Topics: International trade, Free trade, Tariff Pages: 5 (1024 words) Published: April 13, 2013

Mercosur was instituted by the Treaty of Asuncion signed between Argentina, Brazil, Paraguay and Uruguay on 26th march 1991, thus creating a common market in member countries territories. This common market became fully operational in 1st January 1995.Mercusor was established because of uneven growth of that region. Currently Mercosur includes 6 members countries- Argentina, Brazil, Paraguay, Uruguay, Bolivia & Chile.


The treaty for Asuncion makes provision for:

• Free movement of capital, goods, services and people;

• The creation of common external tariff and the establishment of a common external trade policy; and

• The co-ordination of macro-economic policies

In order to achieve these objectives, the Treaty of Asuncion created the following instruments

• A programme of gradual trade liberalization with the purpose of eliminating all trade barriers by 1st January 1995;

• A programme for adjusting internal legislation to enhance equitable competition;

• A system to define the rules of origin;

• A mechanism for resolving disputes and controversies; and

• Transitory safeguard clauses;


The governing body of Mercusor is the Common Market Council, consisting of the member states’ ministers of foreign relations and finance. The executive body is the Common Market Group comprising of sixteen members who represent the foreign relations offices, the economic ministries and the central banks of the member states. The Common Market Group has a permanent secretariat based in Montevideo, Uruguay.

The treaty also created ten working groups to deal with matters of trade like:

• Liberalization

• Harmonization of internal trade legislation

• Customs

• Technical specifications

• Taxation & Finance

• Maritime & Land Transportation

• Industrial property

• Agriculture & Energy

• Macro-economic issues

The treaty of Asuncion created the system for the resolution of disputes. The system which was perfected by the Protocol of Brasilia and signed in December 1991, institutes the following procedures

• Direct Negotiations: Direct Negotiations can be freely pursued by the member states and may not exceed fifteen days, unless the parties concerned mutually agrees to extend the period.

• Conciliation: Resources to conciliation may be taken when direct negotiation fails and member state submits its grievances to another against another to the Common Market Group. A maximum term of thirty days is allowed to conclude the respective proceedings.

• Arbitration: Arbitration may be started by a communication to the secretariat of a Common Market Group. An arbitrator panel is then formed which has to announce its decision within a maximum period of ninety days. The major problem with Mercusor’s arbitration system is that the mechanism does not allow private parties to contest their own or other governments on treaty matters without the approval of their own government.

Concerning the judicial co-operation, a protocol was signed at Las Lenas on 23rd June 1992. This dealt satisfactorily with numerous problems inhibiting the administration of justice, such as the appalling situation where rogatory letters in the past took years to be served. On 4th August 1994, another protocol was signed in Buenos Aries. It deals with international jurisdiction on contractual matters and attempts to isolate the most significant problems pertaining to conflicts of law-a most relevant matter.


As mentioned earlier that the main objective of the Treaty of Asuncion was to create a common market by 1st January 1995. In view of well known problems facing the region, this was undoubtedly a most ambitious target. The VI meeting of Common Market Council, held in Buenos Aires on 4th and...
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