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Trade and Integration Arrangements in the Americas:
An Analytical Compendium
FOREWORD
| WTO | ALADI | Mercosur | Andean | CACM |
| Caricom | Caricom-Bilat | NAFTA | G3 | Chile |
One of the key tasks assigned by the leaders in Miami to the Organization of American States’ Special Committee on Trade was the preparation of a comparative analysis of existing trade arrangements in the Americas. The “compendium”, meets this objective.
The “compendium” contains ten horizontal boxes, which correspond to the sixteen agreements or arrangements under examination. These are: the Uruguay Round Agreement (WTO); the Association for Latin American Integration (Aladi); the Southern Cone Common Market (Mercosur); the Andean Group (Andean Group); the Central American Common Market (Central America); the Caribbean Common Market (Caricom); two bilateral arrangements with Caricom on the one hand and Venezuela and Colombia on the other (Caricom Bilaterals); the North American Free Trade Agreement (NAFTA); the Group of Three (Mexico, Colombia and Venezuela); and six Bilateral Agreements (Chile-Venezuela, Chile-Colombia, Chile-Ecuador, Mexico-Chile, Mexico-Costa Rica and Mexico-Bolivia).
Among the above agreements examined, one (the WTO) is multilateral, one regional scope (ALADI), four (Mercosur, Andean Group, Central American Common Market and Caricom) fall into the category of customs unions. The Caricom-Bilaterals fall into the category of temporary non-reciprocal preferential agreements, in that their distinguishing feature is the preferential access accorded to Caricom goods by Venezuela and Caricom for a pre-determined temporary period of time. Both agreements contain provisions for further negotiations leading to full reciprocity. These two elements, taken together, distinguish these two agreements from such arrangements as the General System of Preferences (GSP) and the General Preferential Tariff (GPT) maintained by industrial countries such as the United States and Canada. The next two categories are devoted to an analysis of free trade areas (NAFTA and the Group of Three agreements) involving more than two members. The last category (six agreements) is designed to cover bilateral free trade agreements.
While the “matrix” structure of the “Compendium” may at first glace appear to be somewhat complicated, readers should bear in mind that the structure of this study was chosen so as to achieve a balance between traditional “hard copy” production requirements and the development of a fully searchable electronic version for the Internet. The full Internet version should be available on the World Wide Web in the Summer of 1996. In this format, it is anticipated that the inclusion of updates and coverage of new developments will be enhanced. In this context, the Compendium is one of the first documents of its length, complexity and comprehensiveness that was specifically designed for Internet publication.
In terms of vertical structure, the “compendium” is a matrix divided into four sections. The first is a general section covering broad issues such as type, scope and objectives of the agreements, their basic administrative and executive structures, accession and withdrawal provisions and dispute settlement. The second section is devoted to an examination of the terms of liberalization, provisions relating to market access and regulation of trade. It includes an examination of safeguard measures, trade remedies, technical and agricultural standards related measures and rules of origin. The third section is devoted to issues such as services, government procurement, the regulation of state enterprises, competition issues, foreign investment and intellectual property provisions. The fourth and final section examines four sectors (energy, autos, textiles and clothing, and agriculture) in which various agreements provide for special approaches.
Lastly, great efforts have been expended to ensure that the information contained in it is as accurate as possible. To this end, the Trade Unit is grateful for the extensive information and cooperation that was extended by individual countries and sub-regional integration and cooperation organizations. It is important to note however, that the contents of the Compendium do not necessarily reflect the views or official positions of the countries or arrangements described herein. Moreover, the descriptions of these regional arrangements have been developed in order to provide a basis for this comparison, and are not intended to reflect the legal positions of the signatories. The document is the sole responsibility of the Trade Unit of the Organization of American States. The compendium is the result of intensive collaboration between Dr. Juan Jose Echavarria, Minister, Embassy of Colombia to the United States, Mr. Bernardo Gluch, OAS Foreign Trade Information System, and Mr. Donald R. Mackay, Special Advisor to the Secretary General, Trade Unit, Organization of American States.
Trade and Integration Arrangements in the Americas
At the Summit of the Americas the leaders of the Western Hemisphere recognized the important role played by the subregional trade arrangements in forging the “Free Trade of the Americas.” They resolved to “build on existing sub- regional and bilateral arrangements in order to broaden and deepen hemispheric economic integration and to bring the agreements together.” 1The Western Hemisphere is a very different place in 1996 than it was a decade ago. The countries of the region have taken a series of great leaps over the past ten years, with negotiation and implementation of bilateral and subregional trade agreements serving as vital complements to their domestic economic reforms. In contrast to many of the agreements that countries negotiated in the 1960s, the agreements of the 1990s are based on an open and liberalizing trade regime. The region is now poised for even greater progress through the Free Trade Area of the Americas (FTAA).
The 1990s have seen the establishment of new trade arrangements in the region and the revival of old ones. These changes have come about as a consequence to a number of a factors; some global in nature, others of a regional or hemispheric character and yet others as a consequence of the interaction of domestic forces in individual countries. In the context of Latin America and the Caribbean, much of the change can be attributed to the widespread failure of the mix of misguided fiscal and monetary policies that were pursued in the 1980s that resulted in a debt crisis for some and a net outward transfer of financial and other resources for many. In the 1990s, efforts aimed at enhanced participation in the increasingly globalized marketplace, prompted many countries to revive many of their existing trade and integration arrangements and adopt policies aimed at trade liberalization through unilateral efforts to open domestic economic and trade regimes. These unilateral trade measures have helped to facilitate the revival of Latin American and Caribbean integration. In part, this revival was also a reaction to the perceived consolidation of trade blocs in other regions of the world, which have “called attention to the potential benefits of freer trade with existing partners.” 2
Meanwhile in North America, increased trade and economic linkages were being built upon the foundation of the multilateral system embodied in the GATT and the increased economic integration of the North American economy. The modern foundation for bilateral based, later to become trilateralized, negotiations in North America was the decision of Canada and the U.S. to negotiate a special arrangement in 1965 to deal with trade in autos and autoparts. The 1965 Autopact ushered in an era of increased sectoral trade, enhanced bilateral relations and contributed to industrial competitiveness. By 1987, however, the two countries had agreed that the sheer size and scope of bilateral trade had outgrown multilateral based trade instruments and the Canada-United States Free Trade Agreement was negotiated and came into force in 1989. In Mexico, domestic economic reforms began with that country’s decision to join the GATT in 1986, which set the stage for all three countries to open negotiations in 1991 on a North American Free Trade Agreement (NAFTA) that came into force in 1994.
Examples of various types of trade and integration agreements can be found in the Western Hemisphere today. In addition to the significant number of customs unions and free trade agreements that exist in the Americas, Canada, the United States, and some Latin American countries (e.g., Venezuela and Colombia) also offer preferential non reciprocal access to their markets for developing countries under various types of programs. There are also numerous sectoral agreements, such as the Autopact that the United States and Canada entered into in 1965, and bilateral agreements on specific products negotiated within the framework of LAIA (Latin American Integration Association). The following section describes the agreements found in the Compendium.
The World Trade Organization
The World Trade Organization (WTO), established on 1 January 1995, is the legal and institutional foundation of the multilateral trading system. It provides the principal contractual obligations determining how governments
frame and implement domestic trade legislation and regulations. And it is the platform on which trade relations among countries evolve through collective debate, negotiation and adjudication. The WTO is the embodiment of the
results of the Uruguay Round trade negotiations and the successor to the General Agreement on Tariffs and Trade (GATT).
The Preamble of the Marrakesh Agreement Establishing the WTO
3 states that members should conduct their trade and economic relations with a view to "raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of
sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of development."
The fundamental principles of the multilateral trading system are:
Four other bodies are established by the Ministerial Conference and report to the General Council: the Committee on Trade and Development, the Committee on Balance of Payments and the Committee on Budget, Finance
and Administration and the Committee on Regional Arrangements. The General Council formally established, in early 1995, a Committee on Trade and Environment, which will present a report on its work to the first meeting of the
WTO Ministerial Conference in Singapore on December 9-13, 1996.
Each of the plurilateral agreements of the WTO - those on civil aircraft, government procurement, dairy products and bovine meat - have their own management bodies which report to the General Council. The day-to-day
work of the WTO, however, falls to a number of subsidiary bodies; principally the General Council, also composed of all WTO members, which is required to report to the Ministerial Conference. As well as conducting its regular
work on behalf of the Ministerial Conference, the General Council convenes in two particular forms - as the Dispute Settlement Body, to oversee the dispute settlement procedures and as the Trade Policy Review Body to conduct
regular reviews of the trade policies of individual WTO members.
The General Council delegates responsibility to three other major bodies - namely the Councils for Trade in Goods, Trade in Services and Trade-Related Aspects of Intellectual Property. The Council for Goods oversees the
implementation and functioning of all the agreements (Annex 1A of the WTO Agreement) covering trade in goods, though many such agreements have their own specific overseeing bodies. The latter two Councils have responsibility
for their respective WTO agreements (Annexes 1B and 1C) and may establish their own subsidiary bodies as necessary.
Four other bodies are established by the Ministerial Conference and report to the General Council. The Committee on Trade and Development is concerned with issues relating to the developing countries and, especially, to
the "least-developed" among them. The Committee on Balance of Payments is responsible for consultations between WTO members and countries which take trade-restrictive measures, under Articles XII and XVIII of GATT, in
order to cope with balance-of-payments difficulties. Finally, issues relating to WTO's financing and budget are dealt with by a Committee on Budget.
The WTO continues a long tradition in GATT of seeking to make decisions not by voting but by consensus. This procedure allows members to ensure their interests are properly considered even though, on occasion, they
may decide to join a consensus in the overall interests of the multilateral trading system. Where consensus is not possible, the WTO agreement allows for voting. In such circumstances, decisions are taken by a majority of the votes
cast and on the basis of "one country, one vote". There are four specific voting situations envisaged in the WTO Agreement. First, a majority of three-quarters of WTO members can vote to adopt an interpretation of any of the
multilateral trade agreements. Second, and by the same majority, the Ministerial Conference, may decide to waive an obligation imposed on a particular member by a multilateral agreement. Third, decisions to amend provisions of the
multilateral agreements can be adopted through approval either by all members or by a two-thirds majority depending on the nature of the provision concerned. However, such amendments only take effect for those WTO members
which accept them. Finally, a decision to admit a new member is taken by a two-thirds majority in the Ministerial Conference.
Surveillance of national trade policies is a fundamentally important activity running throughout the work of the WTO. At the center of this work is the Trade Policy Review Mechanism (TPRM). The objectives of the TPRM
are, through regular monitoring, to increase the transparency and understanding of trade policies and practices, to improve the quality of public and intergovernmental debate on the issues, and to enable a multilateral assessment of the
effects of policies on the world trading system. In this way member governments are encouraged to follow more closely the WTO rules and disciplines and to fulfil their commitments.
Reviews are conducted on a regular, periodic basis. The four biggest traders - the European Union, the United States, Japan and Canada - are examined approximately once every two years. The next 16 countries in terms of
their share of world trade are reviewed every four years; and the remaining countries every six years, with the possibility of a longer interim period for the least-developed countries.
In addition to the TPRM, many other WTO agreements contain obligations for member governments to notify the WTO Secretariat of new or modified trade measures. For example, details of any new anti-dumping or
countervailing legislation, new technical standards affecting trade, changes to regulations affecting trade in services, and laws or regulations concerning the TRIPs agreement all have to be notified to the appropriate body of the WTO.
Special groups are also established to examine new free-trade arrangements and the trade policies of acceding countries.
Customs Unions
Mercosur: The Common Market of the Southern Cone was created on March 26, 1991, when Argentina, Brazil, Paraguay and Uruguay signed the Treaty of Asunción. The two main instruments of the Treaty were a four-year
Trade Liberalization Program and a commitment to implement a common external tariff by January 1, 1995.
4 Preceding the Asunción Treaty was the signature in 1986 by Argentina and Brazil of the Acta para la Integración
Argentina-Brasileña. This new accord aimed at expanding bilateral trade among the two countries by adopting a sectoral approach. Two other accords, signed by Argentina and Brazil preceded Mercosur: the Tratado de Integración in
1989; and the Acta de Buenos Aires in 1990. A meeting held in August 1990 with Uruguay and Paraguay led to the Asunción Treaty in March 1991.
On December 17, 1994, the presidents of the four Mercosur countries met at Ouro Preto in Brazil to sign a document that set January 1, 1995 as the implementation date of a common external tariff (CET). The CET ranges
from 0 percent to a maximum of 20 percent. Each country was allowed a list of exceptions which will be phased out in five years for Argentina, Brazil and Uruguay and ten years for Paraguay. For Argentina, Brazil and Uruguay,
each were allowed 300 exceptions and Paraguay was allowed 399. In fact, for each of these products, the tariff will fall automatically every year on a linear basis until it becomes equal to the CET in 2001 for Brazil, Argentina and
Uruguay and 2006 for Paraguay. Domestic tariffs will converge to a maximum of 14 percent by 2001 for Argentina and Brazil and 2006 for Paraguay and Uruguay in the case of capital goods, and to a maximum of 16 percent by 2006 for information technology
products 5, which might reach lower levels.
The Common Market Council is Mercosur’s policy-making body. It is composed of the four countries’ foreign and economy ministers. The Common Market Group is the executive organ in charge of overseeing and
implementing the Treaty. The Mercosur Trade Commission is the executive organ in charge of overseeing the application of the common external trade policy. The Secretariat is based in Montevideo.
In early 1995, Brazil increased its tariffs from 32 percent to 70 percent on 109 products exempted from the customs union. Examples include cars, audio equipment, and consumer durables. The government of Brazil has
emphasized that this increase will be in place for one year only, just to help Brazil to overcome its internal economic difficulties. The Common Market Group met in Asunción on April 25, 1995, and adopted Resolution 7/95 that
authorized Brazil to define up to 150 addition exceptions to the Common External Tariff for a maximum period of one year, as an exceptional measure aimed at addressing imbalances in supply and prices that had resulted from its
economic stabilization plan.
Andean Group: The members of the Pact are Bolivia, Colombia, Ecuador, Peru, and Venezuela. The Andean Group was established in 1969 when Bolivia, Colombia, Chile, Ecuador and Peru signed the Cartagena
Agreement. Venezuela joined the group in 1973, and Chile left in 1976. The main objectives of the Andean Group were to eliminate trade barriers within the Group; to create a customs union with a common external tariff; to
harmonize economic, social, and economic policies; and to adopt a joint industrialization program.
In the early years of the process, at the beginning of the liberalization program, intra-subregional trade increased between member countries whose markets had few preexisting links. However, shortly thereafter the deadlines
for the fulfillment of the liberalization program and the adoption of a common external tariff were practically abandoned. In 1987, the Quito Protocol acknowledged this fact and modified the Cartagena Agreement by, inter alia,
providing for more flexibility in the achievement of the group’s goals. In addition, a new safeguard clause and tariff quotas were introduced.
A revival of the Andean Group began in 1989, when the member states signed decided to move forward in their integration efforts. In December 1991, the Act of Barahona was signed in Cartagena. It provided for the
establishment of a free trade zone by January 1, 1992, and the definition of a common external tariff with four levels (from 5 percent to 20 percent). Free trade between Colombia and Venezuela met this deadline and, after some side
agreements, Ecuador and Bolivia joined them as the Andean Group’s free trade area went into effect in early 1993. In March of 1995, a common external tariff (CET) was implemented by these same countries. For most goods, the
schedule is as follows: 5 percent for raw materials; 10 and 15 percent for semi-finished products; and 20 percent for finished goods. Although the CET cannot exceed 20 percent, there is an exception for automobiles for which the
tariff is 40 percent. Exceptions to the CET were also granted to each country.
Disagreements between Peru and other members of the Andean Group on the need to harmonize certain macroeconomic measures that this country had already enforced led to the adoption of Decision 321 by the Commission
of the Cartagena Agreement. This decision authorized Peru to suspend its participation with regard to total elimination of intra regional tariffs, adoption of a common external tariff and harmonization of macroeconomic policies. To
preserve reciprocal trade flows, Peru entered into bilateral agreements with each other member. In April 1994, the Commission approved Peru’s reintegration on a gradual basis, together with the commitment of the rest of the
members on reinforcement of rules of origin and a reduction of their tariff dispersion.
Central American Common Market (CACM): Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The General Treaty for Central American Integration was signed in 1960, and entered into force in 1961. It
provided for immediate free trade on 95 percent of all goods. The remaining tariffs were to be removed by June 1966. Other provisions of the Treaty included an agreement on integration industries. The conflict between Honduras and
El Salvador in 1969 led to the de facto withdrawal of Honduras. Then came almost two decades of political unrest and economic difficulties (e.g., low international commodity prices and overvalued exchange rates).
The agreement was reinvigorated in the early 1990s. In a June 1990, presidential summit in Antigua, Guatemala, the Plan de Acción Económica para Centroamérica (PAECA) called for the revival of economic integration in
Central America. In 1992, Honduras was “readmitted,”
6 and created with El Salvador and Guatemala the Northern Triangle. This led to the establishment of a free trade area in 1993, which Nicaragua later joined to create the Group of Four. They agreed on a common external tariff with four sub-tariffs of 5, 10, 15 and 20 percent. These countries signed the Guatemala Protocol in October 1993, a program aimed at modernizing the General Treaty of 1960. Its main
objective is the establishment of an economic union.
The five CACM members and Panama showed their commitment to integration by establishing a new organization, the Sistema de Integración Centroamericana (SICA), which began its work in February 1993. Early in 1995,
Costa Rica and Guatemala both increased their tariffs to try to solve their fiscal problems. Costa Rica added an 8 percent surcharge to its initial customs tariff. The Guatemalan decision to adopt a flat rate tariff in April was reversed
ten days later. Moreover, at the 16th Presidential Meeting held in San Salvador on March 30, 1995, the region’s economy ministers signed an agreement to extend the tariff reductions implemented by El Salvador. As of April 1, 1995,
El Salvador has cut its tariffs on capital goods from 5 percent to 1 percent.
Caricom: Antigua and Barbuda, the Bahamas (not a member of the Common Market, only of the Caribbean Community), Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia,
St. Vincent and the Grenadines, and Trinidad and Tobago. Suriname joined the Organization in February 1995, and took its seat at the Guyana summit held in July 1995.
The Caribbean Free Trade Association (CARIFTA) was created in 1967 as a limited free trade agreement. It was superseded by Caricom when Barbados, Guyana, Jamaica, and Trinidad and Tobago signed the Treaty of
Chaguaramas on July 4, 1973 to create the Caribbean Community. All Commonwealth Caribbean countries are members of the group. In July 1989, the Heads of Governments adopted several measures aimed at stimulating and
promoting economic and political integration. One of the main objectives of the Organization is a phased common external tariff on most goods by 1998.
An agreement was signed with Chile in January 1995 to prepare preliminary studies that will analyze the prospect for a free trade agreement.
Free Trade Agreements
North American Free Trade Agreement (NAFTA): United States, Canada, and Mexico. The goal of negotiating a free trade agreement between the three North American countries grew out of a number of factors. Canada and
the United States, partners in the single largest trading relationship in the world, successfully completed a bilateral FTA in 1988 that included goods, services, and investment, but did not deal in depth with intellectual property. For its
part, Mexico had gradually come to be the third-largest trading partner of the United States, and had since the mid-1980s pursued a policy of economic and trade reform during the administrations of Presidents de la Madrid and
Salinas. The three countries also shared a view that the size and scope of economic and commercial ties in North America essentially required a unique agreement, one that could be customized to fit the specific circumstances of the
region.
The negotiations were launched in Toronto, Canada on June 12, 1991, and were completed fourteen months later on August 12, 1992 in Washington D.C. The agreement was signed on December 17, 1992. It was
supplemented in 1993 by the negotiation of “side agreements” on labor, the environment, and safeguards. Following the approval of the three countries’ respective legislatures, NAFTA and its side agreements came into effect on
January 1, 1994.
The NAFTA is a comprehensive free trade agreement. In addition to establishing a five or 10-year schedule for the elimination of tariff barriers on most goods,
7 it covers trade in services; provides protection for investment
and intellectual property; applies rules to government procurement and the operation of government enterprises; and contains highly developed systems for the settlement of disputes. The agreement liberalizes market access
conditions in a number of important sectors critical to the continued development of North America’s infrastructure, such as in transportation, telecommunications, and financial services. It facilitates the movement of business people
and professionals among the three countries.
The agreement contains an accession clause and the three original members formally launched accession negotiations with the government of Chile on June 7, 1995, in Toronto, Ontario. Subsequent to that, Canada and Chile
announced in December 1995, their intention to negotiate an interim arrangement dealing with trade in goods, services and investment on a bilateral basis.
Group of Three: Colombia, Mexico, and Venezuela. On June 13, 1994, Colombia, Mexico, and Venezuela signed the Group of Three economic treaty which entered into force on January 1, 1995. Trade between Colombia
and Venezuela will still be governed by the Andean Group agreements. The Group of Three agreement calls for the total elimination of tariffs over a 10-year period with some exceptions in the textile, petrochemical and agricultural
sectors. Unlike most trade arrangements among Latin American countries, the Group of Three goes beyond tariff provisions, and deals with such matters as intellectual property rights, services, government procurement, and
investment.
Bilateral Agreements
The Compendium also contains information on a number of bilateral agreements, negotiated principally by Chile and Mexico with their respective trading partners. Chile has negotiated free trade agreements with Mexico
(implemented on January 1, 1992), Venezuela (implemented on July 1, 1993), Colombia (implemented on January 1, 1994) and Ecuador (implemented on January 1, 1995). For its part, Mexico has negotiated Agreements with Chile
(see above), Bolivia (January 1, 1995) and Costa Rica (January 1, 1995).
The agreements generally provide for trade liberalization in respect of trade in goods. The agreements share a common structure although provisions in certain cases are customized to fit particular circumstances. Each
contains well developed mechanisms for the settlement of disputes and the administration of the agreements, as well as clear timetables for the elimination of almost all tariffs and non-tariff barriers. Disciplines on trade-related
measures are well developed and each also contains timetables for the further elaboration of such measures. The agreements negotiated by Mexico with Costa Rica and Bolivia are more elaborate in their structure and scope of
coverage and reflect Mexico’s experiences in the NAFTA and Group of Three agreements.
Temporary Non-Reciprocal Preferential Agreements
Caricom-Venezuela: Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago. This
agreement was signed in October 1992, and provides for duty-free access for many imports from Caricom countries into Venezuela. After a five-year period, negotiations are to begin which could make the trade agreement reciprocal.
Caricom-Colombia: Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago. This
agreement was signed in July 1994. It provides for the immediate elimination of Colombian duties on goods covering 86 percent of the Colombian imports from Caricom. Another 4 percent will be included by January 1998. Further
negotiations will include the liberalization of the remaining Colombian tariffs and the trade concessions that the largest Caribbean countries will give to Colombia in reciprocity.
Regional Scope Agreements
Latin American Integration Association (LAIA): In 1960, the Latin American Free Trade
(LAFTA) was established by the Treaty of Montevideo. The main goal of this Treaty was to remove trade
barriers among the member countries over a period of 12 years. However, this proved to be both
controversial and difficult. By the end of 1978, the 11 signatories agreed that a restructuring of the
Association was needed. The Treaty of Montevideo of 1980 set up LAIA as a successor to LAFTA. Its
objective is to increase “bilateral trade among the member countries and between member countries and
third countries through bilateral and multilateral agreements, with the goal of eventually achieving regional
free trade.” LAIA members are Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay,
Peru, Uruguay, and Venezuela. LAIA integration mechanisms are more flexible than those of LAFTA.
They are based on a sectoral approach: regional scope agreements covering all members of the Association;
and partial scope agreements which are trade agreements giving preferences on some specific products,
signed by sub-groups of members, normally two countries. Sometimes partial scope agreements are wider
in scope and are called economic complementation agreements.
8
There are currently 32 partial scope and economic complementation agreements in place, half of which
have been signed in the 1990s. 9 In June 1994, the LAIA Council of Ministers approved the Interpretative
Protocol of Article 44 of the Montevideo Treaty of 1980 allowing members that have granted preferences
to third countries the right not to have to apply the MFN clause and to extend these preferences to the other
LAIA members provided negotiations are launched to compensate LAIA members. Mexico ratified this
Protocol, and invoked it in September 1994, with regard to its obligations to LAIA members in respect of
its membership in NAFTA.
Notes
:
1. Summit of the Americas, Declaration of Principles (Miami: December 1994), 3.
The highest WTO authority is the Ministerial Conference which meets every two years. The day-to-day work of the WTO, however, falls to a number of subsidiary bodies, principally the General Council, which also
convenes as the Dispute Settlement Body and as the Trade Policy Review Body. The General Council delegates responsibility to three other major bodies - namely the Councils for Trade in Goods, Trade in Services and
Trade-Related Aspects of Intellectual Property Rights.
2. Nora Lustig and C.A. Primo Braga, “The Future of Trade Policy in Latin America,” in Integrating the Americas: Shaping Future Trade Policy, ed. Sidney Weintraub (New Brunswick, N.J.: Transaction Publishers, 1994), 23, 17.
3. World Trade Organization, The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts. Geneva, Switzerland, 1995. P. 6.
4. Roberto Bouzas, Mercosur and Preferential Trade Liberalisation in South America: Record, Issues and Prospects (Buenos Aires: Latin American School of Social Sciences, May 1995), 4.
5. The Economist Intelligence Unit, Country Report: Brazil, 1st Quarter 1995. London: 1995, 23.
6. Honduras did not formally renouce the General Treaty, however, by Decree No. 222-92 of the Legislative Assembly, that country decided to again participate fully in the integration process.
7. Most tariffs are eliminated long before the end of this phase-in period. Tariffs between Canada and the United States will be eliminated by 1997, as already established under the bilateral FTA between these two countries. For a
small number of items, tariffs will be phased out over a period of up to 15 years.
8. For instance, Chile has signed a number of economic complementation agreements with other LAIA
members. These agreements, such as the Mexico-Chile free trade agreement, are much wider in scope than the traditional partial scope agreements.
9. Economic Commission for Latin America and the Caribbean, Desenvolvimiento de los procesos de integración en América latina y el Caribe (Santiago: ECLAC, 16 May 1995), 19.
