“Some Economic Alliances” of Significance all over the world

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“Some Economic Alliances” of Significance all over the world

North American Free Trade Agreement:

The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada-United States Free Trade Agreement between the U.S. and Canada. In terms of combined purchasing power parity GDP of its members, as of 2007[update] the trade bloc is the <href=”#Most_active_regional_blocs” title=”Trade bloc”>largest in the world and second largest by nominal GDP comparison.The North American Free Trade Agreement (NAFTA) has two supplements, the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).


In 1988 Canada and the United States signed the Canada-United States Free Trade Agreement after which the U.S. Congress approved implementing legislation. The American government then entered into negotiations with the Mexican government for a similar treaty, and Canada asked to join the negotiations in order to preserve its perceived gains under the 1988 deal.<href=”#cite_note-canworld-0>[1] The climate at the time favored expanding trade blocs, such as the Maastricht Treaty, which created the European Union in 1992.

Negotiation and ratification

Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed it. The agreement then needed to be ratified by each nation’s legislative or parliamentary branch.


The goal of NAFTA was to eliminate barriers of trade and investment between the US, Canada and Mexico. The implementation of NAFTA on January 1, 1994, brought the immediate elimination of tariffs on more than one half of U.S. imports from Mexico and more than one third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all US-Mexico tariffs would be eliminated except for some U.S. agricultural exports to Mexico that were to be phased out in 15 years. Most US-Canada trade was already duty free. NAFTA also seeks to eliminate non-tariff trade barriers.


Chapter 20 provides a procedure for the interstate resolution of disputes over the application and interpretation of the NAFTA. It was modeled after Chapter 18 of the Canada-United States Free Trade Agreement.<href=”#cite_note-3>[4]

NAFTA’s effects, both positive and negative, have been quantified by several economists, whose findings have been reported in publications such as the World Bank‘s Lessons from NAFTA for Latin America and the Caribbean, NAFTA’s Impact on North America, and NAFTA Revisited by the Institute for International Economics. Some[who?] argue that NAFTA has been positive for Mexico, which has seen its poverty rates fall and real income rise (in the form of lower prices, especially food), even after accounting for the 1994–1995 economic crisis.<href=”#cite_note-7>[8] Others argue that NAFTA has been beneficial to business owners and elites in all three countries, but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U.S. agribusiness, and negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico. Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence,<href=”#cite_note-8>[9] nor to substantially reduce poverty rates. Some have suggested that in order to fully benefit from the agreement, Mexico must invest more in education and promote innovation in infrastructure and agriculture.


According to Issac (2005), overall, NAFTA has not caused trade diversion, aside from a few industries such as textiles and apparel, in which rules of origin negotiated in the agreement were specifically designed to make U.S. firms prefer Mexican manufacturers. The World Bank also showed that the combined percentage growth of NAFTA imports was accompanied by an almost similar increase of non-NAFTA exports.


Maquiladoras (Mexican factories that take in imported raw materials and produce goods for export) have become the landmark of trade in Mexico. These are plants that moved to this region from the United States, hence the debate over the loss of American jobs. Hufbauer’s (2005) book shows that income in the maquiladora sector has increased 15.5% since the implementation of NAFTA in 1994. Other sectors now benefit from the free trade agreement, and the share of exports from non-border states has increased in the last five years while the share of exports from maquiladora-border states has decreased. This has allowed for the rapid growth of non-border metropolitan areas, such as Toluca, León and Puebla; all three larger in population than Tijuana, Ciudad Juárez, and Reynosa.


For more details on this topic, see NAFTA’s Impact on the Environment. Securing U.S. congressional approval for NAFTA would have been impossible without addressing public concerns about NAFTA’s environmental impact. The Clinton administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation (NAAEC), which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the CEC was given a mandate to conduct ongoing ex post environmental assessment of NAFTA.<href=”#cite_note-9>[10]In response to this mandate, the CEC created a framework for conducting environmental analysis of NAFTA, one of the first ex post frameworks for the environmental assessment of trade liberalization. The framework was designed to produce a focused and systematic body of evidence with respect to the initial hypotheses about NAFTA and the environment, such as the concern that NAFTA would create a “race to the bottom” in environmental regulation among the three countries, or the hope that NAFTA would pressure governments to increase their environmental protection mechanisms. The CEC has held four symposia using this framework to evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this subject. In keeping with the CEC’s overall strategy of transparency and public


From the earliest negotiation, agriculture was (and still remains) a controversial topic within NAFTA, as it has been with almost all free trade agreements that have been signed within the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada–U.S. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the Mexico–U.S. pact allows for a wider liberalization within a framework of phase-out periods (it was the first North–South FTA on agriculture to be signed).The overall effect of the Mexico–U.S. agricultural agreement is a matter of dispute. Mexico did not invest in the infrastructure necessary for competition, such as efficient railroads and highways, creating more difficult living conditions for the country’s poor. Still, the causes of rural poverty cannot be directly attributed to NAFTAin fact, Mexico’s agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period. One of the most affected agricultural sectors is the meat industry. Mexico has gone from a small-key player in the pre-1994 U.S. export market to the 2nd largest importer of U.S. agricultural products in 2004, and NAFTA may be credited as a major catalyst for this change. The allowance of free trade removed the hurdles that impeded business between the two countries. As a result, Mexico has provided a growing meat market for the U.S., leading to an increase in sales and profits for the U.S. meat industry. This coincides with a noticeable increase in Mexican per capita GDP that has created large

Impact of NAFTA on Canada

Canada gained the most from NAFTA with Canada’s GDP rate at 3.6%, growing faster than the United States at 3.3% and Mexico at 2.7%. Canadian employment levels have also shown steady gains in recent years, with overall employment rising from 14.9 million to 15.7 million in the early 2000s. Even Canadian manufacturing employment held steady. One of NAFTA’s biggest economic effects on U.S.-Canada trade has been to boost bilateral agricultural flows.<href=”#cite_note-38>[39] In the year 2008 alone, Canada exports to the United States and Mexico was at CAN$381.3 Billion Dollars and imports from NAFTA was at CAN$245.1 Billion Dollars.<href=”#cite_note-39>[40] The Canadian mainstream has been so unanimous in its recognition of NAFTA’s advantages despite a few odd detractors that even former NDP Gary Doer of Manitoba openly praises the benefits of NAFTA.<href=”#cite_note-40>[41]

South Asian Association for Regional Cooperation:


The concept of SAARC was first adopted by Bangladesh in the late 1970s, under President Ziaur Rehman. In the late 2000s, Indian President proposed the creation of a trade bloc consisting of South Asian countries. The idea of regional cooperation in South Asia was again mooted in May 2001. The foreign secretaries of the seven countries met for the first time in Colombo in April 2002. The Committee of the Whole, which met in Colombo in August 2002, identified five broad areas for regional cooperation. New areas of cooperation were added in the following years.


The objectives of the Association as defined in the Charter are:

to promote the welfare of the people of South Asia and to improve their quality of life;

to accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potential;

to promote and strengthen collective self-reliance among the countries of South Asia;

to contribute to mutual trust, understanding and appreciation of one another’s problems;

to promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;

to strengthen cooperation with other developing countries;

to strengthen cooperation among themselves in international forums on matters of common interest; and

to cooperate with international and regional organization with similar aims and purposes.

Afghanistan was added to the regional grouping at the behest of India on 13 November 2005, and became a member on 3 April 2007.<href=”#cite_note-3>[4] With the addition of Afghanistan, the total number of member states were raised to eight (8). In April 2006, the United States of America and South Korea made formal requests to be granted observer status. The European Union has also indicated interest in being given observer status, and made a formal request for the same to the SAARC Council of Ministers meeting in July 2006. On 2 August 2006 the foreign ministers of the SAARC countries agreed in principle to grant observer status to the US, South Korea and the European Union. On 4 March 2008, Iran requested observer status.<href=”#cite_note-6>[7] Followed shortly by the entrance of Mauritius.

Free trade agreement

Over the years, the SAARC members have expressed their unwillingness on signing a free trade agreement. Though India has several trade pacts with Maldives, Nepal, Bhutan and Sri Lanka, similar trade agreements with Pakistan and Bangladesh have been stalled due to political and economic concerns on both sides. India has been constructing a barrier across its borders with Bangladesh and Pakistan. In 1993, SAARC countries signed an agreement to gradually lower tariffs within the region, in Dhaka. Eleven years later, at the 12th SAARC Summit at Islamabad, SAARC countries devised the South Asia Free Trade Agreement which created a framework for the establishment of a free trade area covering 1.6 billion people. This agreement went into force on January 1, 2008. Under this agreement, SAARC members will bring their duties down to 20 per cent by 2009.

Dhaka 2009 Summit

The summit accorded observer status to People’s Republic of China, Japan, South Korea and United States of America. The nations also agreed to organize development funds under a single financial institution with a permanent secretariat, that would cover all SAARC programs and also ranging from social, to infrastructure, to economic ones.

Current members (alphabetically)








Sri Lanka






European Union




South Korea

United States

Future membership

The People’s Republic of China has shown its interest in joining SAARC.<href=”#cite_note-12>[13] While Pakistan and Bangladesh support China’s candidature, India is against the prospect of Chinese membership. China’s entry in to SAARC will likely balance India’s overbearing presence there.<href=”#cite_note-13>[14] However, during the 2005 Dhaka summit, India agreed on granting observer status to the PRC along with Japan. During the 14th summit, Nepal along with Pakistan and Bangladesh, announced their support for the membership of China.<href=”#cite_note-14>[15]<href=”#cite_note-15>[16]<href=”#cite_note-autogenerated1-16>[17] China seeks greater involvement in SAARC, however, finds it too early to apply for full membership.<href=”#cite_note-17>[18]

Indonesia intends to become an observer as well, and is supported by Sri Lanka.<href=”#cite_note-Indonesia-18>[19]

Iran, a state with borders to two SAARC members, has traditionally enjoyed strong cultural, economic and political relationships with Afghanistan and Pakistan and has expressed its desire to become a member of the South Asian organization. On 22 February 2005, the Foreign Minister of Iran, Kamal Kharrazi, indicated Iran’s interest in joining SAARC by saying that his country could provide the region with “East-West connectivity”.<href=”#cite_note-19>[20] On 3 March 2007, Iran asked to join the SAARC as an observer. SAARC Secretary-General Lyonpo Chenkyab Dorji responded by saying that Iran’s request for observer status would be taken up during a meeting of ministers of foreign affairs of SAARC member countries in the 3 April summit in New Delhi.

Russia intends to become an observer as well, and is supported by India.

Myanmar has expressed an interest in joining as a full member, even though it is already a member of the ASEAN. If done so, Myanmar will become the ninth member in the group. India is currently backing Myanmar.

Myanmar’s military regime officially applied for full SAARC membership in May 2008. However, the application is still being considered and the government is currently restricted to observer status.<href=”#cite_note-25>[

South Africa has participated in meetings.<href=”#cite_note-26>[27]

SAARC Preferential Trading Arrangement

The Agreement on SAARC Preferential Trading Arrangement (SAPTA)<href=”#cite_note-27>[28] was signed on 11 April 1993 and entered into force on 7 December 1995, with the desire of the Member States of SAARC (India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives) to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions.

The establishment of an Inter-Governmental Group (IGG) to formulate an agreement to establish a SAPTA by 1997 was approved in the Sixth Summit of SAARC held in Colombo in December 1991.

The basic principles underlying SAPTA are:

overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account their respective level of economic and industrial development, the pattern of their external trade, and trade and tariff policies and systems;

negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews;

recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favour;

inclusion of all products, manufactures and commodities in their raw, semi-processed and processed forms.

So far, four rounds of trade negotiations have been concluded under SAPTA covering over 5000 commodities.

South Asian Free Trade Area

The Agreement on the South Asian Free Trade Area is an agreement reached at the 12th SAARC summit at Islamabad, capital of Pakistan on 6 January 2004. It creates a framework for the creation of a free trade area covering 1.6 billion people in India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives.The seven foreign ministers of the region signed a framework agreement on SAFTA with zero customs duty on the trade of practically all products in the region by end 2016. The new agreement i.e. SAFTA, came into being on 1 January 2006 and will be operational following the ratification of the agreement by the seven governments. SAFTA requires the developing countries in South Asia, that is, India, Pakistan and Sri Lanka, to bring their duties down to 20 percent in the first phase of the two year period ending in 2007. In the final five year phase ending 2012, the 20 percent duty will be reduced to zero in a series of annual cuts. The least developed nations in South Asia consisting of Nepal, Bhutan, Bangladesh and Maldives have an additional three years to reduce tariffs to zero. India and Pakistan have signed but not ratified the treaty


Mercosur or Mercosul or Ñemby Ñemuha. (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul, English: Southern Common Market) is a union between Argentina, Brazil, Paraguay and Uruguay. Founded in 1991 by the Treaty of Asunción, which was later amended and updated by the 1994 Treaty of Ouro Preto. Its purpose is to promote free trade and the fluid movement of goods, people, and currency. The official languages are Portuguese and Spanish.<href=”#cite_note-0>[1] It has been updated, amended, and changed many times since. It is now a full customs union. Mercosur and the Andean Community of Nations are customs unions that are components of a continuing process of South American integration connected to the Union of South American Nations.Mercosur origins trace back to 1985 when Presidents Raúl Alfonsín of Argentina and José Sarney of Brazil signed the Argentina-Brazil Integration and Economics Cooperation Program or PICE (Portuguese: Programa de Integração e Cooperação Econômica Argentina-Brasil, Spanish: Programa de Integración y Cooperación Económica Argentina-Brasil).<href=”#cite_note-1>[2] The program also proposed the Gaucho as a currency for regional trade.Bolivia, Chile, Colombia, Ecuador and Peru currently have associate member status. Venezuela signed a membership agreement on 17 June 2006,<href=”#cite_note-2>[3] but before becoming a full member its entry has yet to be ratified by the Congress of Paraguay.<href=”#cite_note-VEN-3>[4] The founding of the Mercosur Parliament was agreed at the December 2004 presidential summit. It should have 18 representatives from each country by 2010, regardless of population.<href=”#cite_note-4>[5] Israel<href=”#cite_note-5>[6] and Egypt<href=”#cite_note-6>[7] are currently the only non-South American free trade partners.

Member states

Mercosur is composed of 4 sovereign member states: Argentina, Brazil, Paraguay, and Uruguay


The territory of Mercosur consists of the combined territories of its 4 member states. The territory of Mercosur is not the same as that of South America, as parts of the continent are outside Mercosur, such as Peru, Colombia and Chile.Including the overseas territories of member states, Mercosur experiences most types of climate from Arctic to tropical, rendering meteorological averages for Mercosur as a whole meaningless. The majority of the population lives in areas with a subtropical climate (Uruguay, Southern Paraguay, Northeastern Argentina and Southern and Southeastern Brazil), or a tropical climate (Northeastern Brazil).


Among the many languages and dialects used in Mercosur, it has 3 official and working languages: Portuguese, Spanish and Guaraní. Brazil is the only Portuguese-speaking country in Mercosur and in the Americas, as it formerly was part of Portuguese America. Argentina, Paraguay, and Uruguay were part of Spanish America. And Paraguay, sectors of Argentina and Brazil speak Guarani.


The Southern Common Market promotes:

The free transit of production goods, services and factors between the member states with inter alia, the elimination of customs rights and lifting of nontariff restrictions on the transit of goods or any other measures with similar effects;

Fixing of a common external tariff (TEC) and adopting of a common trade policy with regard to nonmember states or groups of states, and the coordination of positions in regional and international commercial and economic meetings;

Coordination of macroeconomic and sectorial policies of member states relating to foreign trade, agriculture, industry, taxes, monetary system, exchange and capital, services, customs, transport and communications, and any others they may agree on, in order to ensure free competition between member states;

The commitment by the member states to make the necessary adjustments to their laws in pertinent areas to allow for the strengthening of the integration process. The Asunción Treaty is based on the doctrine of the reciprocal rights and obligations of the member states. Mercosur initially targeted free-trade zones, then customs unification and, finally, a common market, where in addition to customs unification the free movement of manpower and capital across the member nations‘ international frontiers is possible, and depends on equal rights and duties being granted to all signatory countries. During the transition period, as a result of the chronological differences in actual implementation of trade liberalization by the member states, the rights and obligations of each party will initially be equivalent but not necessarily equal. In addition to the reciprocity doctrine, the Asunción Treaty also contains provisions regarding the most-favored nation concept, according to which the member nations undertake to automatically extend, after actual formation of the common market, to the other Treaty signatories any advantage, favor, entitlement, immunity or privilege granted to a product originating from or intended for countries that are not party to ALADI.

Free Trade Zones

The Province of Tierra del Fuego in Argentina has a free-trade zone.

The member nations can have commercial free-trade zones, industrial free-trade zones, export processing zones, and special customs areas, all of which target providing merchandise marketed or produced in these areas with treatment different from that afforded in their respective customs territories.


The member states can assess merchandise from these areas with the common external tariff used for Mercosur merchandise, or, in the case of certain special products, the domestic tariff prevailing in each individual state. In this way, the products from the free-trade zones can have the more favorable tax treatment established under Southern Common Market, given to the merchandise produced in the normal customs zones of each member state or, in the case of certain special products, can have the normal customs treatment prevailing in each nation.


Products produced or marketed in the free-trade zones of each member nation will be eligible for the safeguard system whenever this entails an increase not provided for in imports, but capable of causing damages or threatened damages to the importer country.


In the event of the producing nation’s granting special incentives for production from the free-trade zones that are not compatible with the corresponding guidelines established under the General Agreement on Tariffs and Trade (GATT), the member nation can make any adjustments needed to return the situation to equilibrium.

Creation of FTZs

The member nations agreed that any free-trade zones that in August 1994 were already in operation could operate normally under Mercosur, along with any that are set up in light of legal guidelines prevailing or in course in Congress during this same time period. This means that a member nation can no longer create new free-trade zones that are more privileged.

Reciprocal Promotion and Protection

Tax Issues

The member states are not however obligated to extend to investors in the other nations signatory to the Colonia Protocol the benefits of any treatment, preference or privilege resulting from international accords relating fully or partially to tax matters.


In addition, the member nations can temporarily establish a list of exceptions where the new treatment will not yet prevail. In this way, the various member nations decided to except the following economic sectors: Argentina: ownership of real estate on the frontier strip, air transportation, naval industry, nuclear plants, uranium mining, insurance and fishery; Brazil: mineral prospection and mining; use of hydraulic energy; health care; television and radio broadcasting and telecommunications in general, acquisition or leasing of rural properties; participation in the financial intermediation, insurance, social security and capitalization systems; chartering and cabotage as well as inland navigation; Paraguay: ownership of real property on the frontier strip; communications, including radio and television broadcasting; air, sea and land transportation; electricity, water and telephone services; prospecting for hydrocarbons and strategic minerals; import and refining of petroleum derivates and postal services; and Uruguay: electricity; hydrocarbons; basic petrochemicals, atomic energy; prospecting for strategic minerals; financial in Expropriation and Compensation

The member nations undertook to do nothing to nationalize or expropriate investments in their territories that pertain to investors from the signatory countries, unless such measures are taken based on public need. In such case, nothing discriminatory can be done, but everything must be implemented by due legal process. Compensation for the investment holder that is expropriated or nationalized should be both adequate and effective, and made in advance, based on the real investment value determined at the time

Caribbean Community:


The Caribbean Community (CARICOM), originally the Caribbean Community and Common Market, was established by the Treaty of Chaguaramas<href=”#cite_note-1>[2] which came into effect on 1 August 1973. The first four signatories were Barbados, Jamaica, Guyana and Trinidad and Tobago.CARICOM superseded the 1965–1972 Caribbean Free Trade Association (CARIFTA), which had been organised to provide a continued economic linkage between the English-speaking countries of the Caribbean following the dissolution of the West Indies Federation which lasted from 3 January 1958 to 31 May 1962.A Revised Treaty of Chaguaramas<href=”#cite_note-2>[3] establishing the Caribbean Community including the CARICOM Single Market and Economy (CSME) was signed by the CARICOM Heads of Government of the Caribbean Community on 5 July 2001 at their Twenty-Second Meeting of the Conference in Nassau, The Bahamas



Join date


Antigua and Barbuda

4 July 1974

4 July 1983

Not part of customs union

1 August 1973

1 May 1974

1 May 1974

1 May 1974

1 August 1973

2 July 2002

Provisional membership on 4 July 1998

1 August 1973

1 May 1974

British overseas territory

26 July 1974

Joined as Saint Christopher-Nevis-Anguilla

1 May 1974

1 May 1974

4 July 1995

1 August 1973


July 1999

British overseas territory

2 July 2003

British overseas territory

July 1991

British overseas territory

16 May 2002

British overseas territory

July 1991

British overseas territory


Country of the Kingdom of the Netherlands

Country of the Kingdom of the Netherlands
status unknown after dissolution of the Netherlands Antilles

Dissolved country of the Kingdom of the Netherlands

Commonwealth of the USA

Country of the Kingdom of the Netherlands
status unknown after dissolution of the Netherlands Antilles


Status Full member Bahamas Barbados Belize Dominica Grenada Guyana Haiti Jamaica Montserrat Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Suriname Trinidad and Tobago Associate Bermuda British Virgin Islands Cayman Islands Turks and Caicos Islands Observer Colombia Curaçao Dominican Republic Mexico Netherlands Antilles Puerto Rico Sint Maarten Venezuela


Population and economic statistics of full members

Land area (km2)<href=”#cite_note-land_area-12>[13]


GDP (PPP) Millions USD<href=”#cite_note-GDP-14>[15]

GDP Per Capita USD<href=”#cite_note-GDP_pc-15>[16]






























































Member Antigua and Barbuda Bahamas Barbados Belize Dominica Grenada Guyana Haiti Jamaica Montserrat Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Suriname Trinidad and Tobago

Land area (km2)<href=”#cite_note-land_area-12″>[13]


GDP (PPP) Millions USD<href=”#cite_note-GDP-14″>[15]

GDP Per Capita USD<href=”#cite_note-GDP_pc-15″>[16]





















Population and economic statistics of associate members
Member Anguilla Bermuda British Virgin Islands Cayman Islands Turks and Caicos Islands


Land area<href=”#cite_note-land_area-12″>[13]


GDP (PPP) Millions USD<href=”#cite_note-GDP-14″>[15]

GDP Per Capita USD<href=”#cite_note-GDP_pc-15″>[16]





























Population and economic statistics of observers
Member Aruba Colombia Dominican Republic Mexico Netherlands Antilles Puerto Rico Venezuela

Under Article 4 the CARICOM organisation breaks its 15 member states into two groups: Less Developed Countries (LDCs) and More Developed Countries (MDCs).

The countries of CARICOM which are designated as Less Developed Countries (LDCs) are:

Antigua & Barbuda


Commonwealth of Dominica


Republic of Haiti


Federation of St. Kitts & Nevis

St. Lucia

St. Vincent & the Grenadines

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.<href=”#cite_note-2>[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.<href=”#cite_note-3>[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:


Any Latin-American country can join the 1980 Montevideo Treaty. Cuba was the last to accede, becoming a full member on August 26, 1999. In addition, ALADI is also open to all Latin American countries through agreements with other countries and integration areas of the continent, as well as to other developing countries or their respective integration areas outside Latin America. ALADI is now the largest Latin-American group of integration. It is responsible for regulations on foreign trade which includes regulations on technical measures, sanitary regulations, environment protection measures, quality control measures, automatic licensing measures, price control measures, monopolistic measures, as well as other measures.


The ALADI promotes the creation of an area of economic preferences in the region, aiming at a Latin American common market, through three mechanisms:

Regional tariff preference granted to products originating in the member countries, based on the tariffs in force for third countries.

Regional scope agreement, among member countries

Partial scope agreements, between two or more countries of the area Either regional or partial scope agreements may cover tariff relief and trade promotion; economic complementation; agricultural trade; financial, fiscal, customs and health cooperation; environmental conservation; scientific and technological cooperation; tourism promotion; technical standards and many other fields. As the Montevideo Treaty is a “framework treaty”, by subscribing to it, the governments of the member countries authorize their representatives to legislate through agreements on the economic issues of greatest importance to each country.A system of preferences — which consists of market opening lists, special cooperation programs (business rounds, preinvestment, financing, technological support) and countervailing measures on behalf of the landlocked countries — has been granted to the countries deemed to be less developed (Bolivia, Ecuador and Paraguay), to favour their full participation in the integration process. As the institutional and normative “umbrella” of regional integration that shelters these agreements as well as the subregional ones (Andean Community, MERCOSUR, G-3 Free Trade Agreement, Bolivarian Alternative for the Americas, etc.) it is the aim of the Association to support and favour every effort in order to create a common economic area.