Mercosur

Free-trade organization, founded in March 1991 on signature of the Asunción Treaty by Argentina, Brazil, Paraguay, and Uruguay, and formally inaugurated on 1 January 1995. With a GNP of $800,000 million and a population of more than 190 million, Mercosur constitutes the world's fourth-largest free-trade bloc after the European Economic Area, the North American Free Trade Agreement, and the Asia-Pacific Economic Cooperation Conference.

The presidency is held for a six-month period on a rota basis. The Common Market Council is responsible for taking decisions concerning the treaty's main objectives. Its executive body is the Common Market Group.

From January 1995 tariffs were to be removed from about 85% of goods traded within the market, and common tariffs imposed on about 80% of goods imported from outside. Members of the Andean Pact (Bolivia, Colombia, Ecuador, Peru, and Venezuela) agreed to seek a free-trade agreement with Mercosur shortly after its inauguration. In June 1996 Chile and Bolivia were admitted as associate members.

The organization ran into trouble in 1999 when Argentina announced that it would impose unilateral quotas on Brazilian textiles and shoes, after the flood of imports which had followed Brazil's currency devaluation. In response, Brazil suspended trade talks with Argentina. In March 2001, however, Brazil reluctantly agreed to Argentina's temporary suspension of the customs union to enable it to avoid debt default. In February 2002 members agreed to set up a permanent body to settle internal trade disputes, and called on wealthy countries to back International Monetary Fund (IMF) aid to help the ailing Argentinian economy.