Latin American Integration Association

Asociación Latinoamericana de Integración Latin American Integration Association
Administrative center		Montevideo
Working languages		Spanish, Portuguese
Type		Trade bloc
Membership		14 Members  Argentina  Bolivia  Brazil  Chile  Colombia  Cuba  Ecuador  Mexico  Nicaragua  Panama  Paraguay  Peru  Uruguay  Venezuela
Leaders
-	Secretary General	Carlos Álvarez
Establishment
-	Treaty of Montevideo	12 August 1980
Area
-	Total	19,521,500 km2  7,537,293 sq mi
Population
-	2008 estimate	515,722,726
-	Density	26.4/km2  68.4/sq mi
Time zone		(UTC-3 to -8)
Website http://www.aladi.org

The Asociación Latinoamericana de Integración (the Latin American Integration Association; known as ALADI or, occasionally, by the English acronym LAIA) is a Latin American trade integration association, based in Montevideo. Its main objective is the establishment of a common market, in pursuit of the economic and social development of the region. Signed on August 12, 1980, the Montevideo Treaty^[1][2] is an international legal framework that establishes and governs the Latin American Integration Association. It sets the following general guidelines regarding trade relations between signatory countries: pluralism, convergence, flexibility, differential treatment and multiplicity.

History

The Latin American Free Trade Association (LAFTA) was created in the 1960 Treaty of Montevideo by Argentina, Brazil, Chile, Mexico, Paraguay, Peru, and Uruguay. The signatories hoped to create a common market in Latin America and offered tariff rebates among member nations. LAFTA came into effect on January 2, 1962. When the trade association began, it had seven members and its main goal was to eliminate all duties and restrictions on the majority of their trade within 12 years.^[3] By the late 1960s, the area of LAFTA had a population of 220 million and produced about $90 billion of goods and services annually. It also had an average per capita gross national product of $440.^[4]

The goal of the LAFTA is the creation of a free trade zone in Latin America. It should foster mutual regional trade among the member states, as well as with the US and Canada, the Pacific Union, the African Union, and the European Union. To achieve these goals, several institutions are foreseen:

• the council of foreign ministers
• a conference of all participating countries
• a permanent council

The LAFTA agreement had important limitations: it only refers to goods, not to services, and it does not include a coordination of policies. Compared to the European Union, the political and economic integration was very limited.

By 1970, LAFTA expanded to include four more Latin American nations: Bolivia, Colombia, Ecuador, and Venezuela. It now consisted of 11 nations. In 1980, LAFTA reorganized into the Latin American Integration Association (ALADI). LAFTA brought many new positive changes to Latin America. With LAFTA in place existing productive capacity could be used more fully to supply regional needs, industries could reduce costs as a result of potential economies through expanded output and regional specialization, and attraction to new investment occurred as a result of the regional market area.^[5]

Although LAFTA has brought many constructive results, like other FTAs, it has also brought problems to individual nations and to Latin America as a whole. Some of the problems which individual countries face are the way they are grouped together by their economic strengths according to LAFTA. The grouping was originally Argentina, Brazil, and Chile in one group, Colombia, Chile, Peru, Uruguay, and Venezuela in the second group, and the last group which included Bolivia, Ecuador, and Paraguay.^[6] There is a problem in this classification because it ignores the great economic and other differences between the countries. Problems which Latin America faced as a whole had to do with many of the nations in the continent being underdeveloped. The Free Trade Agreement was seen as a way of the countries having greater economic interactions among each other and thus improving the economic state of the poorer nations.

Entry

Any Latin-American country can join the 1980 Montevideo Treaty. Cuba was the last to accede, becoming a full member on August 26, 1999. In addition, ALADI is also open to all Latin American countries through agreements with other countries and integration areas of the continent, as well as to other developing countries or their respective integration areas outside Latin America. ALADI is now the largest Latin-American group of integration. It is responsible for regulations on foreign trade which includes regulations on technical measures, sanitary regulations, environment protection measures, quality control measures, automatic licensing measures, price control measures, monopolistic measures, as well as other measures. These regulations are put into place in order for trade to be even handed amongst members of ALADI.

Methods

The ALADI promotes the creation of an area of economic preferences in the region, aiming at a Latin American common market, through three mechanisms:

• Regional tariff preference granted to products originating in the member countries, based on the tariffs in force for third countries
• Regional scope agreement, among member countries
• Partial scope agreements, between two or more countries of the area

Either regional or partial scope agreements may cover tariff relief and trade promotion; economic complementation; agricultural trade; financial, fiscal, customs and health cooperation; environmental conservation; scientific and technological cooperation; tourism promotion; technical standards and many other fields. As the Montevideo Treaty is a "framework treaty", by subscribing to it, the governments of the member countries authorize their representatives to legislate through agreements on the economic issues of greatest importance to each country.

A system of preferences — which consists of market opening lists, special cooperation programs (business rounds, preinvestment, financing, technological support) and countervailing measures on behalf of the landlocked countries — has been granted to the countries deemed to be less developed (Bolivia, Ecuador and Paraguay), to favour their full participation in the integration process. As the institutional and normative "umbrella" of regional integration that shelters these agreements as well as the subregional ones (Andean Community, MERCOSUR, G-3 Free Trade Agreement, Bolivarian Alternative for the Americas, etc.) the Association aims to support every effort to create a common economic area.

See also

References