SOUTHERN CONE MARKET - MERCOSUR-

Mercosur has its genesis in the trade agreements signed between Argentina and Brasil in 1986 that led to the formation of MS in 1991. The "Treaty of Asuncion" that formally created MS was signed by Argentina, Brasil, Paraguay & Uruguay on March 26, 1991.

Argentina, Brazil, Paraguay and Uruguy signed also on january 1, 1994 the "Colonia Protocol" to the Asuncion Treaty: Protocol for Reciprocal Promotion and protection of Mercosur Investements.

Mercosur (MS) or the Southern Cone Market is the fastest growing area in Latin America. The creation of MS guarantees that as from Jan 1 1995, those who invest in Argentina, Brazil, Paraguay and Uruguay can reach consumers in all four countries free of tariff and non tariff barriers.

MS met its prime objective of constituting a customs union (CU) among its four member countries on January 1, 1995. Argentina, Brazil, Paraguay & Uruguay have liberalized the bulk of their reciprocal trade, and introduced a common external tariff (CET) that runs from 0 to 23% for most goods.
However, the CU is still imperfect because the CET does not apply to certain (albeit a relatively short) list of exemptions. Nevertheless, the very fact MS achieved within the established time a tariff reduction scale for the totality of its tariff schedule is in itself a enormous achievement.

Size of market

• Argentina, Brazil, Paraguay and Uruguay constitute an integrated market of 210 million people (48% of the Latin American population).
• It covers practically 2/3 of the region's land area.
• Its GDP is 1150 billion - 54% of the region's total.
• It represents slightly more than 59 % of Latin America industrial production and intra-regional trade.
• In other words, Mercosur is an integrated market which accounts -for more than half the value of Latin America's main economic indicators, and has an unmistakable potential and drawing power.

Tariff regimen

As from 1/1/1995:
• Zero Duty in Intra-Mercosur Trade.
• Common External Tariff: For 90% Tariff Positions, CET between 0 and 23%.
• MS Customs Union is still imperfect because the CET does not apply to certain short lists of exceptions. In the case of Argentina, these exceptions are mainly in the chemical sector ; steel sector; paper & pulp sector; and in the footwear sector. In addition there are a number of exceptions in toys, and home appliances.

Mercosur expands

The European Union and the Southern Common Market (Mercosur) have signed a Inter-Regional Framework Cooperation Agreement (Madrid, December 1995.) The cooperative treaty calls for the establishment of an Inter-Regional Association, regular political dialogue between leaders of both blocs, and the eventual duty-free movement of products among EU and Mercosur.
In June 1996 Chile and Bolivia signed association accords with Mercosur. In the case of Chile, the agreement pledged to reduce 90 per cent of import tariffs to zero within eight years and eliminate all tariffs within 18 years.
On 16 June 1998 Mercosur signed a Trade and Investment Cooperation Arrangement with Canada. Mercosur and Canada will enhance economic relations, in particular concerning trade in good and services, as well as investment. They will facilitate the increased involvement of the private sector in trade.

Source: Ministerio de Economía y Obras y Servicios Públicos. Consulate General of Argentina in Montreal . Fundación Invertir.


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