This document provides an overview of major Latin American trade agreements and economic integration in the region. It discusses the recent progress of Mercosur in strengthening economic cooperation between Argentina, Brazil, Paraguay and Uruguay. This includes empowering Mercosur to negotiate trade deals with other countries/blocks and making it easier for private sectors to participate. Trade between Mercosur members has grown significantly in recent years. However, further harmonization is still needed in areas like regulations and policies to fully achieve the goal of free trade by 1999. The regional integration offers opportunities for foreign companies, especially those looking to invest directly in Latin America.

1. VOUJME EI.EYE/Y NUMBER FOUR· APRIl. 199~
EXPORT
TODAY
sourH AMERICA
BUlLDlNG ON
THE TRADE BLOCS
CHILE: KING COPPER
BRAZIL AO STRATEGIES
•
FINANCE/PAYMENTS
ASSET-BASED LENDlNG
COLLECTlONS
•
BEST WAYS INTO AFRICA .
•
EUROPEAN MARKETS
WHICH SEAL DF
APPROVAL?
•
TRANSPORT
ARABIAN CROSSROADS
. THE NEW INTERMODAL
STEW
•
ASIA
INOONESIA INVESTMENT
OISCOUNT JAPAN
KOREA: 7 BEST SECTORS
•
CANADA
MANUFACTURING
II

2. in Argentina, and has purchased one of
Venezuela's two main breweries. Mercosur ai Work
• Sancor, Argentina's leading dairy, has
annonnced plans to invest $200 million over the bji Erica Aoki
next three years to eÀ-pandcapacity in Brazil.
• Tintas Reuner, a Braziliall paint company, The recent progress made by Mercosm"at a meeting at
now makes paint in Argentina and UrUcouay. Om'o Preto, Brazilmarks a new and important phase for the
• Unisur, 1068-mile fiber opric cable that con- nine-year old common market agreement.
nects Brazil, Argentina, and Uruguay, can handle The Ouro Preto Protocot wlúch was signed by the presi-
25,000 simultaneous conversarions and data dents of Argentina, Brazil, Paraguay and Uruguay, empow-
transmissions. ered the organizarion to act on behalf of members in u"ade
• General Motors Ís building a $100 million negotiations with other countries or groups of conntJ;es.
plant to make 25,000 pick-up trucks per year for The protocol, which must still be approved by the congress
the Mercosur region. of each counu:y, also made it easier for the plivate sectors of
Man)' companies are even beginning to make the four countries to take part in discussions, ",ith the cre-
acquisirions across trade bloc bOTders. ation of the Social Economic Advisorv Forum.
Chilean businesses have been particularly Mercosur has already had a huge effect ou trade in the
active, especially in Argentina. For example, last region. lu the past three years, trade among the cormnon
year, Banco O'Higgins, a major Chilean bank, market's members grew by 150%. Brazil's Mercosur trade
bought 50% of Banco Popular AJ:gentino, and figures, for instance, l"Osefrom $4 billion in 1990 to $10 bil-
Embotelladora Andina, Chile's Coca-Cola bottler, lion Ín 1994. Going back to 1986, when the first steps were
paid $120 million for Brazil's second largest bot- taken towards the common market, trade among the four
tler. This activity should accelerate once Chile countIies has grown at an annual rate of 22%.
reaches a formal agreement 'with Mercosur. Stilt much needs to be completed if Mercosur is to meet its
For U.S. companies, Latin American integra- 1999 goal of fully free u'ade" E ven though some 7,500 prod-
tion offers good opportnnities, particularly for ucts are u'aded free of tariffs among the four members, intel-
firms planning to mak.e direct investments. The lectual property codes need to be unified, free competition
new trading blocs allow foreign firms to more eas- protected, consumer protection enacted, taxes and monetary
ily plan on a regional basis. policies harmonized, legislation for foreign investments
Also, should Mexico resume its grmvth, U.S. (h'awn up and export incentives prepared.
politicians may once again consider the expansion
of NAFTA, which would lock in these advantages l.'·ica Aoki ll/orks at the Washington offiees 0/ the
for the future. ET Mill/zeapolis laU)jirm Dorsey & Whitney.
$154.36 .S. Pop. Major Latin American Trade Agreements
FromU.S.
FromU.S. 141
toImports 97
to%ImpoTts 395Trade
41%
36%
17%
67%
62%
43%
45%
$52.72
23%
GNP
$14.54 .S.
80%
67%
$$65.04 372
8676
$141.81 198
$10.21
$22.72
$2.37
$49.46
$406
$66.63
$2.94
$142
$1162
$296.57
$6,960
$9.65
$9.35
$10.59
Intragroup
$ Eúorts
% ExJ0rts
Notes:Population is in millions;G)'Ij-P,
intragroup trade, imports and exports are in $hillions;Import and export data for NAFTA
are for both Canada and Mexico.
Sources: World Bank, IMF, Technology Marketing Analysís
22 EXPORT TOOAY APRIL 1995