Free Trade In South America: Mercosur And Other Groups

1643 words - 7 pages

Over the last 75 years, South America has done a large amount of economic development. This economic development has been done to try and enhance the relations with other economic superpowers. The European Union was created after the Second World War as a way for European countries to trade without duties or tariffs, and as a way to share knowledge of industrial development. After the EU was created, it was clear that if South America wanted to compete on a world stage, they would need to implement a common market. South America has had plenty attempts at common markets, Latin America was first with the Central American Common Market, which they followed with Latin American Free Trade Association. The Latin American Free Trade Association included some countries from South America, making it South America’s first try at a free trade area. Soon after, a sub group called the Andean Community of Nations was created, which was strictly for South America.
In the 1950’s, Latin America was looking to create free market trading as a way to boost the local economy. The first attempt to do this was the Central American Common Market (CACM). The CACM was created by El Salvador, Guatemala, Honduras, and Nicaragua. The group began meeting in 1958 but wasn’t official until the signing of the General Treaty on Central American Economic Integration in December 1960. Costa Rica joined CACM two years later in 1962. The main agenda of CACM was to “create a free trade area among these five nations and to share insight on industry organization” (Editors). This was unfortunately hindered by “The Soccer War of 1969.” The Soccer War was a conflict between Honduras and El Salvador over economic issues that was enflamed by a semifinal for the 1970 World Cup.(Kapuscinski) Though the actual war itself only lasted 4 days, the disagreements between the two countries lasted much longer. The conflict was so large that Honduras actually pulled out of the CACM for some time. According to some sources, CACM still exists today but there is little current information about the group. CACM has been all but absorbed by the North American Free Trade Association (NAFTA) and the Caribbean Community and Common Market (CARICOM).
Not long after CACM was created, the Latin American Free Trade Association (LAFTA) was established. This association was a free trade area that bridged the gap in between Central America and South America. The countries that made up LAFTA were Argentina, Brazil, Chile, Mexico, Paraguay, Peru, and Uruguay. LAFTA was made official of the 1960 Treaty of Montevideo, signed in January of 1962, two years after CACM was established. The goal of the treaty was to create a free trade area and to remove all restrictions and duties of that area within twelve years. Establishment of a common market and the institution of tariff rebates were other goals. From 1962-1970 four more countries joined LAFTA; Bolivia, Colombia, Ecuador, and Venezuela. In December 1980, the 1980...

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