In Latin American region, three main regional integration processes are in existence, namely, MERCOSUR (Mercado del Sur), Central Common Market (CAMC) and the Andean Community.
MERCOSUR [Mercado del Sur], also known as the ” Common Market of the Southern Cone” and Treaty or Pact of Asuncion, was created on March 26, 1991 by four Latin American countries, viz., Argentina, Brazil, Paraguay and Uruguay. Its original goal was an ambitious one comprising the following:
1. To create a common market/a customs union by end of December 1994 by reducing inter-member tariffs to zero and abolition of all non-tariff barriers.
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2. Coordination of their macroeconomic policies in harmony with the process of trade liberalisation.
3. A common external tariff for non-member countries.
4. Automatic extension of any advantage, favour, exemption, etc., accorded to a non-member country, to the member countries.
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5. Avoiding any agreement or indulging in any activity which may harm the interests of the other members.
6. A degree of economic cooperation had already existed between Brazil and Argentina since 1986, and Mercosur planned to build upon its elements.
However, the integration process fell behind schedule and in 1994, the member countries decided to start the process of creating the common market, with 1995-2006 being the transition period.
A characteristic feature of Mercosur is that it does not accept the need for having super-national regulatory institutions. The entire decision making is on a horizontal basis involving all the member countries.
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The Treaty was open to other countries of Latin America, but only after it had been in force for five years. Mercosur was augmented in 1996 by association agreements signed with Chile and Bolivia for establishing free trade areas with these countries.
Similarly, a member country could also leave the association. On the basis of an agreement in December 2003, Mercosur countries and Andean Community started the process of FTA on July 1, 2004.