Trade liberalization, regional integration and Southern Common Market: the Brazilian role

This paper takes an evolutionary and systemic approach on the question of regional integration in Latin America, reviewing the main instruments of preferential trade in the region, from the experience of Laia (Latin American Integration, Aladi) to the Southern Com-mon Market (Mercosul), and its intermediate stage, the Argentina-Brazil integration program. Special attention is given to the position of Brazil, being the main partner in the intrarregional trade of Aladi member countries as well as the key country for the success of Mercosul, the most recent experiment in the Latin American integration process. Aladi’s preferential trade arrangements were deeply affected by their economic crises of the 80’s, which touched practically all of its member countries and thus reducing the intrarregional trade flows and the trade creation virtues of its main multilateral mechanism, the Regional Tariff Preference (PTR). By the middle of the 80’s, Brazil and Argentina had already decided to launch a new, bilateral, integration process, which expanded and encompassed the sectorial agreements subscribed under the Aladi framework. After agreeing upon the institutional procedures for the bilateral integration process, the two countries negotiated and concluded an Economic Complementation Agreement (ACE) with be-came the basis for the Assunción Treaty, signed in March 1991 with the adhesion of Paraguay and Uruguay. The new subregional integration experiment takes place in the middle of trade liberali-zation processes and the dismantling of import substitution policies in the four countries. JEL Classification: F15.