Relations between the Andean Community and MERCOSUR, integration blocs whose membership includes nine of the twelve South American countries, have evolved rapidly toward a convergence process that will benefit the 350 million inhabitants of their member countries. The advances are reflected in the creation of a free trade area and the implementation of a political dialogue that have made it possible to arrive at a reciprocal association between the two blocs.

The first concrete step in that direction was the signing, on April 16, 1998, of a Framework Agreement for the creation of a Free Trade Area between the Andean Community and MERCOSUR, which laid the groundwork for the formation of this enlarged space.

The Agreement stipulated that the negotiations would be conducted in two stages: first, the negotiation of a Fixed Tariff Preferences Agreement on the basis of already existing accords and second, a Free Trade Agreement.

The Andean Community and MERCOSUR launched the negotiation of a Tariff Preferences Agreement in June 1998, based on the guidelines set out in the Framework Agreement. The initial bloc-to-bloc (4 + 4 system) negotiating arrangement was converted, at Brazil’s suggestion, into an arrangement in which the Andean countries jointly negotiated with each of the MERCOSUR countries separately (4 + 1), but never losing sight of the final objective.

As a result of those negotiations, Colombia, Ecuador, Peru and Venezuela signed a Partial Scope Economic Complementarity Agreement with Brazil on August 12, 1999, establishing fixed margins of preference as an initial step toward creating a Free Trade Area between the CAN and MERCOSUR.

With this same aim in mind, Argentina and the CAN negotiated a Tariff Preferences Agreement that was signed on June 29, 2000 and became effective on August 1 of that same year.

The aim of the second stage of negotiations, launched in April 2001, is to sign an Agreement for the formation of a Free Trade Area between the two groups. On repeated occasions, the highest political levels, both Presidential and Ministerial, have underscored the importance attributed by the governments of the Andean Community Member Countries to the formation of a free trade area.

The CAN and MERCOSUR countries signed an Economic Complementarity Agreement in Brasilia on December 6, 2002, reiterating their decision to form a Free Trade Area "that should be fully negotiated by December 31, 2003."

In compliance with this commitment, Argentina, Brazil, Uruguay and Paraguay (MERCOSUR Member States), signed Economic Complementarity Agreement Nº 59 with Colombia, Ecuador and Venezuela (CAN Member Countries), on October 16, 2003, in order to form a free trade area by expanding and diversifying trade and eliminating tariff and non-tariff restrictions that affect reciprocal trade. This instrument was deposited with the Latin American Integration Association (ALADI) on October 18, 2004.

It should be pointed out that on December 17, 1996, Bolivia and MERCOSUR signed Economic Complementarity Agreement Nº 36 to establish a Free Trade Area between the two parties and on August 25, 2003, Peru and MERCOSUR signed Economic Complementarity Agreement No.58 for the same purpose.

CAN - MERCOSUR - Chile Political Dialogue

The Andean Community and MERCOSUR are implementing comprehensive agendas for political cooperation within their own processes that are based on a multidimensional conception of integration and that complement their economic achievements.

The Heads of State of the two blocs, gathered at the South American Summits in Brasilia -2000- and Guayaquil -2002- agreed to jointly address the issues on their agendas, in order to build shared visions for their main areas of mutual interest in the dynamic regional and world scenarios.

In this context, the Foreign Ministers of the Andean Community and MERCOSUR member states and Chile established a Mechanism for Political Dialogue and Coordination in La Paz, Bolivia, on July 17, 2001. The purpose of that mechanism is to make it easier to coordinate joint measures in the areas of political cooperation, economic integration and physical infrastructure, foreign relations and the exchange of information, as well as on social and cultural aspects, among other things.

This dialogue and political coordination should be conceived as a flexible, comprehensive and progressive process that will make it possible to take the actions that are needed in the short, medium and long terms to permit the two blocs to converge.

The establishing treaties of the Andean Community and of MERCOSUR stipulate that in order to be able to grant the status of associate member to any country that requests it, a free trade agreement must first be signed with that country. The Andean countries, as a result of having signed Economic Complementarity Agreements Nos. 36, 58 and 59, have obtained associate membership status in MERCOSUR.