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WORLD TRADE WT/COMTD/78

27 November 2012
ORGANIZATION
(12-6438)

Committee on Trade and Development Original: Spanish

LATIN AMERICAN INTEGRATION ASSOCIATION (LAIA) -
BIENNIAL REPORT TO THE WTO

Information on Measures Taken by LAIA Member Countries under the
1980 Treaty of Montevideo (1/1/2006-31/12/2007 Period)

On 4 October 2012, the following communication and the attached report were received from
the Delegation of Uruguay for distribution to the Members of the WTO.

The Latin American Integration Association (LAIA) member countries which are also
Contracting Parties to the General Agreement hereby notify the World Trade Organization
Committee on Trade and Development of the activities undertaken pursuant to the 1980 Treaty of
Montevideo between 1 January 2006 and 31 December 2007.

_______________
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TABLE OF CONTENTS

Page

I. INTRODUCTION ...................................................................................................................... 3
II. AGREEMENTS ESTABLISHED AND AMENDMENTS MADE DURING
THE 2006-2007 PERIOD ........................................................................................................... 5
A. ECONOMIC COMPLEMENTATION AGREEMENTS (ANNEX 1) ....................................................... 6
A.1. Additional Protocols ...................................................................................................... 6
A.2. Signing of New Agreements ........................................................................................ 15
A.3. Economic Complementation Agreements Rendered Invalid ....................................... 16
B. OTHER TYPES OF PARTIAL-SCOPE AGREEMENTS (ANNEX 2) .................................................. 16
B.1. Agriculture Agreement ................................................................................................ 16
B.2. Agreements Signed Pursuant to Article 14 of the 1980 Treaty of Montevideo ........... 18
C. AGREEMENTS SIGNED BETWEEN LAIA MEMBER COUNTRIES AND NON-MEMBER
LATIN-AMERICAN COUNTRIES (ARTICLE 25 OF THE 1980 TREATY OF MONTEVIDEO;
ANNEX 6) .................................................................................................................................. 18
III. EVOLUTION IN TRADE ........................................................................................................ 18
REGIONAL ECONOMIC CONTEXT .............................................................................................. 18
GLOBAL FOREIGN TRADE ......................................................................................................... 19
INTRAREGIONAL TRADE ........................................................................................................... 20
ANNEXES
PROTOCOLS SIGNED BETWEEN 1 JANUARY 2006 AND 31 DECEMBER 2007 ........... 23
ANNEX 1
ECONOMIC COMPLEMENTATION AGREEMENTS ......................................................... 25
ANNEX 2
OTHER TYPES OF PARTIAL-SCOPE AGREEMENTS ....................................................... 28
ANNEX 3
RENEGOTIATION AGREEMENTS FOR CONCESSIONS GRANTED DURING
THE 1962-1980 PERIOD ......................................................................................................... 30
ANNEX 4
REGIONAL AGREEMENTS .................................................................................................. 31
ANNEX 5
AGREEMENTS ESTABLISHED BETWEEN LAIA MEMBER COUNTRIES AND
LATIN AMERICAN COUNTRIES NOT MEMBERS OF LAIA............................................ 32
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I. INTRODUCTION

Pursuant to paragraph 4(a) of the Ministerial Decision of 28 November 1979 regarding
"Differential and More Favourable Treatment, Reciprocity, and Fuller Participation of Developing
Countries", the permanent delegations of the 12 Latin American Integration Association (LAIA)
member countries submit, for consideration by the other World Trade Organization member
countries, this report, which describes the trade which took place during the 2006 to 2007 period and
summarizes the progress made during said period within the framework of the 1980 Treaty
of Montevideo. The previous report, dated September 2006, described the measures taken
between 1 January 2004 and 31 December 2005, for which reason the current report discusses the
progress made between 1 January 2006 and 31 December 2007.

During the 2006-2007 period, the integration process continued to progress, both as regards
the consolidation of the partial-scope agreements established and the expansion of the existing trade
liberalization process. The progress of the regional integration process during the period was chiefly
demonstrated by the observance of the various gradual tariff reduction schedules established in the
economic complementation agreements signed in recent years. Some of these agreements have,
through compliance with the corresponding tariff reduction schedules, already resulted in free trade
for practically all goods.

Within the framework of LAIA, during this period, 41 legal instruments were signed.
Only two of these were new agreements; the rest were additional protocols.

The only new economic complementation agreement signed was No. 62, which deals with the
multilateralization of the bilateral agreements already signed between the countries of MERCOSUR
and Cuba. The other new agreement was Partial-Scope Agreement (PSA) No. 3, which relates to
agriculture and was signed by Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay.
Through PSA No. 3, the Agreement Establishing the Southern Agricultural Council was incorporated
into the LAIA legal system.

As well as lengthening the period of validity of and further developing the trade liberalization
provisions in certain agreements, the additional protocols introduce new legal instruments into other
agreements in order to extend or improve their scope.

The objective of eight of the additional protocols is to extend the period of validity of the
corresponding agreements' preferences or rules. The remaining additional protocols incorporate
further-reaching standards into their corresponding agreements.

As discussed in previous reports, out of all the agreements signed within the framework
of LAIA, it is the economic complementation agreements (ECAs) which are especially noteworthy,
particularly the 13 ECAs relating to free trade. The Cartagena Agreement, which establishes the
Andean Community (CAN) and which has not been formalized within the framework of the
Association, can be included in this category. These 14 agreements involve 48 of the 66 intra-LAIA
bilateral relations.

Progress as regards the regional aspect of the integration process continued to be weak,
and the main regional instruments were thus stagnant. It should be noted that seven regional
agreements are currently in effect within the framework of the 1980 Treaty of Montevideo.1

1
The regional agreements in effect are: (a) the Framework Agreement for Trade Promotion through
the Overcoming of Technical Barriers to Trade; (b) regional market-opening agreements favouring Bolivia,
Ecuador, and Paraguay; (c) the Regional Agreement on Scientific and Technological Cooperation
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In recent years, the Association's work agenda has included a group of issues of regional
scope. Notable among them are the issues concerning the following: physical integration and
infrastructure; business participation; participation of relatively less economically developed
countries; jobs in the production sectors and in information and communications technologies.
Particularly worthy of mention in these areas were the efforts undertaken during the period under
study to strengthen the support system for relatively less economically developed countries and to
decrease imbalances; the call for the participation of businesspeople and workers in institutional
spaces; support for business management and financing of trade; and the work carried out in logistics
and infrastructure.

Notwithstanding the foregoing, during the two years covered by this report, the Association's
activities continued to centre primarily on the development and consolidation of the Free Trade
Area (FTA). The resolutions of the 13th Council of Ministers of October 2004 established an
important political mandate aimed at setting up the FTA, thereby fomenting a qualitative change in
the process of regional integration. In order to meet this objective, the Council of Ministers issued
three resolutions (Resolutions 59, 60, and 61 [XIII]) which served to establish the general guidelines
for action by the Association in the medium term. As their goals, the guidelines propose going further
into the integration process and developing new topics for its agenda, the main components of
which are: market access, common standards and disciplines, support for relatively less economically
developed countries, and associated matters.

The tasks set in respect of the FTA resulted in the matter being addressed by the
Committee of Representatives in order to organize a group of activities primarily aimed at defining
the way in which to approach the creation of the FTA. Several measures were taken in support of
these activities: specific working groups were established; during the period under study,
two meetings of the Senior Officials Responsible for the Integration Policies of Member Countries
were held (May 2006 and June 2007); also held were meetings of experts in specific topics
considered essential to the creation of the FTA (origin, safeguards, and dispute settlement); studies,
seminars, and virtual forums were established in order to put forth and analyse concrete proposals in
the search for substantial progress in the integration process.

All the aforementioned measures have generated a series of proposals and documents which,
despite the effort invested, have not produced concrete results to date, but which have, nonetheless,
enabled consensus regarding the priority issues which will make it possible to define the work of the
Association in the coming years. Given the ambitious objectives entailed by the decision to create
the FTA, the decisions taken reveal that, in practice, in the coming years, the agenda will be steered
by the recommendations which come out of the Evaluation and Convergence Conference.

In the area of trade rules and disciplines, it was clear that there is a need to prioritize issues
such as rules of origin, safeguards, and dispute settlement. Concrete results regarding these
three issues are expected in the near future.

Also given priority were matters such as trade facilitation, productive complementation, the
use of information technologies, and cooperation in support of relatively less economically developed
countries. Of note as well was the desire to introduce guidelines aimed at developing the social
dimension of LAIA.

A definitive choice was made in terms of an agenda which would enable concrete results in
the coming years, taking into account, on the one hand, the resources available to the Association,
and, on the other, the balancing of the various different positions held by the 12 member countries.

(framework agreement) among LAIA Member Countries; (d) the Regional Agreement on Cooperation and
Trade in Goods in the Cultural, Educational, and Scientific Sectors; (e) Regional Tariff Preference.
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In addition to discussing the negotiation activities carried out by member countries during
the 2006-2007 period, this report shows how trade in LAIA countries has evolved.

In addition to discussing the characteristics of the new agreements signed, section II of this
report also discusses the amendments made to the rest of the partial-scope agreements signed both
among LAIA countries and with other Latin American and Caribbean countries.

Section III summarizes the evolution of trade in LAIA countries, both as regards total trade
and intraregional trade. The section shows that, in the two-year period under study, the total imports
and exports of the countries of LAIA continued to grow so significantly that they reached a record
high in 2007.

Lastly, annexed to this report is a list of the various agreements and protocols signed
between 1 January 2006 and 31 December 2007.

II. AGREEMENTS ESTABLISHED AND AMENDMENTS MADE DURING
THE 2006-2007 PERIOD

This section of the report discusses the negotiation activities undertaken by member countries
during the 2006-2007 period in terms of both the signing of new partial-scope agreements (the content
of which is summarized) and the amendments made through protocols to prior agreements.
The section discusses the subject matter of each amendment.

The aforementioned negotiation activities are grouped under various headings, each of which
corresponds to the type of agreement stipulated in the 1980 Treaty of Montevideo (TM80). As noted
in the corresponding annexes, they are presented in the order established by the articles of TM80, and
the various situations corresponding to each case are identified.

Through the years, the agreement negotiation process within the LAIA framework has been
progressive. The initial agreements, which were selective and concerned fixed preferences, have been
replaced by agreements which are more detailed and have a broader scope from a tariff perspective,
and which are more complex and comprehensive as regards their regulations. Over the 28 years since
the founding of the Association, this process has made possible the signing of a total
of 167 agreements between member countries, in addition to the 38 agreements signed, pursuant
to Article 25 of the 1980 Treaty of Montevideo, with Latin American countries which are not
members of LAIA.

At present, the network of agreements consists of a total of 74 agreements:
seven regional-scope agreements plus 67 partial-scope agreements. The most significant
achievements are primarily related to the development of economic complementation agreements,
and, very particularly, to those known as free trade agreements (FTAs). The adoption of this kind of
agreement, the main objective of which is the establishment of free trade areas or of more advanced
stages of integration within given time-frames, introduced qualitative changes to the negotiation
dynamic, as well as helping to substantially promote the expansion of intraregional trade.

There are three different situations in the current tariff liberalization process within LAIA:
(a) firstly, there is a set of FTA-based relationships (32) which have already made progress in the
liberalization of a large part of the tariff universe; (b) secondly, there are the bilateral relations (16)
which are also FTA-based, but whose tariff reduction schedules are at an intermediate stage,
which means that few items are currently liberalized, while at the same time, the bulk of the progress
foreseen in the liberalization of intraregional trade depends on compliance with these schedules;
(c) lastly, there is a set of relationships (17) which are still based on fixed-preference agreements
which have a limited number of liberalized items and which do not contain free trade commitments.
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As mentioned in the previous report, fewer new agreements have been signed in recent years,
mostly because the geographic coverage of the agreements is gradually becoming complete. During
the period under study in the present report, only one new economic complementation agreement
(ECA No. 62) was signed; ECA No. 62 concerns the multilateralization of the bilateral agreements
already signed between the countries of MERCOSUR and Cuba. This multilateralization includes the
expansion and enhancement of the preferences in effect in each bilateral relation.

Although the number of concrete advances was small, the following bear noting as the most
significant of the 2006-2007 period:

 The expansion and development of Economic Complementation Agreement No. 6
between Argentina and Mexico (ECA No. 6), which comprises nearly 50% of the
tariff universe and a new legal text which introduces new disciplines and updates
previous ones so that it sets in order and supersedes all the provisions
established previously;

 within the framework of ECA No. 22 (Chile-Bolivia), Chile's granting of a tariff
preference of 100% to the tariff universe of products originating in Bolivia, except for
items subject to price bands;

 the expansion and consolidation of ECA No. 40 between Cuba and Venezuela, which,
among other provisions, liberalizes access to the Cuban market for the
entire Venezuelan tariff universe;

 the signature of Partial-Scope Agreement on Agriculture No. 3 between the countries
of MERCOSUR and Bolivia and Chile, which formalizes before LAIA the
Convention Establishing the Southern Agricultural Council (CAS).

Another important event during the period under study was Venezuela's withdrawal from the
Group of Three Agreement (ECA No. 33, signed by Colombia, Mexico, and Venezuela).
In May 2006, Venezuela notified the governments of Colombia and Mexico, as well as the General
Secretariat of LAIA, of its decision to formally withdraw from ECA No. 33. As a result, there no
longer exists a preferential trade framework between Mexico and Venezuela. Said withdrawal
entered into force 180 days after its notification to the other parties and to the General Secretariat.

Various amendments were also made to the partial-scope agreements previously signed;
this report discusses said amendments. The annexes to this report identify the partial-scope
agreements established and in force. Where such protocols exist, these annexes also identify the duly
signed corresponding additional protocols.

A. ECONOMIC COMPLEMENTATION AGREEMENTS (ANNEX 1)

A.1 Additional Protocols

The member countries of the Association have been engaged in multiple negotiation activities
related to the signing of additional protocols which amend the economic complementation agreements
in effect between 1 January 2006 and 31 December 2007. These amendments essentially deal with
extending the period of validity of the preferences negotiated, and, in some cases, expanding
liberalization programmes through the granting of new preferences. The following economic
complementation agreements have been amended in accordance with the foregoing:
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ECA/2 (Brazil and Uruguay)

Since the beginning of MERCOSUR, trade in automobiles and automotive parts between
countries has been governed by special regimes exempting it from the liberalization entailed by the
establishment of the common market. Reciprocal automotive-sector trade between Brazil
and Uruguay is regulated by Economic Complementation Agreement No. 2. The conditions of this
regime have been amended in recent years, and the 62nd Additional Protocol of December 2005
established new rules for bilateral trade between the two countries. The new regime entered into force
on 1 January 2006, and provisions were established stipulating that it was to remain in effect until the
entry into force of the MERCOSUR Agreement on Automotive Policy (MAP).

Later, through the 65th Additional Protocol, both parties agreed to maintain until 30 June 2007
the rules for bilateral trade in the automotive sector.

It was, moreover, decided that, where applicable, the quotas established for preferential
access to the countries' respective markets during the aforementioned period would be half of what
had been determined previously, under Articles 5 and 6 of the 62nd Additional Protocol.

This protocol thus reduced by 50% the preferential access of one party to the other party's
market in the automobile categories indicated in the aforementioned articles.

The 66th Additional Protocol later extended these conditions until 31 July 2007 and obligated
Brazil and Uruguay to continue negotiations on trade rules for the automobile sector between
the two countries.

In accordance with prior provisions, Additional Protocol No. 67 incorporates the
Agreement on Common Automotive Policy between the Federative Republic of Brazil and the
Eastern Republic of Uruguay into ECA No. 2, and stipulates its validity until 30 June 2008, provided
that an automotive policy is not established in MERCOSUR (PAM)2 before said date.

This protocol thus provides for a transitional agreement which is to be in effect until the entry
into force of the MAP or until 1 July 2008, and which enables continued negotiations without the
pressure of short deadlines.

In the event that the MAP were not approved before 30 June 2008, the protocol establishes
that the new agreement between Brazil and Uruguay must be based on "a system of trade
compensation with flexible bands, with a transitional convergence period, and any other possible
instruments agreed upon by the parties".

With a view to fomenting the integration of the automobile sector's production chains and
reducing the trade imbalance between the two parties in said area, the agreement prescribes the
following conditions for access:

 Automobile products3 will be marketed between the parties with a preference
of 100%, so long as said products meet origin requirements and the other conditions
stipulated in the agreement.

2
Within the framework of Economic Complementation Agreement No. 18.
3
Buses, trucks, semi-trailer towing machines, chassis with engine, trailers and semi-trailers, bodies and
cabs, farm tractors, harvesters and self-propelled farm equipment, self-propelled road machinery,
automotive parts, utility vehicles with a payload capacity of over 1,500 kg and a gross total weight
of up to 3,500 kg (provided that the goods are new).
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 Specific automobile products manufactured in the territory of Uruguay will have
quotas or conditions for access to the Brazilian market.4

 Light industrial vehicles and automobiles produced by companies located
on Brazilian territory will have a quota of 6,500 units for access to
the Uruguayan market.

Margins of preference of 70% will be applied to automotive products which exceed the
quotas established. However, importers will be able to opt for either the access conditions established
previously or inclusion in the quotas defined above.

Automotive products resulting from investments receiving incentives or benefiting from
export incentives may not make use of tariff preferences. Certain exceptions were established in the
case of Uruguay.

ECA/6 (Argentina and Mexico)

The two countries, considering the need for a clear legal framework, decided,
through the 15th Additional Protocol, to introduce a new legal, ordered, and consolidated text from
ECA No. 6, and from its corresponding annexes, which supersedes all previous arrangements, except
the dispute settlement mechanism adopted through the 13th Additional Protocol of March 2001, which
remains in effect.

The original ECA No. 6 was signed on 24 October 1986 and incorporated
five additional protocols.

In November 1993, an adaptation protocol was signed. This protocol provided for the
adaptation of the classification of negotiated products to NALADISA and consolidated all the
provisions of the agreement into a single text.

To date, the adaptation protocol has had 15 additional protocols,
and the 15th Additional Protocol abrogates the first through the 12th additional protocols.
As mentioned in the first paragraph, it keeps the 13th Additional Protocol, which concerns the dispute
settlement mechanism and was signed on 13 March 2001, in force and adopts an ordered and
consolidated text of the agreement.

While it confirms the validity of Annexes I and II of the Liberalization Programme
(Preferences Granted by Argentina and Mexico, respectively) as regards the tariff preferences agreed
upon in the original agreement and its protocols, it also introduces new preferences granted by
Argentina (Annex III) and by Mexico (Annex IV). Approximately 1,500 tariff items were introduced;
they correspond essentially to the following sectors: chemical, plastics, steel, rubber (tyres), electrical
and mechanical material and equipment, information technology and communications, the printing
industry, and cosmetics. A reduced number of agricultural products were also introduced.

4
Automobiles and light industrial vehicles (20,000 units), trucks (2,500 units), auto-parts
(US$100 million), utility vehicles with a payload capacity of over 1,500 kg and a gross total weight
of up to 3500 kg (2,500 units), automobiles and light armoured industrial vehicles (2,000 units).
The Automotive Committee will define the Brazilian market access conditions for buses.
Automobiles and light industrial vehicles which are imported in CBU (Completely Built Unit) form
from countries outside MERCOSUR by companies located on Uruguayan territory, and which undergo, at said
companies, active upgrading for the purposes of protection from firearms and/or explosives, and which meet the
established requirements will be considered as originating in said country and may be exported to Brazil with a
margin of preference of 100%.
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Annex V of the consolidated and ordered text reproduces the Supplementary Notes to the
First Additional Protocol to the agreement, which are to be replaced and updated. Annex VI
incorporates the new general rules of origin and a new form for the certificate of origin. As well,
new specific origin requirements (SORs) are introduced into two annexes (Annex I and II): one
contains those which were established previously, and the other, the new SORs.

This protocol also establishes specific rules for the following: safeguard clauses, withdrawal
of concessions, technical standards, technical regulations and conformity assessment procedures,
sanitary and phytosanitary measures, review of the agreement, termination, convergence,
and administration of the agreement.

As mentioned earlier, the signature of this protocol rendered invalid the economic
complementation agreement between Mexico and Argentina signed on 24 October 1986 and a total
of 18 additional protocols listed on page 27 of this report.

ECA/14 (Argentina and Brazil)

The 35th Additional Protocol to Partial-Scope Economic Complementation Agreement No. 14
of 28 June 2006, signed by Argentina and Brazil and concerning the automotive agreement signed
between the two countries, renders invalid and supersedes the provisions of
the 31st Additional Protocol and their corresponding extensions, applied through
nd rd
the 32 and 33 Protocols. The Common Automotive Policy Agreement between the two countries
is included as an annex thereto.

The period of validity of the 35th Additional Protocol is from 1 July 2006 until 30 June 2008.

One of the most important new features of the new automotive agreement is that it does not
prohibit the application of temporary admission regimes and drawback for the manufacturing of
automotive products for export through the agreement. As stipulated in the agreement, the
manufacturing of automotive products exported to the territory of the other party is to comply with the
general guidelines established by MERCOSUR in respect of temporary admission and drawback.

Also worthy of note was the adoption of the relevant provisions of Partial-Scope Economic
Complementation Agreement No. 18 by the 44th Additional Protocol (MERCOSUR Rules of Origin).

The provisions of the agreement apply to the following: trade in automobiles and light utility
vehicles with a payload capacity of up to 1,500 kg; buses; trucks; semi-trailer towing machines;
chassis with engine, including cab; trailers and semi-trailers; bodies and cabs; farm tractors;
harvesters and self-propelled farm equipment; self-propelled road machinery; and automotive parts.
The foregoing applies so long as the goods are new.

For the aforementioned automotive products which are non-originating in the territory of
either party, there applies a 35% import tariff in general, except for farm tractors, harvesters,
self-propelled farm equipment, and self-propelled road machinery, for which the import tariff
will be 14%. For automotive parts, the import tariffs will be those established in the Common
External Tariff of MERCOSUR.

It was also determined that the tariffs established are to be periodically reviewed by an
automotive committee.

The protocol prescribes that the automotive products which are contemplated in the
agreement and which comply with the origin requirements and conditions stipulated therein are to
benefit from a tariff preference of 100% until 30 June 2008. Save for some exceptions, goods
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produced through investment receiving incentives will not benefit from any tariff preferences in trade
with the other party.

Afterward, through the 36th Additional Protocol of 1 August 2006, the two parties established
the specific rules for certification of origin for particular cases in which the commercial invoices
corresponding to automotive bodies and chassis are used for the export of buses.

ECA/18 (Argentina-Brazil-Paraguay-Uruguay)

Through the 50th Additional Protocol, the countries of MERCOSUR agreed to incorporate
into Economic Complementation Agreement No. 18 the Council of the Common Market (CMC)
decision concerning the Regulations for Approval and Incorporation of Amendments to the
MERCOSUR Common Nomenclature and the Corresponding Common External Tariff
(CMC Decision No. No. 31/04).

Through the 51st Additional Protocol, the four countries of MERCOSUR agreed to
incorporate Common Market Group Resolution No. 37/04 into ECA No. 18. Said resolution concerns
the Regulation of CMC Decision No. 41/03, which deals with the MERCOSUR Rules of Origin.

The above was incorporated into ECA No. 18 because it was deemed advisable for the
countries of MERCOSUR to implement measures which would allow them to obtain conditions no
less favourable than those accorded to third parties in external negotiations.

With that in mind, the Common Market Group resolved that the regional value-added content
of the MERCOSUR Rules of Origin to be applied temporarily to reciprocal trade among its members
would be as follows: 50% from the first to the seventh year, and 55% as of the eighth year of validity
of ECA No. 59 (MERCOSUR - Colombia, Ecuador, and Venezuela). The possibility of
reaching 60% regional value added will, however, be studied. There are, nonetheless,
some exceptions5 in respect of which 60% regional value added will still be exercised,
where applicable.

The MERCOSUR Specific Origin Requirements will remain in effect, and compliance with
them will take precedence over these rules.

The following will be considered as originating in MERCOSUR territory: materials
originating in the Andean Community (CAN) and incorporated into certain goods in the territory of a
MERCOSUR country, provided that specific requirements laid out in this protocol are met.

In order to help further the MERCOSUR integration process and improve its standing in
negotiations with third-party countries, member countries signed the 53rd Additional Protocol, which
provides for the incorporation of MERCOSUR Trade Commission Directive No. 04/04, which
concerns total intra-MERCOSUR cumulation of origin, into the agreement.

Directive No. 04/04 stipulates that MERCOSUR countries are to comply with the terms
established therein in order to achieve total cumulation of origin and specifies that such cumulation
implies that all operations involved in the manufacture of a product in the territory of Argentina,
Brazil, Paraguay, and Uruguay will be taken into account in the determination of origin
of the final product.

Directive No. 04/04 states that determination of the origin of the final product will take into
account all the material and regional value added in MERCOSUR territory.

5
These include reciprocal trade between Argentina and Brazil.
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For the purposes of the above, the protocol stipulates that the final producer of a good must
submit the Declarations of Materials Used which must be provided by the producers of the inputs
used in the manufacture of the final product. In order for a MERCOSUR certificate of origin to be
issued, the exporter and/or producer must submit to the corresponding certifying body the
Declaration(s) of Materials Used associated with the final product, together with the
Sworn Declaration of Origin stipulated in Article 15 of CMC Decision No. 1/04.

As well, the 55th Additional Protocol incorporates into ECA No. 18 CMC Decision No. 33/05
concerning special import regimes.

Through this decision, MERCOSUR countries undertook to fully eliminate,
by 31 December 2007, all special import customs procedures and the benefits granted under said
procedures, except in the case of special customs areas.

The aforementioned special import procedures are those which have been adopted unilaterally
by member countries, which entail full or partial exemption from customs duties (Common External
Tariff), and the objective of which is not the upgrading and subsequent export of goods
to third countries.

The 56th Additional Protocol incorporates into the agreement MERCOSUR CMC Decision
No. 40/05, which postpones the date of entry into force of the Common Regime for Capital Goods
Not Produced6 (established in Article 1 of CMC Decision No. 34/03) until 1 January 2009.

As of 1 January 2011, only the following goods receiving the benefits established in the
aforementioned regime will be admitted: imports of new capital goods and the parts, pieces,
and components thereof which have not been produced in MERCOSUR, and which are included in
the Common List and are classified as BK in the MERCOSUR Common Nomenclature.

Moreover, Decision No. 40/05 instructs the High-Level Group for Examination of the
Consistency and Dispersion of the Common External Tariff to prepare a proposal for the review of the
common external tariff (CET) for capital goods by 31 December 2006.

Through the 57th Additional Protocol, MERCOSUR countries approved and incorporated into
ECA No. 18 CMC Decision No. 03/05 concerning the Regime for Integration of Production Processes
in Various States Parties to MERCOSUR with the Use of Non-Originating Materials.

Said regime establishes improved access to MERCOSUR countries for non-originating
materials which constitute inputs acquired for production integrated within the scope of projects of
business interest and approved by the competent authorities of the countries involved.

In particular, inputs admitted under this regime in MERCOSUR countries where the initial or
intermediate steps of the integrated production process take place will be considered temporarily
admitted for subsequent export.

Upon the application of the tariff preference duly established for this purpose, intermediate
goods will, by means of tariff payment, enter the territory of the country in which the final stage of the
integrated production process takes place.

The exit of goods in the process of productive integration from one MERCOSUR country to
the next will take place in the form of final export for consumption, which will entail the application
of all the rules governing such operations in each of these countries.

6
In MERCOSUR.
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The final products produced under this regime may be exported on a MERCOSUR certificate
of origin issued by the country in which the final step in the production process takes place.

ECA No. 18 also incorporated CCM Directive No. 06/05, which establishes specifications for
completion of the MERCOSUR certificate of origin in operations involving a third operator
(58th Additional Protocol).

Lastly, pursuant to the 59th Additional Protocol, LAIA countries party to MERCOSUR
undertake to incorporate into ECA No. 18 CMC Decision No. 25/07 concerning commercial
transactions in local currencies.

This decision creates a system of payment in local currency for trade among MERCOSUR
countries based on the following reasons: this integration process tends to foment progressive
coordination of macroeconomic policies; the optional use of local currency in foreign trade helps to
further regional integration; the decision favours the reduction of the financial costs of commercial
transactions between the signatory countries.

Decision No. 25/07 also establishes that the operating conditions of this optional system will
be defined by bilateral agreements signed voluntarily by the central banks of the countries concerned.

ECA/22 (Bolivia and Chile)

By means of the 15th Additional Protocol, Bolivia and Chile decided to expand and further
develop the liberalization programme of Economic Complementation Agreement No. 22.
Chile undertook to grant 100% tariff preference to imports of any product originating in Bolivia,
except for wheat, wheat flour, and sugars.

With regard to the aforementioned products, Chile will grant to Bolivia a global tariff quota
of 6,000 tonnes per year for sugars with a 100% tariff preference.

It was decided that, within the framework of the work programme instituted for further
development of ECA No. 22, priority was to be given to ensuring effective access to
the Chilean market for the list of products submitted by Bolivia in August 2005.

The work programme instituted for further development of ECA No. 22 also saw the
establishment of technical committees associated with the areas of, inter alia, trade, phyto and
zoosanitary measures, trade promotion, agroforestry, tourism, customs, technical standards,
and cooperation.

Through the 16th Additional Protocol, Bolivia and Chile decided to incorporate into
ECA No. 22 the Cooperation Agreement between the Directorate General of International Economic
Relations (PROCHILE) and the Centre for the Promotion of Bolivia (CEPROBOL).

Generally speaking, the objective of this new mechanism for cooperation between the
two countries' respective trade promotion agencies is to design programmes and projects which
foment relations between them, particularly in, though not limited to, the agri-industry, livestock,
forestry, mining, and manufacturing sectors.

This instrument also aims for the exchange of information and the development of
commercial intelligence analyses which enable the identification and promotion of business
opportunities and strategic alliances between businesspeople from both countries.
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This protocol renders invalid the Fifth Additional Protocol to Economic Complementation
Agreement No. 22.

ECA/24 (Colombia and Chile)

The Seventh Additional Protocol highlights the decision of Chile and Colombia to begin
negotiations with a view to signing a free trade agreement which will replace ECA No. 24 and will
include provisions on services, investment, and government procurement.

As well, in this protocol, the two countries agree on the need for a new dispute
settlement procedure.

Also established are certain measures concerning market openness and including new
duty-free quotas granted to Colombia by Chile for sugar.

For its part, Colombia is to annul provisions which had been affecting the import of products
originating in Chile.

The Eighth Additional Protocol modifies the conditions of access to bilateral trade for
boneless bovine meat (0201.30.00) and certain cheeses.

On 30 October 2006, after two rounds of negotiation, the end of negotiations for the signing
of a free trade agreement was announced (Additional Protocol to ECA No. 24).

Parliamentary discussions on the matter began in both countries in 2007, and entry into force
is expected in the first quarter of 2009.

ECA/35 (MERCOSUR-Chile)

Through the 46th Additional Protocol of 18 August 2006, the parties to ECA No. 35 agreed to
incorporate into the agreement the MERCOSUR Foot-and-Mouth-Disease-Free Action
Programme (PAMA).

With this initiative, Chile and MERCOSUR aim to complement national foot-and-mouth
disease programmes and have the fundamental objective of eradicating the epidemic in their territory
by 31 December 2009. Thereafter, the goal is to sustain the epidemiological conditions attained by
means of a sound system of veterinary care.

ECA/36 (MERCOSUR-Bolivia)

The parties to ECA No. 36 decided to amend Article 19 thereto, establishing that products the
manufacture of which includes inputs which have been imported temporarily, or under the drawback
regime, will not benefit from the liberalization programme as of 1 January 2011
(23rd Additional Protocol).

As well, the MERCOSUR Foot-and-Mouth-Disease-Free Action Programme (PAMA)
mentioned in ECA No. 35 was also incorporated into ECA No. 36 (24th Additional Protocol).

The 25th Additional Protocol incorporates into ECA No. 36 the Interinstitutional Agreement
on Mutual Assistance and Cooperation in Customs Matters between the Directorate General of
Customs of Paraguay and the National Customs Administration of Bolivia, signed in La Paz
in April 2005.
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The basic objective of this inter-institutional agreement is to create integrated controls on the
border between Bolivia and Paraguay. For this purpose, areas in which such controls are carried out
are established on a single side of the border, superimposed on the international limit, or on both sides
of the border. Within this framework, Bolivia and Paraguay are authorized to collect, in the integrated
control area, taxes and other charges in accordance with their respective legislation.

ECA/38 (Chile and Peru)

On 11 January 2005, negotiations began in Lima regarding the signing of a free trade
agreement (FTA) between Chile and Peru.

After arduous negotiations, on 22 August 2006, the FTA between Chile and Peru was signed.
This FTA supersedes Economic Complementation Agreement No. 38, which had been in force
since 1 July 1998.

The new agreement includes the commitments respecting goods and trade disciplines
contained in ECA No. 38, but has expanded to cover investment and trade in services, and establishes
a new dispute settlement mechanism.

Parliamentary discussions on the matter began in 2007 and entry into force is expected in the
first quarter of 2009.

ECA/40 (Cuba/Venezuela)

Through the 3rd Additional Protocol, Cuba and Venezuela, taking into consideration the
progress made in respect of ECA No. 40, decided to consolidate and arrange said agreement into a
single text. To this end, they incorporated into the agreement Administrative Commission resolutions
regarding administrative matters, the dispute settlement regime, rules of origin, standards, technical
regulations and conformity assessment procedures, and the expansion and elaboration of tariff
preferences granted by Venezuela to Cuba.

Cuba, for its part, grants 100% of its tariff universe preferences to products originating in
Venezuela, in accordance with the agreement signed by the presidents of Cuba and Venezuela in
Havana on 14 December 2004.

ECA/55 (Argentina, Brazil, Mexico, Paraguay, Uruguay)

Given that ECA No. 55 establishes the possibility of introducing automotive products into the
liberalization programme at any time, Argentina and Mexico decided, through the
Second Additional Protocol, to expand such trade liberalization between the two countries.
This protocol amends Article 4 of Appendix I on automotive-sector trade between the two countries.

Initially, the aforementioned article granted a 0% tariff on imports of certain engines
(8407.34.00). The protocol extends this trade liberalization to other automotive-sector products.
Specifically, this expansion includes certain parts and pieces, in addition to engines of various
cylinder capacities. In total, just over 100 items are included.

This instrument also establishes that, in the event that the Government of Mexico should
confirm that the participation of a Mexican company is affected by the application of
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Argentine Decree No. 774/057, both parties must initiate discussions, which (it points out) may result
in the temporary withdrawal of the corresponding tariff preference.

The same procedure is prescribed in the event that Argentina should confirm that a company
which produces specific parts or pieces is affected as a consequence of the preferences granted.

Lastly, the parties agreed to continue negotiating access conditions and preferences for the
auto parts not contemplated in the aforementioned protocol.

It was also decided that amendments be made to Supplementary Note No. 1 of Appendix II
Concerning Automotive-Sector Trade between Brazil and Mexico (First Additional Protocol to
Appendix II to ECA No. 55).

Through this protocol, Brazil and Mexico introduce into the agreement the possibility of
reciprocal trade, without technical restrictions in the importing country, in vehicles which comply
with the Technical Regulation of the EEC (European standard), the Directive of the
EEC (European standard), or the FMVSS (United States standard) in respect of vehicular lighting
systems, rear-view mirrors, and headrests.

A.2 Signing of New Agreements

Only one new economic complementation agreement was signed between 1 January 2006
and 31 December 2007: ECA No. 62, signed by MERCOSUR and Cuba. The main characteristics of
the agreement are described below.

Economic Complementation Agreement No. 62
between MERCOSUR and Cuba

Cuba and the countries of MERCOSUR signed this economic complementation agreement
taking into account the need to strengthen and further develop the Latin American integration process
in order to meet the objectives of the 1980 Treaty of Montevideo.

The objective of ECA No. 62, which was signed on 26 July 2006, is to promote trade among
the signatory parties through the reduction or elimination of the charges and other restrictions applied
to the import of the products negotiated.

The parties deemed it advisable to offer economic agents clear and predictable rules for trade
development, and they consider trade liberalization in the region an instrument for economic and
social development.

The parties acknowledged the importance of taking into account their respective degrees of
economic development and the differential treatment set out in the 1980 Treaty of Montevideo.

In order to meet the objectives put forth, the ECA identifies the products which originate in
parties' territory and which will benefit from tariff preferences and it points out other conditions for
the import of said goods. An annex to the agreement discusses the goods in respect of which
preferences are established and various duty relief programmes established therefor.

Cuba and MERCOSUR also undertook not to maintain or introduce new non-tariff
restrictions to their reciprocal trade.

7
Establishes a regime which provides incentives to ensure the competitiveness of local auto-parts.
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In the matter of national treatment, the parties will be governed by Article III of GATT 1994
and Article 46 of the 1980 Treaty of Montevideo.

The Agreement contains general rules of origin and provisions concerning customs
procedures for the control and verification of the origin of goods.

Other rules included in the agreement concern valuation for customs purposes, safeguards,
antidumping and countervailing measures, technical barriers to trade, sanitary and phytosanitary
measures, dispute settlement, and the promotion and exchange of commercial information.

As of the entry into force of the agreement, the parties render invalid the tariff preferences
negotiated and the associated regulations contained in economic complementation agreements
Nos. 43, 44, 45, and 52.

However, the provisions and associated protocols of said instruments which are not
incompatible with ECA No. 62 will remain in effect where they do not refer to matters not included
in ECA No. 62.

The parties are to ensure the convergence of this agreement with other instruments for
Latin American integration, in accordance with the mechanisms established in the 1980 Treaty
of Montevideo.

As well, in compliance with the aforementioned treaty, the agreement is open to accession,
through prior negotiation, by the other LAIA member countries.

The Agreement will be in effect indefinitely and will enter into force bilaterally between the
parties which have incorporated it into their domestic law, and in their own legislative terms.
In accordance with this clause on its period of validity, the agreement entered into force bilaterally,
both for Cuba/Argentina and for Cuba/Brazil, on 2 July 2007.

Notwithstanding the foregoing, the parties may decide on the provisional application of the
agreement and its additional protocols until the requisite procedures for their entry into force are
carried out.

A.3 Economic Complementation Agreements Rendered Invalid

Economic Complementation Agreement No. 62, signed between the states party to
MERCOSUR and Cuba (see section A.2), rendered invalid the tariff preferences and associated
regulatory elements contained in the following partial-scope economic complementation agreements:
No. 43 (Brazil/Cuba), No. 44 (Cuba/Uruguay), No. 45 (Argentina/Cuba), and No. 52
(Cuba/Paraguay).

B. OTHER TYPES OF PARTIAL-SCOPE AGREEMENTS (ANNEX 2)

B.1 Agriculture Agreement

Partial-Scope Agreement on Agriculture No. 3

Agreement Establishing the Southern Agricultural Council (CAS)

On 8 August 2006, Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay signed PSA on
Agriculture No. 3, thereby incorporating into LAIA's legal system the Convention Establishing the
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Southern Agricultural Council (CAS) as a forum for consultation on and coordination of measures in
the areas of agriculture, forestry, and fishery.

The general objective of the convention is the sustainable development of the agricultural,
forestry, and fisheries sector. It is believed that such development can be supported by means of
coordinated actions, seeking regional solutions, complementation measures, and alliances which
contribute to the improved positioning of the sector in world markets.

The Council will be comprised of the ministers of agriculture of the countries of
MERCOSUR, Bolivia, and Chile. It will meet at least once a year and extraordinarily, upon the
request of any of its member ministers.

As part of its duties and functions, the Council must assess the policies and programmes for
development of the sector, and it must act as the standing body for consultation, guidance, and
exchange of experiences.

The Council must also assess the region's sanitary and phytosanitary conditions and the
progress of trade negotiations on agriculture with a view to coordinating positions in multilateral and
plurilateral forums. It must seek to establish positions coordinated with the work of the Codex
Alimentarius Commission, the World Organisation for Animal Health, and the Commission on
Phytosanitary Measures of the International Plant Protection Convention.

The Council must also define strategies for the development of the sector's human resources
in order to create the human and social capital needed to deal with rural poverty and promote
sustainable development of the sector.

Also created was a permanent technical-administrative secretariat which must, inter alia,
facilitate and logistically support the Council in the preparation and monitoring of agendas
and agreements.

Agricultural Agreement No. 3 will enter into force on the date on which all the signatory
parties have incorporated it into their respective domestic legal systems. It will be in effect
indefinitely and will be open to accession, upon prior consent of CAS, by the other countries
of LAIA.

On 8 August 2006, the 1st Additional Protocol to PSA on Agriculture No. 3 was signed.
It formalizes, pursuant to the 1980 Treaty of Montevideo, the Convention Establishing the Standing
Veterinary Committee of the Southern Cone (CVP).

The CVP operates within the framework of the Southern Agricultural Council. Its main
objective is to coordinate actions and increase regional capacity for the prevention and control of the
sanitary impacts and risks which affect the production and marketing of animals and animal products
and byproducts in the region.

As part of its terms of reference, the Standing Veterinary Committee must:

(a) Analyse and propose solutions in respect of all laws common to member countries
which create difficulties for trade or which are technically unjustified, and which
concern the following: animal health; the safety of products and byproducts of all
species of animal; and import and export rules between member states and
with third countries;
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(b) develop sanitary standards upon the request of member countries in order to address
emerging health problems;

(c) coordinate the actions and strategies of member countries vis-à-vis third countries in
order to facilitate the marketing of livestock products from the region, including the
opening of new markets;

(d) represent the interests of the region's countries where deemed appropriate.

The Committee will be made up of the most senior animal health authorities in the ministries
of signatory countries. It will meet regularly at intervals of no more than 90 days.

A permanent technical and administrative secretariat was also established. Its terms of
reference include the obligation to provide logistical support for the Committee in the preparation and
monitoring of agendas and agreements.

B.2 Agreements Signed Pursuant to Article 14 of the 1980 Treaty of Montevideo

Fourteenth Regulation of Partial-Scope Agreement/14TM No. 5: Safety Regulations for
Paraguay-Paraná Waterway (Port of Cáceres-Port of Nueva Palmira) Vessels
(Argentina, Bolivia, Brazil, Paraguay, and Uruguay)

On 12 July 2007, Argentina, Bolivia, Brazil, Paraguay, and Uruguay agreed to incorporate
into the Paraguay-Paraná (Port of Cáceres-Port of Nueva Palmira) Waterway Transport Agreement
(Partial-Scope Agreement/14TM No. 5) the 14th Regulation, which introduces into the agreement the
Safety Regulations for Paraguay-Paraná Waterway (Port of Cáceres-Port of Nueva Palmira) Vessels.

These regulations establish the safety conditions for vessels which navigate the
aforementioned route. They contain clauses on the following: construction, compartmentalization,
and stability of electricity and machine facilities; fire prevention and protection measures through
detection and extinguishing systems; rescue equipment on manned vessels; and radiocommunication
and navigation safety.

C. AGREEMENTS SIGNED BETWEEN LAIA MEMBER COUNTRIES AND
NON-MEMBER LATIN-AMERICAN COUNTRIES (ARTICLE 25 OF THE 1980
TREATY OF MONTEVIDEO; ANNEX 6)

Extension

The only additional protocol of this type signed during the period covered by this report
concerns the extension of the PSA between the Federative Republic of Brazil and the Cooperative
Republic of Guyana (Third Additional Protocol to Partial-Scope Agreement/A25TM80 38).

Said protocol extends the period of validity of the agreement until 31 May 2008.

III. EVOLUTION IN TRADE

Regional economic context

The 2006-2007 biennium falls within a broader period characterized by the great economic
vitality of LAIA member countries. In 2007, the region completed its fifth year (2003-2007) of strong
GDP growth, leaving behind the previous period of major instability known as "the lost half-decade"
(1998-2002).
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Regional performance benefited from a set of factors, including the following: the favourable
international economic environment, characterized by the expansion of GDP and of world trade;
the high price of basic commodities; and the evolution of record low international interest rates.

GDP expansion was fuelled, firstly, by foreign demand, the effect of which has been
decreasing over time. This decrease is due both to the reduced rate of growth of export volumes,
and to the growing prominence of domestic demand, especially as regards private consumption.

During the biennium under study, the product of all LAIA member countries grew by 12%.
The aforementioned vitality was generalized, extending to all 12 of the LAIA economies.

Notable for their high vitality during this period were Cuba (20.7%), Venezuela (19.6%),
Argentina (17.9%), and Peru (17.3%). In second place came Colombia (15.5%), Uruguay (14.9%),
and Paraguay (11.3%). The remaining countries registered more moderate rates: Bolivia (9.4%),
Chile (9.3%), Brazil (9.3%), Mexico (8.2%), and Ecuador (6.7%).8

GDP Growth 2006-2007

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2006 2007

Global foreign trade

In terms of foreign trade, global exports and imports both grew significantly in the two-year
period under study, continuing an expansion which began in 2003 and which subsequently made it
possible to reach record highs in 2007.

Global exports from LAIA member countries as a whole exceeded $700 billion, after growing
by 19.6% and 12.8% in 2006 and 2007 respectively.

The expansion of exports spread to all 12 LAIA countries. During the period under study, the
global sales of Cuba (71.4%), Chile (70.3%), and Bolivia (65.9%) stood out for their particular
vitality. Nonetheless, the major sources of the increase were Mexico and Brazil, which contributed,
respectively, 31.6% and 22.9% of the total.

8
Unless stated otherwise, growth rates shown are biannual.
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As a result of the aforementioned increased economic activity in the region, global imports
also generally expanded. They grew by 19.3% and 19.8% in 2006 and 2007 respectively,
surpassing $630 billion in the latter year.

The countries in which foreign purchases grew most were Venezuela (91.8%), Peru (63.6%),
and Brazil (63.3%). Once again, the main sources of the increase in global imports in the region were
Mexico and Brazil, with, respectively, 32.4% and 25.9% of the total.

Distinguishing between trade flows by destination and trade flows by origin shows that
intraregional trade was more dynamic than extraregional trade. While exports to the region grew by
50.4% during the period under study, exports to the rest of the world increased by 32.4%. In terms of
imports, the increases were of 49.3% and 41.6% respectively.

The vitality of trade with the rest of the world was fundamentally determined by trade with
Mexico and Brazil, whose joint contribution was 57.3% for exports, and two thirds for imports.

Intraregional trade

Trade between LAIA member countries continued to experience the growth trend which
began in 2004, achieving 49.3% growth during the period under study (2005-2007), and reaching a
new record high of $116.6 billion, measured according to imports.

INTRA-LAIA IMPORTS 1990-2007

US$ millions
120,000

100,000

80,000

60,000

40,000

20,000

0
1990 1992 1994 1996 1998 2000 2002 2004 2006

The importance of the recent expansion is clear when one considers that intraregional trade
multiplied by 2.6 in merely four years (2004-2008), an occurrence unprecedented in the entire history
of LAIA.

All member countries significantly expanded their intraregional exports during the biennium,
with particularly outstanding sales registered in Mexico (83%), Paraguay (74.7%),
and Ecuador (71.1%). However, Brazil, and to a lesser degree, Argentina and Mexico, contributed the
most to the total increase: 29.5%, 16.5%, and 13.6% respectively.

The performance of intraregional imports by country was more heterogeneous than that of
sales. Purchases in Cuba (14.3%) and Mexico (17.7%) experienced moderate growth. Meanwhile,
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purchases in the remaining countries grew significantly: Venezuela (106.6%), Brazil (75.7%),
Uruguay (70.3%), and Paraguay (65%) stood out on account of their vitality.

During the period under study, the most dynamic channels of commerce between
LAIA countries were CAN-Chile (76.8%), CAN - MERCOSUR (72%), and CAN (62.7%).

In terms of goods traded during the biennium under study, the intra-MERCOSUR
channel played the most important role, registering a participation level of 28%
of intraregional trade. Relatively less significant were CAN-MERCOSUR (16.5%), CAN (13.4%),
MERCOSUR-Chile (12.3%), and MERCOSUR-Mexico (10%).

LAIA - GLOBAL EXPORTS BY COUNTRY
ACCORDING TO LAIA DESTINATION - REST OF WORLD
2005, 2006 and 2007
(US$ millions, f.o.b. and percentages)
2005 2006 2007 CHANGE 2007/2005
COUNTRY REST OF THE REST OF THE REST OF THE REST OF THE
ALADI GLOBAL ALADI GLOBAL ALADI GLOBAL ALADI GLOBAL
WORLD WORLD WORLD WORLD
ARGENTINA 15,563 24,824 40,387 18,729 27,817 46,546 21,664 34,116 55,780 39.2 37.4 38.1
BOLIVIA 1,964 966 2,930 2,719 1,504 4,223 2,957 1,903 4,860 50.6 97.1 65.9
BRAZIL 25,428 92,880 118,308 31,384 106,086 137,470 36,314 123,948 160,262 42.8 33.4 35.5
CHILE 6,075 32,521 38,597 8,630 47,252 55,882 10,110 55,630 65,740 66.4 71.1 70.3
COLOMBIA 5,350 15,840 21,190 5,825 18,550 24,375 8,860 21,152 30,011 65.6 33.5 41.6
CUBA 476 1,684 2,159 557 2,368 2,925 573 3,129 3,701 20.4 85.8 71.4
ECUADOR 2,049 8,051 10,100 2,777 9,951 12,728 3,506 10,295 13,800 71.1 27.9 36.6
MEXICO 6,060 208,173 214,233 8,163 241,834 249,997 1,088 260,966 272,055 83.0 25.4 27.0
PARAGUAY 1,044 767 1,811 1,128 779 1,906 1,824 962 2,785 74.7 25.4 53.8
PERU 3,275 14,550 17,825 4,118 18,620 22,737 5,047 22,094 27,141 54.1 51.8 52.3
URUGUAY 1,136 2,268 3,405 1,414 2,572 3,986 1,792 2,704 4,496 57.7 19.2 32.1
VENEZUELA (1) 4,867 49,635 54,501 6,702 58,991 65,693 6,506 61,554 68,060 33.7 24.0 24.9
TOTAL 73,287 452,159 525,446 92,145 536,323 628,469 110,240 598,452 708,692 50.4 32.4 34.9

Source: Data provided by member countries.
Prepared by the LAIA Secretariat.
(1) 2007 data are estimated.

LAIA - GLOBAL IMPORTS BY COUNTRY
ACCORDING TO LAIA ORIGIN - REST OF WORLD
2005, 2006 and 2007
(US$ millions, c.i.f. and percentages)
2005 2006 2007 VARIATION 2007/2005
COUNTRY REST OF THE REST OF THE REST OF THE REST OF THE
ALADI GLOBAL ALADI GLOBAL ALADI GLOBAL ALADI GLOBAL
WORLD WORLD WORLD WORLD
ARGENTINA 12,713 15,974 28,687 14,796 19,364 34,160 18,647 26,060 44,707 46.7 63.1 55.8
BOLIVIA 1,408 936 2,344 1,664 1,167 2,831 1,992 1,471 3,463 41.4 57.2 47.7
BRAZIL 12,299 65,241 77,539 17,175 78,728 95,903 21,608 105,047 126,655 75.7 61.0 63.3
CHILE 11,480 18,378 29,857 12,717 22,009 34,726 14,087 28,655 42,742 22.7 55.9 43.2
COLOMBIA 6,247 14,888 21,135 8,135 17,934 26,069 9,734 23,311 33,045 55.8 56.6 56.4
CUBA 2,797 4,807 7,604 3,170 6,328 9,498 3,197 6,885 10,083 14.3 43.2 32.6
ECUADOR 4,230 6,188 10,417 4,647 7,412 12,059 5,495 8,000 13,494 29.9 29.3 29.5
MEXICO (1) 10,603 211,216 221,820 12,445 243,686 256,130 12,483 270,786 283,269 17.7 28.2 27.7
PARAGUAY 1,776 1,966 3,743 2,108 2,381 4,489 2,930 2,647 5,577 65.0 34.6 49.0
PERU 5,160 7,319 12,480 6,639 8,655 15,294 7,704 12,715 20,418 49.3 73.7 63.6
URUGUAY 2,008 1,871 3,879 2,929 1,846 4,775 3,419 2,209 5,628 70.3 18.1 45.1
VENEZUELA (1) 7,428 14,420 21,848 10,262 20,297 30,559 15,349 26,562 41,911 106.6 84.2 91.8
TOTAL 78,149 363,204 441,353 96,686 429,807 526,493 116,646 514,348 630,993 49.3 41.6 43.0

Source: Data provided by member countries.
Prepared by: General Secretariat of LAIA.
(1): F.O.B. values.
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LAIA - STRUCTURE OF INTRAREGIONAL EXPORTS
BY CHANNEL OF COMMERCE
2005, 2006 and 2007
(US$ millions, f.o.b. and percentages)

US$ MILLIONS % S/TOTAL % GROWTH
CHANNEL (1)
2005 2006 2007 2006-2007 2007/2005
MERCOSUR 21,654 25,993 33,450 27.9 54.5
CAN-MCS 11,220 15,992 19,295 16.5 72.0
CAN 10,078 12,155 16,393 13.4 62.7
MCS-CHILE 11,193 12,727 13,510 12.3 20.7
MCS-MEXICO 8,543 10,202 11,070 10.0 29.6
CAN-MEXICO 6,221 7,563 8,903 7.7 43.1
CAN-CHILE 3,760 5,223 6,650 5.6 76.8
CHILE-MEXICO 2,516 3,464 3,941 3.5 56.7
CUBA-REST OF LAIA 2,963 3,365 3,433 3.2 15.8
LAIA TOTAL 78,149 96,686 116,646 100.0 49.3

Source: Data provided by member countries.
Prepared by: General Secretariat of LAIA.
(1) Venezuela included as part of CAN.
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ANNEXES

PROTOCOLS SIGNED BETWEEN
1 JANUARY 2006 AND 31 DECEMBER 2007
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ANNEX 1

ECONOMIC COMPLEMENTATION AGREEMENTS

1980 Treaty of Montevideo, Article 11

Economic complementation agreements aim, among other objectives, to promote maximum
utilization of production factors, stimulate economic complementation, ensure equitable conditions
for competition, facilitate entry of products into the international market, and encourage the balanced
and harmonious development of member countries.

These agreements shall be subject to the specific rules to be established for that purpose.

Resolution 2 of the Council of Ministers, Article Seven

Economic complementation agreements aim, among other objectives, to promote maximum
utilization of production factors, stimulate economic complementation, ensure equitable conditions
for competition, facilitate entry of products into the international market, and encourage the balanced
and harmonious development of member countries.

These agreements shall be subject to the following rules:

- They may be based both on tariff cuts and industrial programming;

- they may be sectoral or multisectoral;

- they shall contain a tariff-cutting programme for the sector or sectors involved, and
they may contemplate the elimination or reduction of non-tariff restrictions;

- they shall remain in force for a minimum of three years and a maximum to be decided
upon in each agreement;

- they shall include measures aimed at ensuring the balanced and harmonious
utilization of their benefits to the participating countries, based on the three categories
of countries and on procedures for the assessment and correction of imbalances; and

They may include, inter alia, provisions regarding:

(i) Harmonization of the treatment applied to imports from third countries in respect of
products contained in the agreement, as well as to raw materials and parts used in
their manufacture;
(ii) coordination of programmes and governmental incentives to facilitate economic
complementation and harmonization of the treatment applied to foreign capital and
services associated with the products contained in the agreement;
(iii) rules aimed at preventing unfair trade practices;
(iv) regulation of balanced exchanges; and
(v) definition of other measures for the harmonization of instruments and policies, as well
as the coordination of complementary measures in the fields of technological
development, financing, physical infrastructure, and others deemed appropriate.
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ECONOMIC COMPLEMENTARITY AGREEMENTS
Agreements and Additional Protocols
signed between 1 January 2006 to 31 December 2007
AGREEMENT AND SIGNATORY SUBJECT DATE
PROTOCOL NO. COUNTRIES SIGNED

ECA 2.64 BR/UR Incorporates electrical interconnection agreement 30/08/2006
ECA 2.65 BR/UR Maintains automotive-sector trade rules 29/12/2006
ECA 2.66 BR/UR Maintains automotive-sector trade rules 09/07/2006
ECA 2.67 BR/UR Incorporates automotive agreement 25/08/2006

ECA 6.15 AR/ME Adopts ordered and consolidated text 24/08/2006
AR/ME Original protocol rendered invalid as of 1 January 2007
AR/ME First AP of 15/12/86 rendered invalid as
of 1 January 2007
AR/ME Second AP of 28/02/87 rendered invalid as
of 1 January 2007
AR/ME Third AP of 17/04/89 rendered invalid as
of 1 January 2007
AR/ME Fourth AP of 24/07/89 rendered invalid as
of 1 January 2007
AR/ME Fifth AP of 13/12/93 rendered invalid as
of 1 January 2007
AR/ME Adaptation Protocol signed 28 November 1993 rendered
invalid, except for Article 2

AR/ME First AP of [text missing] rendered invalid
AR/ME First AP of 31/05/94 rendered invalid as of
1 January 2007
AR/ME Second AP of 30/12/94 rendered invalid as
of 1 January 2007
AR/ME Third AP of 27/03/95 rendered invalid as
of 1 January 2007
AR/ME Fourth AP of 30/03/95 rendered invalid as
of 1 January 2007
AR/ME Fifth AP of 31/03/95 rendered invalid as
of 1 January 2007
AR/ME Sixth AP of 22/06/95 rendered invalid as
of 1 January 2007
AR/ME Seventh AP of 30/11/95 rendered invalid as
of 1 January 2007
AR/ME Eighth AP of 20/12/96 rendered invalid as
of 1 January 2007
AR/ME Ninth AP of 08/09/97 rendered invalid as
of 1 January 2007
AR/ME 10th AP of 22/01/98 rendered invalid as of 1 January 2007
AR/ME 11th AP of 09/10/98 rendered invalid as of 1 January 2007
AR/ME 12th AP of 13/03/01 rendered invalid as of 1 January 2007

ECA 8.8 ME/PE Extension validity of agreement 09/11/2007

ECA 14.33 AR/BR Automotive agreement - Extension 01/03/2006
ECA 14.34 AR/BR Establishes competitiveness improvement measures 11/04/2006
ECA 14.35 AR/BR Incorporates new automotive agreement and rendered 28/06/2006
invalid previous agreement
ECA 14.36 AR/BR Specific certificate of origin regime 01/08/2006
ECA 14.37 AR/BR Extension validity AP 36 20/06/2007

ECA 18.49 AR/BR/PA/UR Incorporates CMC decision /07/04 24/06/2005
ECA 18.50 AR/BR/PA/UR Incorporates CMC decision /31/04 28/03/2006
ECA 18.51 AR/BR/PA/UR Incorporates CMC decision /37/04 28/03/2006
ECA 18.52 AR/BR/PA/UR Incorporates CMC directive /01/05 28/03/2006
ECA 18.53 AR/BR/PA/UR Incorporates CMC directive /04/05 28/03/2006
ECA 18.54 AR/BR/PA/UR Incorporates CMC decision /20/05 28/03/2006
ECA 18.55 AR/BR/PA/UR Incorporates CMC decision /33/05 28/03/2006
ECA 18.56 AR/BR/PA/UR Incorporates CMC decision /40/05 28/03/2006
ECA 18.57 AR/BR/PA/UR Incorporates CMC decision /03/05 28/03/2006
ECA 18.58 AR/BR/PA/UR Incorporates CMC decision /33/05 28/03/2006
ECA 18.55 AR/BR/PA/UR Incorporates CMC decision /06/05 20/04/2006
WT/COMTD/78
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AGREEMENT AND SIGNATORY SUBJECT DATE
PROTOCOL NO. COUNTRIES SIGNED

ECA 22.15 BO/CH Expands, develops agreement PL 29/08/2006
ECA 22.16 BO/CH Incorporates cooperation agreement 29/08/2006
BO/CH Fifth Additional Protocol rendered invalid

ECA 24.7 CH/CO Establishes sugar quotas 14/09/2006
ECA 24.8 CH/CO Develops preference, etc. 08/03/2007

ECA 35.46 AR/BR/CH/PA/UR Approves foot-and-mouth disease programme 18/08/2006
ECA 35.47 AR/BR/CH/PA/UR Eliminates Appendix 1B Annex 13 13/08/2007

ECA 36.24 AR/BO/BR/PA/UR Approves foot-and-mouth disease programme 18/08/2006
ECA 36.25 AR/BO/BR/PA/UR Incorporates cooperation agreement 14/02/2007

ECA 40.3 CU/VE Consolidates, orders text of agreement 13/11/2007

ECA 43 BR/CU Rendered invalid by entry into force of ECA No. 62

ECA 44 CU/UR Rendered invalid by entry into force of ECA No. 62

ECA 45 AR/CU Rendered invalid by entry into force of ECA No. 62

ECA 52 CU/PA Rendered invalid by entry into force of ECA No. 62

ECA 53.3 AR/BR/PA/PE/UR Increases product preference 04/05/2007

ECA 55.1 AR/BR/ME/PA/UR Amends ECA 55, Article 5 10/07/2007

ECA 58.3 AR/BR/ME/PA/UR Establishes conditions for preferences. 24/08/2006
Granted by Peru to Uruguay
ECA 58.4 AR/BR/ME/PA/UR Peru corrects preference granted to Paraguay 11/04/2007

ECA 59.2 AR/BR/CO/EC/PA/UR/VE Extends specific origin requirements 30/03/2006
ECA 59.3 AR/BR/CO/EC/PA/UR/VE Extends specific origin requirements 30/06/2006
ECA 59.4 AR/BR/CO/EC/PA/UR/VE Eliminates note provisions in some chapters 18/08/2006

ECA 62 AR/BR/CU/PA/UR Trade agreement between Cuba and MERCOSUR 21/07/2006
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ANNEX 2

OTHER TYPES OF PARTIAL-SCOPE AGREEMENTS

1980 Treaty of Montevideo, Article 13

Trade promotion agreements shall refer to non-tariff matters and tend to promote
intraregional trade flows. They shall be subject to the specific rules to be established for that purpose.

Resolution 2 of the Council of Ministers, Article Nine

Trade promotion agreements shall refer to non-tariff matters and tend to promote
intraregional trade flows.

To this end, they may contemplate, inter alia, the following matters:

Rules on trade conduct:

- Subsidies and countervailing duties;
- unfair trade practices;
- licences and import procedures;
- other technical aspects of regional trade.
Other rules on non-tariff matters:

- Payments;
- financial cooperation;
- zoo and phytosanitary cooperation;
- customs cooperation;
- facilitation of transport;
- State procurement.
1980 Treaty of Montevideo, Article 14

Member countries may establish, through the corresponding regulations, specific rules to
conclude other types of partial-scope agreements.

For this purpose, they shall take into consideration, among other matters, scientific and
technological cooperation, tourism promotion and preservation of the environment.

Resolution 2 of the Council of Ministers, Article Ten

Member countries may establish, through the corresponding regulations, specific rules for the
signing of other types of partial-scope agreements.

For this purpose, they shall take into consideration, among other matters, scientific and
technological cooperation, promotion of tourism, and preservation of the environment.
WT/COMTD/78
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OTHER TYPES OF PARTIAL-SCOPE AGREEMENTS (PSAs)

PSAs Signed Pursuant to Articles 13 and 14 of TM80

Agreements and Additional Protocols Signed between 01/01/2006 and 31/12/2007

AGREEMENT SIGNED COUNTRIES SUBJECT SIGNATURE
Arts. 13
Note: No amendments were made to this type of agreement.

Arts. 14
A14TM5 AR/BO/BR/CH/PA/UR Safety Regulations for Paraguay - 12/07/2007
Reg. 14 Pananá Waterway Vessels
(Port of Cáceres-Port of Nueva Palmira)

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Page 30

ANNEX 3

RENEGOTIATION AGREEMENTS FOR CONCESSIONS
GRANTED DURING THE 1962-1980 PERIOD

Resolution 1 of the Council of Ministers, Article One

The Contracting Parties shall incorporate into the new integration scheme established by
the 1980 Treaty of Montevideo, signed on 12 August 1980, the concessions granted in national lists,
lists of non-extensive advantages, and complementation agreements.

To that effect, they shall renegotiate said concessions by updating, expanding or eliminating
them in order to further strengthen and balance trade flows.

The result of such renegotiation shall conform to the provisions and mechanisms set forth in
the 1980 Treaty of Montevideo.

Resolution 433 of the Standing Executive Committee, Articles 1 and 2 (Regulations)

The partial-scope agreements on renegotiation of preferences granted during
the 1962/1980 period shall aim to incorporate into the new integration scheme established by
the 1980 Treaty of Montevideo the results of the renegotiation provided for in Resolution 1 of
the Council of Ministers.

The rights and obligations established in those agreements shall be applicable exclusively to
the countries which sign or accede to them.

The agreements referred to in the preceding article shall be based on the granting of
preferences in respect of the customs duties and/or other restrictions applied by the countries
participating therein to the import of negotiated products originating in their respective territory.

The preferences recorded in those agreements may likewise, on a temporary or seasonal basis,
be subject to import quotas, or apply to products of one or more sectors of the tariff nomenclature of
the Association.

RENEGOTIATION AGREEMENTS

Agreements Signed between 01/01/2006 and 31/12/2007
Note: No amendments were made to this type of agreement.

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ANNEX 4

REGIONAL AGREEMENTS

1980 Treaty of Montevideo, Article 6

Regional-scope agreements are those in which all member countries participate.

They shall be drawn up within the framework of the objectives and provisions of the
present Treaty, and may refer to the same matters and include those instruments set out for the
partial-scope agreements established in the third section of the present chapter.

REGIONAL AGREEMENTS

Agreements Signed between 01/01/2006 and 31/12/2007
Note: No amendments were made to this type of agreement.

_______________
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ANNEX 5

AGREEMENTS ESTABLISHED BETWEEN LAIA MEMBER COUNTRIES AND
LATIN AMERICAN COUNTRIES NOT MEMBERS OF LAIA

1980 Treaty of Montevideo, Article 25

Likewise, member countries may draw up partial-scope agreements with other
Latin American countries and areas of economic integration, in accordance with the various
modalities foreseen in the third section of chapter II of the present Treaty, and under the terms of the
respective regulative provisions.

Notwithstanding the above, these agreements shall be subject to the following rules:

- Concessions granted by participating member countries shall not be extensive to the
others, excepting the relatively less developed countries;

- when a member country includes products already negotiated in partial agreements
with other member countries, concessions granted may be higher than those agreed
upon with them; in this case, consultation with the affected member countries shall
be carried out in order to find mutually satisfactory solutions, unless the respective
partial agreements include clauses concerning automatic extension or waiver of
preferences contained in the partial agreements referred to in the present article; and

- they shall be multilaterally assessed by the member countries within the Committee
in order to determine the scope of the agreements drawn up and facilitate
participation of other member countries in same.

AGREEMENTS SIGNED PURSUANT TO ARTICLE 25
OF THE 1980 TREATY OF MONTEVIDEO

Additional Protocols signed during the Period
from 1 January 2006 to 31 December 2007

AGREEMENT SIGNATORY COUNTRIES SUBJECT DATE OF SIGNATURE

A25TM 38.3 BR/GUY Extension of period of validity of 30/05/2006
agreement

__________