MEMBER COUNTRIES OF THE AGREEMENT

Andean Community (CAN): Colombia, Ecuador, Peru, Venezuela and (Bolivia).

The South's Common Market (MERCOSUR): Argentina, Brazil, Paraguay and Uruguay.

The Frame Agreement for the Free Trade Area between the CAN and the Mercosur was subsbribed in April 16, 1998 in Buenos Aires, Argentina.

The need of strengthen and deepen the Latin American integration process in order to reach the aims foreseen in the 1980 Montevideo Treaty, through the common accord of open agreements to the rest of the ALADI's member countries, which allow forming a wide economic space.

The regional economic integration is one of the essential instruments for the Latin American countries in order to have a large economic and social development, warranting a better standard of living for their people.

The conformation of free trade areas in Latin America constitutes a relevant element in order to put nearer the existing integration squemes, besides being a fundamental stage in the integration process and in the establishment of an hemispheric free trade area.

Contribute to the world trade spreading and a better market functioning, offering clear rules to the economic agents for the development of the goods and services exchange, as well as reciprocal investment between the CAN and Mercosur.

Establish a legal and institutional economic and physical cooperation and integration frame that contributes for the creation of a wide economical space which trends to make easy the goods and services free circulation, as well as the productive factors duly use, under competitivity and equity conditions between the parties.

Form a free trade area by spreading and diversifying the commercial exchange and eliminating those restrictions that adversely affect the reciprocal trade.

Promote the development and use of the physical infraestructure, specially emphisizing the establishment of the integration corridors, which allow the cost reduction and the generation of competitive advantages within the recional trade and with out-of-the-region third countries.

Establish a normative frame in order to promote and encourage reciprocal investments among the parties' economical agents.

Promote the economical, energetic, scientific, and technological complementation and cooperatoin.

Promote consultations, when necessary, of trade negotiations performed with third countries and extra regional countries.

• Up to Septermber 30, 1998 the Andean Community and Mercosur will negotiate a tariff preferences agreement based on the historical patrimony, which could include new products.  Such agreement will replace the existing Partial Scope Agreements.

• The tariff preferences agreement will be in force beginning October 1st, 1998, establishing fixed preferences  margins and adding the trade disciplines in force in the ALADI frame.

• Between October 1st and December 31st, 1999, Mercosur and CAN will negotiate a Free Trade Agreement that will involve all the tariff universe products.  Such agreement will be in force beginning in January 1st, 2000.

• In the case of Bolivia the Economical Complementation Agreement No. 36 will rule.  Regardless this matter, it will participate in the CAN and MERCOSUR negotiations in order to adjust such agreement with the agreements the parties subscribed through negotiations to be held within these negotiations frame.

In order to fulfill the Frame Agreement aims, a Negotiating Commission will be established by the Alternating Representatives before the Andean Community and the MERCOSUR Ad hoc Group.

The agreement established that the Partial Scope Agreements subscribed within the ALADI frame will be in force until September 30, 1998.  The Regional Scope Agreements will last just if the Free Trade Agreement between CAN and MERCOSUR do not come in force.

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