Latin American Integration Association

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The Asociación Latinoamericana de Integración (the Latin American Integration Association; known as ALADI or, occasionally, by the English acronym LAIA) is a Latin American trade integration association, based in Montevideo. Its main objective is the establishment of a common market, in pursuit of the economic and social development of the region. Signed on August 12, 1980, the Montevideo Treaty[1][2] is an international legal framework that establishes and governs the Latin American Integration Association. It sets the following general guidelines regarding trade relations between signatory countries: pluralism, convergence, flexibility, differential treatment and multiplicity.

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The Latin American Free Trade Association

The Latin American Free Trade Association (LAFTA) was created in the 1960 Treaty of Montevideo by Argentina, Brazil, Chile, Mexico, Paraguay, Peru, and Uruguay. The signatories hoped to create a common market in Latin America and offered tariff rebates among member nations. LAFTA came into effect on January 2, 1962. When the trade association commenced it had seven members and its main goal was to eliminate all duties and restrictions on the majority of their trade within a twelve year period.[3] By the late 1960s the area of LAFTA had a population of 220 million and produced about $90 billion of goods and services annually. By the same time it had an average per capita gross national product of $440.[4]

The goal of the LAFTA is the creation of a free trade zone in Latin America. It should foster mutual regional trade among the member states, as well as with the U.S. and the European Union. To achieve these goals, several institutions are foreseen:

  • the council of foreign ministers
  • a conference of all participating countries
  • a permanent council

The LAFTA agreement has important limitations: it only refers to goods, not to services, and it does not include a coordination of policies. Compared e.g. to the European Union the political and economic integration is very limited.

By 1970, LAFTA expanded to include four more Latin American nations which were Bolivia, Colombia, Ecuador, and Venezuela. It now consisted of eleven nations. In 1980, LAFTA reorganized into the Latin American Integration Association (ALADI). LAFTA brought many new positive changes to Latin America. With LAFTA in place existing productive capacity could be used more fully to supply regional needs, industries could reduce costs as a result of potential economies through expanded output and regional specialization, and attraction to new investment occurred as a result of the regional market area.[5] Although LAFTA has brought many constructive results, it has also brought problems to individual nations as well as to Latin America as a whole.

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