The Latin American Free Trade Association1

In February 1960, seven Latin American countries signed the Treaty of Montevideo to bring into being the Latin American Free Trade Association (LAFTA — Spanish acronym ALALC). They included the three largest economies of the region (Argentina, Brazil and Mexico) as well as Chile, Paraguay, Peru and Uruguay. In 1961 Colombia and Ecuador joined, and with the accessions of Venezuela (1966) and Bolivia (1967) the Area comprised the whole of South America — except for Guyana, Surinam and French Guiana — and Mexico (see Table 10.1 for basic statistics). In its early years the LAFTA arrangements appeared to function well. Nonetheless, by 1967 the scheme had entered the period of stagnation and crisis which it was never able to overcome. In 1969 it was necessary to extend the target date for achievement of regional free trade, while a group of member countries initiated a more ambitious programme of sub-regional integration as the Andean Pact (AP). Successive attempts to renegotiate the Treaty of Montevideo failed, and in 1980 LAFTA finally expired, to be replaced by the Latin American Integration Association (LAIA — Spanish acronym ALADI).