d)  thoughts on the Andean experience

Not only is the Andean integration process more institutionally complex than other integration schemes in our region, it is also the most dynamic in terms of organizational development.  Furthermore,  its growth and expansion has been accompanied by ongoing adjustments and institutional reforms.

While its organizational structure is complex, it is also closer than any other subregional initiative is to the institutional maturity of the European Union.  However, despite its high level of achievements in the field of economic integration, these achievements do not necessarily coincide with the degree of institutional development attained.  Other economic and political factors play a fundamental part in explaining the goals achieved, as well as the limitations that have prevented higher goals from being reached.

The nineties has been a period of growth and consolidation of the process and the Heads of State play a crucial role in boosting Andean integration.  The presidential meetings not only enabled the economic integration process to be stimulated, but they also expanded the cultural, social and political aspects of integration that had previously lagged behind. 

One aspect worth mentioning is that the institutional density achieved by the Andean process seems comparable with and to some extent corresponds to the broad extent of areas covered by subregional integration.  The different regional bodies and agreements have broadened the scope of subregional integration, and significant progress has been made in such areas as education, public health, welfare systems, to mention just a few of them.

Another aspect to note is the existence of the Tribunal of Justice as a key element of the mechanism for settling disputes among members, and especially the supranationality characteristics of its legal rules which is an aspect that differentiates the Andean subregion from the other integration schemes in Latin America and the Caribbean.  Its experience should be analyzed in depth when the times comes to explore institutional changes on this matter.

2.  Caribbean Community (CARICOM)

The Caribbean Community (CARICOM) was created in 1973, linking together the different countries and territories of the Caribbean under the Chaguaramas Treaty.  It has evolved in different stages.[2] As in other parts of the region, the integration process within CARICOM was relatively stagnant in the eighties.  In the nineties, however, the member states reactivated their regional ties with an economic growth strategy focused abroad and aimed at efficient penetration of its economies in the world market.  CARICOM currently has 15 member states[3] and is facing an arduous process to transform its free trade zone and customs union into a single market.  Six of its member states that make up the Organization of Eastern Caribbean States have already adopted a single currency under the administration of a common central bank.  Furthermore, CARICOM has a long tradition of regional cooperation on a wide range of issues of common interest, such as foreign policy, health, education, tourism, natural disasters, and others vital to social and economic development.

a)  the institutional structure of CARICOM

Since it was created, the Caribbean Community has had broad objectives that surpass the traditional goals of the economic integration entities.  Not only have the CARICOM countries sought to set up a single market and economy through economic cooperation, but they have constantly strived to develop a common foreign policy among member states and maintain common services through functional cooperation in such areas as health, education, culture, communications, transportation, tourism, etc.  Thus, given the extent of the areas of work in which CARICOM is involved, a complex institutional structure has been developed, made up of central bodies and a diversity of institutions.

The Community's main bodies are: the Conference of Heads of Government and the Council of Ministers.

i.  Conference of Heads of Government

The Conference is CARICOM's highest authority.  It is made up of the Heads of Government of the member countries.  As the supreme organ, it adopts the policies of the Community and grants final approval to the international treaties signed by the Community.  Its decisions are reached by consensus.  in October 1992 a Conference Table was set up to prepare proposals, promote consensus and implement the decisions adopted.  This informal entity is composed by the Chairperson of the Conference, the outgoing and incoming chairpersons, and the Secretary General of CARICOM.

ii.   Council of Ministers of the Community

The Council is comprised of the responsible ministers of CARICOM affairs among the country members and of other ministers designated by their governments. The strategic planning and coordination of the organization  is the responsibility of the Council  in areas of integration, functional cooperation and external relations.

There also are four councils at the ministerial level: Council for the Economical Development and Commerce, Council on External Relations and of the Community, Council of Social and Human Development, Council of Planning and Finances.

- The General Secretariat of CARICOM, conducted by its Secretary General, coordinates and supports meetings of the Community organs and institutions, as well as giving permanent follow up to CARICOM´s set of programs and projects.

-  There are numerous institutions in the area of functional cooperation which specializes in natural disasters matters, meteorology, food and agriculture, health, education, tourism, etc.  The Caribbean Development Bank (CDB) is an entity associated in the area of development financing.

-  During the last years, there have been advances to develop agencies in the legislative and jurisdictional areas.  In march 1990 there was an agreement to constitute a CARICOM´s Parlamentary Assembly, whose inauguration meeting was during May 1996 in Barbados.[4]  At the meeting of the CARICOM´s Conference celebrated in Trinidad and Tobago between the 4^th and 7^th of July, 1999, the Heads of State adopted the decision of establishing a Court of Justice of the Caribbean.  This new Court will work as a last instance Court of Appeals, substituting the Judicial Committee of the Privy Council, with Headquarters in London, which had continued to be the last instance Court of Appeals for many of the former British colonies.  In the 21^st Meeting of the Conference of Chiefs of Governments, celebrated in Saint Vincent and the Grenadines in July of 2000, the Chiefs of Governments agreed that the member States would sign the Agreement establishing the Caribbean Court of Justice before the end of the year.

b)  Institutional Reform for greater integration

During the nineties, CARICOM has implemented important institutional changes and norms to advance sub-regional integration.  During the last years there has been considerable activity linked to the establishment of a market  and a Caribbean unique economy which include, not only a common market, but also the harmonization of macroeconomic policies.  To reach this goal, the member States have developed a revision process of the charter of the Community, to completely implement the free commerce area and the customs union by means of an Common External Tariff, and going beyond, establishing clear guidelines of free movement of services, capital and labor.  The nine protocols which amend the Chaguaramas Treaty have been already signed, and four of them have been provisionally enforced until all the member States formally complete the ratification procedure.[5]

Protocol I, in force since 1978, has established a new framework of agencies and procedures for the Community process of decision making, introducing the voting by qualifying majority in some fields, thus softening the old norm of unanimity, and allowing some country members to integrate their economies at a faster rate than others.[6]

In 1998 the provisionally Protocol II[7] took effect, in reference to the right of the establishment,  service lending and movement of capital.  Protocol forbade Member States to introduce new restrictions to service lending, and at the same time, forced them to eliminate existing restrictions.  Also permit more mobility, at a regional scale, of persons that  take part in activities offering lending services.  Although, the free mobility of work limits graduate students from universities accredited in certain professional categories, measure that is in force since 1996.  Also, some advancement has taken place in the establishment of  mutual recognition mechanisms on professional accreditation, easying of travel for members of CARICOM and the harmonization and transferring of social security benefits.

In accordance with Protocol II, member countries are obligated to eliminate the restrictions to payments related to capital, as well as to all payments of goods and services and other transfers.   Even though many restrictions are still applied to capital movements within the region, considerable advancement has taken place in the last years.   The countries had agreed to establish a system of free convertibility within their national currencies and various countries had abolished  the exchange controls.

Other protocols subscribed in 1998 pointed towards facilitating a single market.  Protocol III on Industrial Policies is destined to optimize the allocation of funds and to reinforce international competition through the convergence of macroeconomic policies and the establishment of a solid juridical infrastructure based on harmonized legal rules.[8]  The Protocol IV on Commercial Policy, that is also provisionally in force, consolidates a variety of legal rules in reference to free movement of goods, at Common External Tariff, at rules of origin, at the coordination of policies on external commerce, at cooperation of matters of customs administration and rules on safeguard.[9]  Protocol V on Agriculture refers to the development of diversification, steadiness and competitiveness, of agricultural production.[10]  Protocol VI on Transportation Policies, introduces common policies in the areas of air and sea transportation,  a key factor in the integration of the regional market, because of its insularity.[11]   Protocol VII, provisionally applied, to Countries, Regions and Sectors Under Less Advantageous Conditions is geared   to give the economies of the Community under relatively less advantageous situation, special privileges to help them in adapting themselves to bigger competition in the common market.[12]  Protocol VIII, on Controversy Settlement and Protocol IX on Policies of Competitiveness have been subscribed to but are not in force yet.[13]

To finish the reform process, formal ratification requirements must be complied with  ratification and this requires that member states sanction national laws and establish appropriate institutional mechanisms to enforce the provisions of the several Protocols.  Furthermore, CARICOM must reinforce the functions and control mechanisms for their application and advance on those fields that require the complete functioning of a single market, as well as movement of human resources.

c)  advancement in trade-related areas

Between 1990 and 1998, total exports of goods from CARICOM grew from US$5.8 million to US$7.5 million, representing a 3%  average annual rate of increase.  The annual rate of growth on imports was 6%, reaching almost US$14 billion in 1998.  These figures underline the importance of the service sector for CARICOM.

During the nineties, commerce from CARICOM has diversified within the subregion and towards Latin America.  Even though almost two thirds of the total of exports from CARICOM continue to go towards Europe and North America, right now commerce within the CARICOM countries represents almost 16% of the total exports of the Community, having increased from 8% in 1990.  Exports to the rest of Latin America and the Caribbean represent another 5% of the total.  The relations to this region have been facilitated because of the cooperation within the Association of Caribbean States and the signing of agreements of commerce liberalization with Colombia, Venezuela and the Dominican Republic.  Between 1990 and 1998 the average rate of growth of exports within CARICOM was 12%, more than three times the total exports of the Community.  Although,  if these figures are examined more carefully, it is observed that the major part of the recent increase of the interregional commerce comes from Trinidad and Tobago, whose exports represent more than 70% of the exports within CARICOM.  Several countries of the CARICOM practically do not register exports to the rest of the Community, or show considerable variations on commerce value from one year to the next.

In the nineties, CARICOM adopted several measures to improve their commercial free zone.    In this way, the tariffs that affected the interregional commerce and several duty measurements were eliminated.

CARICOM has obtained several advances on reduction of external protection and the simplifying of the structure of Common External Duty (CET).  After some previous attempts that did not reach the forecasted goal, the member States approved a new structure for CET in 1992, together with a program of gradual reduction of tariffs, to be completed in four stages, to be finished in December 1999.  In June 2000, several countries had completed Phase IV, within the agreed date, and others had  reported  some delays in the process, due to fiscal problems related to the loss of tariffs.[14]  The application of the new CET should be perfected in year 2000, thus perfecting the customs union of CARICOM.  CET rates cover a range within 0 to 20%, with important exceptions for certain products, specially agricultural ones.  The non weighted average tariff is approximately 10%, clearly smaller than the 20% of 1991.

The process of CET has represented an important  opening effort  in the market for CARICOM, that has permitted the subregion to advance to a major liberalization of commerce and to bring closer CARICOM´s economic and commercial structure to the conditions of major opening and competition foreseen with the establishment of FTAA and commercial relations of the Community with the European Community, that gradually are abandoning the preferential character they had with other countries of the APC Group.

The complex commercial negotiations developed in the regional and global framework represent great effort for the governments of the region.  In order to make good use the few human resources of the region, and in view that CARICOM is perfecting its customs union, in 1997 the Member States established the Regional Negotiating Machinery  of the Caribbean for  International Economic Negotiations (RNM).  RNM has made important contributions towards the elaboration and application of joint  negotiating strategies, in relation with WTO,  FTAA, EU and the United States.  The signature last February of the agreement of the countries ACP with the European Community that replaced the Convention of Lomé, where the RNM performed and important role, has meant an important institutional achievement of CARICOM.

d)  Some thoughts on the Caribbean experience

CARICOM is a regional organization that present special characteristics that have to be emphasized.  In the first place, its objectives, although centered in the goal of economic integration with the creation of a single market, go further than the economic sphere to adopt from its very beginning, the shaping of a community within all Caribbean nations.  This advance notion of integration gave place to a dense regional cooperation in several areas, even in the external relations of the Caribbean countries.

Precisely in the frame of external dimension, in 1997 an institution was created,  new  to the integration experiences in Latin American and the Caribbean: the Regional Negotiating  Machinery of the Caribbean for International Economic Negotiations.  This permanent body, not only permits to make good use of those always scarce human resources of high level and experience on complex international negotiations, but its own existence and functioning has required the development of a policy of negotiation on commercial matters for all the Community.  This experience should be studied in detail to seriously analyze the possibilities to be applied in the frame of other subregions.  The complexity of simultaneous negotiations, at an intraregional, hemispheric (FTAA), inter-regional (negotiations with the European Union in the framework of the ACP countries as a result of the renewal of the Lomé Convention)  and international level (WTO), demands instruments and institutional procedures that are capable of creating consensus and coordinated positions that articulate the various interests of the components of the sub regional entities of integration, making more effective the representation and improving the capacity of negotiation of our countries on their external relations.

On the other side, CARICOM has developed a vast and profuse net of institutions and inter governmental meetings, from private sector and from non governmental organizations.  This ¨institutional density¨ and the consequent net development, formal or informal, have pushed the integration of the Caribbean in numerous areas.  The existence of a permanent organization, the General Secretariat, endowed by human and budget resources that permit the support of a high level activity of the Community, constitutes a stand out element.

A note to underline in the process of institutional reform, that has implied modifications to the chart through additional protocols, is that no only the judicial rules to perfect the single market has been developed, but they have also incorporated the principle of decision making by a majority, over the prevalent rule of unanimity or consensus, that constitute the dominant practice within the integration organizations in our region.

Another process to emphasize is the incorporation of new members, like Suriname in 1995 and Haiti at the end of the nineties, extending CARICOM further beyond the Anglo Community of the Caribbean;  also the closeness of new Caribbean actors, like Cuba and the Dominican Republic, and of the Caribbean basin, like Venezuela, Colombia, Mexico and Central America.

3.  Central American Economic Integration

a)  the normative framework

The General Treaty of Central American Economic Integration is the framework of the process of integration in Central America.  The Treaty established the fundamental principles to advance towards the unification of the economies, to establish a Common Market  and to jointly push the development of Central America.   With that purpose, the Member States are committed to perfect a Free Commercial Zone and to adopt a common tariff to institute a Customs Union.[15]

As part of the process of ¨Esquipulas¨, the Central American Heads of State celebrated in 1990 the Antigua Summit in Guatemala, destined to the planning of regional economic development and where they approved the Economic Action Plan for Central America.   This Plan disposed the creation of a new juridical and institutional framework of integration, that carried on to the subscription, on December 13, 1991, to the Tegucigalpa Protocol, where the System  of  Central America Integration is built.

In order to adapt the General Treaty to the new institutionalism created by the Protocol of Tegucigalpa, the Presidents of Central America subscribed on October 29, 1993, the Protocol to the General Treaty of Central American Economic Integration, known as the Protocol of Guatemala.  This new instrument reaffirms the goals, objectives and fundamental principles of the economic integration of the region.  As a main innovation to the process, it establishes the possibility of advancing towards the economic union at different speeds, permitting partial agreements between its members.

b)   institutional framework in the Central American Integration

With recovery of the integration process dynamics during the nineties, there was an advance in the process of organizational reform and modernization, which arrived to an agreement of the Presidents in 1997.[16] Thus, the following reforms were adopted:

-  Institutional framework of the Presidents’ Meeting[17]

Due to the importance obtained by the Presidents during the Central American peace process, the Meeting of the Central American Presidents constituted in itself the main organ of the Integration System.  An annual ordinary meeting was established and some extraordinary meetings were held.  A  six month rotating presidency was instituted and designated the Secretary General of SICA to help with the administrative and technical functions the Pro-Tempore Presidency.

-  Council of Ministries

It was maintained that the statements of the Protocol of Tegucigalpa, that established the Council of Ministries, consisting of the Ministers of the field, preserving the Council of Ministers of Foreign Relations as the main organ of coordination of the Central American Integration System.   In parallel it was determined that the Ministries of Economy, as part of the Council of Ministers of the Protocol of Tegucigalpa, representing the national economic cabinets take part in the Council of Ministers of the Economic Integration.

-  Central American Parliament

The reform of the powers of the Central American Parliament was established,   keeping it as the main institution of the Regional Integration Process.

-  Central American Court of Justice

The Central American Court of Justice is the main  and permanent judicial institution of the Central American Integration System, whose goal is to guarantee the judicial security of the process of integration and the control of the legality in the adoption and execution of the decisions.

-  Secretariats

Given that in Central America there are several  support secretariats to the process of integration in some areas, the Presidents boosted the unification of the same, but this objective suffered modifications, keeping the existing ones but looking for a major coordination. The two main ones are: SICA General Secretariat of the Central American Integration System, and SIECA, Permanent Secretariat of the General Treaty of the Central American Economic Integration.  Nevertheless, there are two other specialized secretariats: SISCA Central American Social Integration Secretariat, and SE-CCAD Executive Secretariat of the Central American Commission on Environment and Development, SG-CAC General Secretariat of the Central American Farming Council, SG-CECC General Secretariat of the Central American Education and Culture Coordination, SITCA Secretariat of Central American Tourism Integration, SE-CMCA Executive Secretariat of Central American Monetary Council.

-          Economic Integration Area

Within the institutional régime of the Central American Integration System which begins at the decision making phase by the Presidents´  Meeting and the execution and follow up by the Council of Ministers, in the specific area of economic integration,  the following departments exist:

i. The Council of Ministers of Economic Integration, composed of the Ministers of Financial Cabinets and the Presidents of the Central Banks, whose responsibilities are the coordination, harmonization, convergence and unification of the economic policies of the countries.  The Council presents proposals for general policies and directions  with the purpose of passing them for approval to the  Presidents´ Meeting.

ii. Inter-sectorial Council of Ministers of Economic Integration, which gathers the Council of Ministers of Economic Integration with heads of other Ministries such as the Ministers of Foreign Relations, Agriculture, Finance, etc. and the sectorial Council which gathers the Ministers of only one branch in accordance with the subjects of their expertise.

iii. Permanent Secretariat of the General Treaty of Economic Integration of Central America (SIECA), has as its function the technical administrative support of the economic integration and must ensure that the legal instruments are applied correctly in the regional area of economic integration.

iv. There is also the Central American Bank of Economic Integration (CABEI), the Consulting Committee of Economic Integration (CCIE), formed by representatives of the private sector organized regionally, related to SIECA.

c) advances in the Central American economic integration process during the    1990s

Thanks to the renewed dynamism of Central American integration in the 1990s, the process was also extended to other neighbouring continental countries such as Panama and Belize and to the island state of the Dominican Republic. In November of 1997, the presidents of Central America and of the above-named countries met in Santo Domingo and signed a Declaration and a Framework Cooperation Agreement formally launching the enlargement of the subregional integration process. This new sphere of cooperation has served as a political forum, for instance, for the meeting preparatory to the visit of the President of the United States in 1999;[18] or for coordinating efforts to deal with the natural disasters that struck the subregion.

To consolidate what was agreed with respect to economic and trade integration at the 1997 Santo Domingo Summit, the Central American countries conducted accelerated negotiations that culminated in the signing of the Free Trade Agreement with the Dominican Republic in Santo Domingo on 16 April 1998.[19]

With a view to modernising trade relations between Central America and Panama, formal negotiations began on 21 March 2000 with the Joint Declaration of the Central American and Panamanian Ministers for Foreign Trade. The Free Trade Agreement currently being negotiated embodies all the regulations of a latest-generation free trade agreement and it is hoped to finalise it during year 2000.

Like the rest of the region, Central America also renewed its efforts at integration during the 1990s in the face of the globalisation process. The new push towards integration encouraged broad liberalisation of the goods trade, thereby fomenting the rapid growth of the regional market in the early 1990s. Nevertheless, the Central American integration process lost momentum under the impact of the international financial crises of the second half of the 1990s.

The trade liberalisation process within the CACM made significant headway in the nineties. In 1990, the CACM member countries reintroduced a common external tariff (CET), this having been abandoned during the crisis of the 1980s. The new CET would institute rates of 5-20 per cent. In 1995 the governments agreed to expedite the tariff rollback process with the aim of reaching a CET level of 0-15 per cent by 1999 at the latest. In June of 1997, however, the member countries decided to delay the full implementation of the CET until 2005.

Total group exports grew vigorously over second half of the 1990s at an average annual rate of 22 per cent, as against 13 per cent in the preceding years. Imports, for their part, maintained a steady 15 per cent average growth rate throughout the 1990s. As regards trade within the CACM, intra-regional exports grew at an annual average rate of 15 per cent between 1990 and 1998. Since 1994, these exports have been far less dynamic than exports to third countries. The share of intra-regional exports in aggregate figures has contracted, to stand at roughly 13 per cent in 1998 (versus 24 per cent in 1980). Intra-regional imports accounted for about 11 per cent of the 1998 total, down from the 20 per cent recorded in 1980.

As the new regulatory framework allows for partial agreements amongst members, El Salvador, Guatemala, Honduras and Nicaragua in 1993 announced their decision to set up a customs union. As the group did not rapidly attain that goal, Guatemala and El Salvador announced in 1996 their intention to create a bilateral customs union, and their governments reaffirmed this in August 1999. The establishment of the customs union was scheduled for 1 January 2001. In May 2000, El Salvador, Guatemala, and Nicaragua signed a joint presidential declaration designed to give added impetus to sub-regional integration.[20] In spite of these various attempts, the Central Americans have not made much progress towards the completion of the common market, even though major strides were made in regard to the CET. It may therefore be concluded that the CACM is continuing to develop as a free trade area, but has failed to advance towards becoming a genuine subregional customs union.

d)  some reflections on the Central American experience

The experience of integration in Central America very clearly shows the close interrelationship of politics and economics in the integration process. The end of the serious conflicts besetting the region in the 1980s made it possible to regain lost ground in economic integration.

As in other subregions, the leading role played by the Heads of State was of capital importance in the development of subregional integration, not only in overcoming the crisis of the 1980s, but also in setting Central American integration on a course towards closer ties amongst the five traditional members from the isthmus and towards gaining new partners in Central America and the Caribbean.

This new integrative momentum has gone hand-in-hand with amendments to the regulatory framework to create more flexible ways towards greater integration, and economic integration in particular. These changes have led to enhanced integration and in turn to increased trade and economic growth, though the Central American Common Market has not yet been fully developed.

The protracted integration process in the subregion has spawned a number of institutions, including permanent ones such as SICA and SIECA, as well as decision-making forums at the intergovernmental, ministerial or presidential levels. A characteristic feature of integration in Central America is the fluidity and density of contacts between the various levels of decision making in member countries, including the presidents. This wealth of institutions has made for greater coordination based on the leadership of the presidents in recent years, and has simultaneously spurred further growth of integration in a range of areas. Thanks to this institutional structure, it has been possible to preserve the ties between the member countries even during the most heated moments of conflict of the 1980s. That structure is today facing new challenges attendant on the intensification of the integrative process and its enlargement to include new members.

4. Southern Common Market (MERCOSUR)

Since the early 1990s, a process of revitalisation and renewal of Latin American subregional integration has accompanied the structural economic reforms being effected in the countries of the region. The Southern Common Market created in 1991 between Argentina, Brazil, Paraguay and Uruguay soon came to prominence for the magnitude of the economic area being developed in the Southern Cone of South America - with a population of over 200 million and a GDP in excess of US$ 800,000 million. Its objectives were also accordingly ambitious: to create a common market for the free movement of goods, services, capital and persons, and to coordinate the economic policies of its member countries. Equally striking was the single-mindedness with which it pursued its set targets, and in particular, the satisfactory conclusion in December 1994 of what was known as the transition phase.

The Treaty of Asuncion signed by Argentina, Brazil, Paraguay and Uruguay on 26 March 1991 signalled the birth of MERCOSUR. The Treaty set forth the objectives of integration in the subregion: the free circulation of goods, services and factors of production through the elimination of tariff and non-tariff barriers; the institution of a common external tariff; coordination among member countries in international and regional economic forums and the coordination of macroeconomic and sectoral policies.

To attain the goals of the Treaty of Asuncion, a transition stage was established together with a strict timetable for the rollback of tariffs in the trade between member States. That phase was satisfactorily concluded on 31 December 1994. The Protocol of Ouro Preto additional to the Treaty of Asuncion formally set out the achievements of the transition phase: the creation of a free trade area, whilst allowing exceptions with set time-frames for eliminating them, and the raising of a common external tariff. Accordingly, an "imperfect" Free Trade Area and Customs Union was established in January of 1995 between Argentina, Brazil, Paraguay and Uruguay.[21]

            a)  MERCOSUR institutions

In December 1994, the Protocol of Ouro Preto established the definitive Common Market institutions, based on the experience garnered during the transition phase. During that period, and pursuant to the Treaty of Asuncion, two inter-governmental bodies were set up, the Common Market Council and the Common Market Group. MERCOSUR is thus governed  by three main bodies: the Common Market Council (CMC), the Common Market Group (GMC), and the Trade Committee (CCM). There are also two collegiate consultative bodies: the Parliamentary Committee and the Economic and Social Consultative Forum. The Administrative Secretariat complements this institutional structure by providing technical support.

As the highest body, the Common Market Council makes its decisions by consensus, with the presence of all four partners. The CMC is comprised of Ministers for the Economy and Ministers for Foreign Affairs. In addition, depending on the specific area to be addressed, it may also include ministers with other portfolios. The Council holds an ordinary meeting every six months, but may convene for extraordinary sessions in cases of emergency.

Pursuant to the Treaty of Asuncion, the presidents of member countries must be present at meetings of the Common Market Council. This has imprinted the MERCOSUR process with strong leadership by the Heads of State and the consequent political support for subregional integration.

The Pro Témpore presidency of MERCOSUR - rotating every six months between the four countries - has also lent great impetus to the process as each member country expressly pledges to further the integration process and to attain specific objectives during the corresponding period.

The Common Market Group (GMC) is composed of four representatives from each of the four countries. The representatives to the GMC are senior officials from the Ministries for Foreign Affairs, the Economy, and Trade and from the Central Bank of each country, the first above-named normally being the national MERCOSUR co-ordinator.

The Common Market Group implements all the decisions of the CMC and receives the recommendations made by the sectoral working groups and specialised meetings. The Common Market Group adopts resolutions by consensus and with the presence of the four members.

The MERCOSUR Trade Commission, a new institution established by the Protocol of Ouro Preto, administrates trading relations between the members and acts as a forum of first instance for the settlement of trade disputes.  This Commission reports to the Common Market Group and its function is to follow up and oversee the application of MERCOSUR trade policy measures, both amongst the member countries and with respect to third countries. The Commission has ten sectoral technical committees, and endeavours to reach solutions by means of recommendations. It approves guidelines that are binding on the States party, by consensus.

            b)  Growth of economic integration during the 1990s

Despite the shortcomings in the application of the CET regime, the external protection that prevailed in MERCOSUR during the 1980s has been markedly reduced The trade bloc's average tariff decreased from 41 per cent in 1986 to 12 per cent in 1996 and MERCOSUR trade therefore expanded rapidly over first half of the 1990s. The value of total exports increased from US$ 47 billion in 1990 to US$ 84 billion in 1997. Imports showed even greater dynamism, growing from US$ 32 billion to US$ 106 billion for the same period. Nevertheless, since 1998, both exports and imports have diminished under the impact of the international crises originating in Asia and Russia. Over the 1991-97 period, MERCOSUR exports grew at an annual average rate of 9 per cent, whilst total imports increased at a rate of 18 per cent.

Although overall MERCOSUR exports increased, the most sizeable increase occurred in intra-bloc trade. Between 1990 and 1997, the average annual growth rate of intra-regional exports was 26 per cent, rising from US$ 4 billion to US$ 21 billion. This remarkable export performance ended in 1998 when intra-regional exports contracted by 2 per cent owing to the economic downturn in Argentina and Brazil. Yet the fall-off in intra-regional exports was less pronounced than the three-per cent contraction in the group's extra-regional exports.[22]

Even so, the subregional economic crisis, the devaluation of the real and the low growth rate of the Brazilian economy (1%) even further depressed Brazil's purchases in the subregion for 1999. The trend of the preceding years was thus reversed and in 1999 Brazil generated its first trade surplus with its MERCOSUR partners since 1994. The reduction of successive Brazilian deficits occurred in conjunction with a drastic contraction in intra-regional trade (-26%) and in Brazilian exports to Uruguay, Paraguay and Argentina (-23%). The surplus with the bloc as a whole was not reflected in Brazil's bilateral trade with Argentina, with which Brazil recorded a deficit of some US$ 450 million in 1999. That deficit was accompanied by a 25 per cent falloff in trade which, although appreciable, was far below that recorded in 1998 (US$ 1,280 million) with that same country.

The share of intra-regional trade in aggregate MERCOSUR exports rose throughout the decade, from 9 per cent in 1990 to 25 per cent in 1998. Thus, amongst the various integration schemes in Latin America, the group has posted one of the highest levels of trade interdependence. Indeed, for each of its member countries, MERCOSUR is now an important export market and a major source of imports. As the group's largest trading partner, Brazil absorbs almost one-third of Argentine exports, and well nigh 40 per cent of Paraguayan and 35 per cent Uruguayan exports. Although MERCOSUR trade with other markets in Latin America and the Caribbean also increased, the proportion of its exports to other destinations worldwide showed a decline. The European Union, in particular, has become relatively less important for MERCOSUR exports, as it now absorbs 22 per cent of total group exports, which is significantly less than the 32 per cent of 1990.

The devaluation of the Brazilian currency in January of 1999 spelled serious economic problems for MERCOSUR member countries. Those problems were accompanied by temporary trade restrictions.[23] Nevertheless, the uncertainty caused by the 1999 devaluation of the real began to subside with the stabilisation of Brazil's macroeconomic variables, a process that was already apparent in the closing months of 1999 and which was consolidated during 2000.

c) towards greater macroeconomic coordination

The economic problems that plagued MERCOSUR during 1999 brought out the need for greater coordination of macroeconomic policies in the subregion and for a formal institutional structure with more sophisticated dispute settlement machinery. With this in mind, two working groups were created in June 1999 for economic and trade matters respectively. The Macroeconomic Coordination Committee is responsible for examining the economic policies of MERCOSUR member countries and for drafting new macroeconomic coordination proposals, including an action programme for greater macroeconomic convergence. This Committee has also been asked to explore mechanisms for the harmonisation of statistical data and to identify methodological criteria used by some member countries to prepare their economic indicators. The Trade Coordination Committee has been charged with assessing the economic implications of devaluation for trade flows within and outside the group. Besides, the MERCOSUR Heads of State endorse the idea of elaborating a "mini-Maastricht Agreement" for securing fiscal balance within the group as a first step towards the creation of a monetary union.

Endeavours to achieve greater coordination of economic policy constitute a positive development, as recent trade imbalances resulted in no small measure from considerable macroeconomic divergences and from the differences in the pace and scope of economic policy responses amongst the countries of MERCOSUR. Such has been the case of Argentina and Brazil in particular, where diverging exchange rate and fiscal policies have engendered economic upswings and downturns over different periods. Argentina's promulgation of the Convertibility Law in 1991 produced a fixed exchange rate pegged to the United States dollar. In 1994 Brazil adopted the Real Plan, which made it possible to curb inflation and relaunch economic growth. The impact of Asian financial crisis of late 1997 and of the Russian economic crisis of mid-1998 destabilised Brazil's financial situation, placed enormous strain on its balance of payments, and led to the adoption of a floating exchange rate system in early 1999.

To address the matter of exchange rates, emphasis has been placed on the need to forge ahead with the convergence of macroeconomic policies amongst member countries and on the goal of concluding a Maastricht-type agreement for MERCOSUR that would pave the way for the introduction of a single currency in a subsequent phase of the integration process and after a lengthy process of macroeconomic coordination and convergence.

d) some reflections on the MERCOSUR experience

One initial consideration regarding the MERCOSUR experience is the speed with which ambitious integration targets were attained. Although integration in the Southern Cone built upon an intensive integration process launched between Argentina and Brazil in 1985 with the signing of the Declaration of Iguazu by Presidents Raúl Alfonsín and José Sarney and continued at a rapid pace until the 1991 signing of the Treaty of Asuncion, it must not be forgotten that after a protracted series of failed regional initiatives over several decades, the success of MERCOSUR, at least in the spheres of trade and economic integration, remains a gratifying source of surprise and satisfaction.

Various factors may account for that success, but there is no doubt that the unflagging political will of the participating States and their compliance with the commitments assumed in the Treaty of Asuncion played crucial part. One aspect already mentioned but which is worth underscoring - being such a positive and exemplary experience - is the adoption of a strict trade liberalisation programme that was applied during the transition phase, culminating in the establishment of a free trade area and an imperfect customs union in December 1994.

Another remarkably positive aspect of the shaping of MERCOSUR was the leadership forthcoming from the highest reaches of the participating governments, not only from the presidents, but also from the ministers and high-level negotiators who spearheaded the entire process. MERCOSUR is an intergovernmental process virtually devoid of "community" components. This positive feature of the formation stage seemingly turns into a drawback in the phase of consolidation and development.

The institutional shortcomings in the community aspect of MERCOSUR, even by the standards of other regional experiences - let us not forget that apart from the operationally limited "Administrative Secretariat" there is no permanent common body - are giving rise to a relatively high level conflict within the integrative process. This observation does not imply that the mere existence of a strong general secretariat or "community" commission necessarily precludes conflicts of interest amongst the various stakeholders, including the non-governmental ones, but would seemingly help circumvent the need for periodic intervention by the highest authorities in order to settle differences or overcome serious crises. Progress through the stages of integration normally requires institutional reforms, a fact that can be regularly observed across various regions.

Another noteworthy aspect is that although the intergovernmental forums are not hampering the extension of integration into various economic, social and cultural spheres, it would seem that the absence a permanent body - which means that coordination and follow-up take place only amongst the participating governments - is a factor that is retarding progress towards more intense integration.

Those conflicts that span several stages may perhaps never be fully resolved, as there are no facile solutions to them. Nevertheless, just as it produced results in earlier stages, the adoption of legal commitments with strict programmes and of binding common standards may be a useful lesson that MERCOSUR can offer to others, and to itself.