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What's Mercosur?

By China Daily | China Daily | Updated: 2012-06-27 08:08

The South American Common Market, or Mercosur, is an economic and political agreement among Argentina, Brazil, Paraguay and Uruguay.

It was founded in 1991 by the Treaty of Asuncion, which was signed on March 26, 1991, in the capital city of Paraguay and amended by the 1994 Protocol of Ouro Preto.

It promotes free trade to allow the fluid movement of goods, people and currency. It officially started operation on Jan 1, 1995, and is now a full customs union.

Mercosur is a component of the continuing process of South American integration. It has followed the approach of the European Union but, with an area of 12 million square kilometers, it is four times bigger. The bloc's combined market encompasses more than 270 million people and accounts for more than three-quarters of the economic activity on the continent.

In 1985, Argentine president Raul Alfonsin and Brazilian president Jose Sarney signed the Argentina-Brazil Integration and Economics Cooperation Program, or PICE, which served as the starting point of Mercosur and proposed the Gaucho as a currency for regional trade.

In December 2004, the presidential summit agreed to the founding of the Mercosur Parliament, which should have 18 representatives from each country by 2010, regardless of population.

Mercosur is actively developing relations with major countries and organizations around the world. It signed a framework agreement on regional cooperation with the EU in December 1995 and decided to set up a transcontinental free trade zone in 2005.

It has also established dialogue or cooperation mechanism with China, Japan, Russia and the Republic of Korea.

In October 1997, a Mercosur delegation headed by ambassador Aispirosa of Uruguay, then the rotating presidency, paid a visit to China and held the first dialogue with the Chinese side.

Since then, both sides have held regular dialogues on political and economic relations and international issues of common interest.

In June 2004, Martin Redrado, then deputy foreign minister of Argentina, the rotating presidency of Mercosur, headed a delegation to China and held the fifth dialogue with Zhou Wenzhong, China's then vice-foreign minister, in Beijing. Both sides exchanged views on negotiations of free trade between China and Mercosur and decided to start the feasibility research.

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