub-region or have set up subsidiaries  in a broad range of production and commercial sectors.