Year XXXVIII, 1996, Number 1 - Page 26
THE PROCESS OF LATIN AMERICAN INTEGRATION
The ideal of unity among Latin American states has its roots in the 19th century, but only in the current century has this ideal become a pursuable political project.
As was the case in Europe, the first steps toward unification have been in the sphere of economic integration, through regional and sub-regional projects, and the European model has played and continues to play an important role in the choice of objectives and in the methods employed to achieve them.
The main difficulties which the Latin American states have had to face, clearly identified by the high degree of fragmentation of the initiatives and projects, are linked to the different starting position in economic and political terms when compared to Europe. Yet the process has been started and since the 1960s has seen the creation of associations, pacts, and economic communities, which among difficulties and re-launches represent a response to the need to overcome the division into sovereign national states as the premise for peace, economic development and the consolidation of democracy.
Before examining the various organs of the integration process in their different sub-regional variations, it is necessary to outline the different goals pursued in the last four decades by Latin America (which now comprises 18 countries, if we include also Mexico, with its total of 400 million inhabitants).
Before the Second World War, the prevailing economic strategy in Latin American states was that of autarchy and state intervention. The depression of 1929 and the subsequent closing of some markets and national outlets gave a decisive impetus to this double process of falling back on internal resources and state intervention. At the same time, populist political regimes established themselves, which were often at the extremes of nationalistic exaltation, even if they officially professed a desire to unify the continent.
This economic strategy enabled the maintenance of reasonable levels of economic activity until the Second World War (especially if compared to the relative weakness of economic activity in the most developed countries of the time) and this relatively favourable trend was maintained also in the post-Second World War period, thus allowing the region to achieve an average annual growth rate of 5% until the end of the 1950s.
It was only at the beginning of the 1970s that the majority of Latin American countries, and especially those of the southern triangle, tried to make up for lost time and to open their economies to the rest of the world. This allowed these countries to take advantage of the opportunities arising at the international level, yet imposed certain rapid and profound changes in the structure of production, which had up until that time been protected from the effects of international competition.
The 1980s were marked by the international debt crisis and the end to the policies of internal development and autarchy. Right at the end of this decade, when it became clear that most states’ GDP would not reach the levels of 1980, and this in spite of much higher inflation rates, the expression “lost decade” made its appearance.
At the level of society, this period was marked overall by a growing gap among the different classes with regard to their capacity to benefit from the goods and services of the consumerist society, precisely when increased education levels and the development of the mass media made them more demanding. As a result, as individual and collective aspirations moved closer to those of the developed countries, the majority of the population demonstrated their growing frustration: among other things, this gave rise to a growth in violence and crime, drug consumption and trafficking, emigration to North America and, at the political level, a certain return to populism.
Analysing this period, the Institute for Latin American Integration (INTAL) wrote that this has been “the worst economic crisis of the region after the great depression. Clearly, the economic integration projects could not ignore this problem; as a result, inter-regional trade suffered a big reduction, greater than the reduction of exports which occurred at the world level. This phenomenon reflected, among other things, the effects of a deep recession in the region, the scarcity of hard currency and the creation of barriers to imports”.
Following the end of the 1980s, with a sharp acceleration after 1990, a new cycle began involving the gradual opening-up of Latin American economies to the rest of the world; this has encouraged a decisive re-launching of the integration progress. Although this phenomenon is an integral part of the world economy’s trend toward integration and the creation of great regional economic blocs of states, INTAL has rightly emphasised that the region has undergone a process which was “probably among the most accelerated in the world economy in recent years”.
This new cycle has been flanked by two new significant and interdependent political phenomena (to be found in all the sub-regional integration schemes) which this time encourage the hope that real progress is going to be made in the Latin American integration process: the commitment of the highest political authorities in its favour and democratisation.
The phenomenon of the renewed involvement of the highest political authorities in the integration process was prepared from the mid-1980s above all by the creation in 1983 of the Contadora Group as a means to avoid conflicts in Central America. This group has gone through a number of stages, first as the Group of Eight, then, after 1986, as the Rio Group or Political Co-ordination Mechanism. It met every year from 1986 to 1990 at the heads of state level, as a forum for discussing regional problems and their respective solutions. At the close of meetings, instructions were given to ALADI (Latin American Development Association, the institutional framework) and to SELA (Latin American Economic System, the political framework of integration) as to the “actions to be undertaken in order to achieve the objectives which had been set out in every meeting”.
Finally, it is not possible to talk of the new vitality shown by the Latin American integration process, in its different versions, without at least mentioning the Initiative for the Americas proposed to the continent by President George Bush in June 1990, and to which the various countries have tried to come up with a common answer, for the most part by signing framework agreements with the United States, sometimes within sub-regional integration schemes, such as MERCOSUR (Common Market of the South) or CARICOM (Community of the Caribbean).
Latin American free-trade association (ALALC).
The Montevideo Treaty, which created ALALC, was signed in that city in February 1960 (within the decidedly protectionist context of the end of the 1950s, as we saw above) by representatives of Argentina, Brazil, Chile, Mexico, Paraguay, Peru and Uruguay, with the aim of establishing a free trade area among the signatories, thanks to the gradual suppression over the course of twelve years of customs duties and non-tariff protection measures. The treaty provided for the following institutions: the Conference, in which each national delegation had the right to one vote, the Committee, which was permanent and was composed of one member for each contracting country, and the General Secretariat.
This organisational model was changed in December 1966 by the Montevideo Protocol, which created the Council of Foreign Ministers to be the supreme organ, alongside the Conference and the permanent Executive Committee. These reforms were not sufficient to hide the clamorous failure of ALALC, despite the good will shown by the member states, caused by the association’s overly ambitious objectives with respect to the means at its disposal, since the clauses of the treaty had not been adequately altered.
Miguel A. Ekmedjian has analysed the failure of the first institutional attempt of Latin American integration as follows: “If the objective was really to create a free trade area and a common market, the adequate means and probably a real and effective mechanism to harmonise the national interests at stake were nevertheless lacking, since the conviction of signatory countries that the integration process satisfy their national interest (even though it damages certain sectoral interests) is an indispensable element for its consolidation”.
Latin American development association (AIADI).
ALADI was founded in August 1980 in the wake of the clamorous failure of ALALC (even though the latter had, in 1969, created within its structure the Andean Group – GRAN) with even more ambitious objectives.
The new Montevideo Treaty, which was this time signed by Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela, aimed at “revitalising the Latin American integration process and setting out objectives and means which are compatible with the regional situation”, “by promoting a convergence process which will lead to the creation of a regional common market”. Article 1 specified that “the contracting parties support the integration process which is destined to promote the harmonious and balanced economic and social development of the region... This process has the long-term objective of the gradual and progressive creation of a Latin American common market”.
The institutional organs which ALADI disposed of were the Council of Foreign Ministers, as the supreme organ, the Conference of Evaluation and Convergence, the Committee of Permanent Representatives and the General Secretariat as the technical body.
Miguel A. Ekmedjian emphasises in his study certain similarities with the European Communities’ institutions (prior to the Maastricht Treaty), although he highlights the limitations of these analogies: the Council could be compared to the EEC’s Council of Ministers, the Conference to the Parliamentary Assembly (now European Parliament), in as much as its basic function was to provide political control over the functioning of the institutions. In this regard, Ekmedjian points out that the Conference, contrary to the European Assembly, did not possess the power to establish the size of the member states’ contributions nor that of setting the organisation’s budget, functions which imply “a significant power, which allowed the European Parliament progressively to widen its competences, a possibility which was evidently not open to the ALADI Conference”. Ekmedjian also highlights that “as a permanent and executive organ, the Committee possesses certain similarities with the European Community’s Commission, although it can not apply sanctions to those responsible for infringing Community laws”.
Moreover, two of the main limitations of the 1980 Montevideo Treaty consisted of not having provided for the direct and immediate application of the decisions of the community’s organs to the citizens of the member states and of not having created a community judicial power above the national jurisdictions. This explains ALADI’s numerous difficulties in putting regional agreements into practice, as, for example, the Program of Trade Support and Expansion, launched in 1985, or the provisions regarding regional customs privileges.
ALADI stagnated throughout the whole of the 1980s and it was only in October 1989, within the framework of the above-mentioned Rio Group, that Latin American heads of state took measures to give it greater dynamism through the decision to “transform substantially ALADI’s objectives, giving it a greater role to play in leading the regional integration process”. Even if not all the countries belonging to ALADI were members of the Rio Group, this did not prevent the latter from wielding a decisive influence. In the spring of 1990, in Mexico, the ALADI’s Council of Ministers confirmed its ambition to be “the fundamental organ of the regional integration process and the framework of cooperation”, by adapting regional integration to the new situations evolving at the international level. In October 1990, in Caracas, the Rio Group reaffirmed “the inescapable need to accelerate and further the regional and sub-regional integration schemes... in order to create a Latin American economic area”.
In this context, in September 1990, the ALADI Secretariat presented an action plan for the three year period 1990-92, which was organised under seven general headings, each of which indicated the action to be taken and the necessary implementation times: “consolidation and reorganisation of the regional market, productive compatibility and technological co-operation, financial and monetary co-operation, co-operation in the fields of transport and communications, new areas of activity (co-operation regarding border issues, tourism, culture, the environment), diffusion and evaluation of the integration process and, finally, legal adjustments”.
At the same time, the driving force of private actors and the various social forces was developed, since those “officials managing the different sub-regional integration processes appreciated that private actors also represent, by their nature, important sectors of the national communities and that their active involvement was therefore necessary”.
Finally, from a more political viewpoint, the “creation of the Latin American Parliament, of parliaments in the framework of the Andean Pact and of the Central American Common Market (MCCA), just as the actions and improvements achieved along the way to creating the CARICOM parliament, show the importance attached to integration”.
Alongside the revitalisation of ALADI and the sub-regional integration projects, which will be dealt with in more detail below, it is worth recalling the trend towards the overlapping of these latter projects and the signing of integration and co-operation agreements which often involved only some of the members of one or other of the groups. In this way, Argentina and Brazil, both members of ALADI, signed a bi-lateral agreement in 1988 which subsequently gave rise to MERCOSUR, while in September 1990, Colombia, Mexico and Venezuela created the Group of Three. This phenomenon created the problem of co-ordinating the different bi-or multi-lateral programmes and meant that ALADI was to play a new communicating role between the various projects.
The Council of Ministers, ALADI’s highest political organ, specified in 1991, in Cartagena, the outlines of a new role for the organisation as “the institutional and legislative framework of regional integration”, assigning itself the task of guaranteeing the convergence of the various sub-regional schemes; this produced “a flexible system of integration, comprising in turn sub-systems in smaller geographic areas, such as MERCOSUR, the Andean Pact, the Group of Three... and a whole series of bi-lateral conventions undertaken by the member states”.
Yet the debate as to the need or otherwise of a radical reform of the organisation continued. While some recognised that “ALADI has created a legal and institutional framework which has enabled the development of integration programmes of varying breadth and content, even if this has not always taken place in an entirely multi-lateral environment, as would have been preferable”, others however pointed out that this association “has not satisfied the expectations it created as a framework for launching trade among the member countries and has therefore remained below the historic needs of Latin America”.
At the end of 1992, in Buenos Aires, the Council of Ministers decided to convoke an ad hoc group of government representatives from the 11 member countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Paraguay, Uruguay and Venezuela, which represent more than 90% of the GDP of Latin America and the Caribbean) with the aim of carrying out an analysis of the 1980 Montevideo Treaty and its mechanisms, of evaluating its effectiveness and functioning and, if necessary, to suggest “new models in order to improve it or new mechanisms within the Treaty itself”.
Since its creation, which followed that of ALALC, up to the end of 1993, ALADI has represented the framework of more than forty bi-lateral free trade agreements, of a free trade agreement between four countries and of more than twenty, variable-geometry sectoral agreements. More recently all members have signed agreements in favour of less-developed countries, which relate also to a regional pact regarding customs privileges.
Although the macro-economic instability of some countries and the differences in their levels of development continue to hinder the integration process, nevertheless a series of so-called “new generation” agreements have been signed in recent years. These agreements “deal with broad sectors of the world of production, establish certain programmes for the automatic tax exemption of trade and include also some new matters such as environmental protection, intellectual property, investment guarantees, trade in services, and technical norms”.
Similarly, the regional economic landscape reveals the rapid progress of MERCOSUR and GRAN, the conclusion of the Group of Three negotiations and the signing of various agreements among these three countries and those of Central America and the Caribbean, the negotiation by Chile of various bi-lateral agreements within ALADI and, on ALADI's borders, the coming into force on 1st January 1994 of the North America Free Trade Agreement, between Canada, the United States and Mexico (NAFTA).
The Andean Group (GRAN).
GRAN was founded by the Cartagena Treaty, signed in Colombia in 1969 by Colombia, Bolivia, Chile, Ecuador and Peru; Venezuela joined in 1973, prior to General Pinochet's Chile withdrawing in 1977, three years after the beginning of the military dictatorship.
GRAN represented a response by the Andean states to their dissatisfaction with the way ALALC was run and with the attitude of its three most important members (Argentina, Brazil, Mexico). In its early years, the Andean Group implemented a decidedly protectionist strategy, since its most important objective was the substitution of imports at the sub-regional level.
From the outset, the signatory countries tried to follow in a broad sense the model of the European Communities' founding treaties, creating three organs: the Council, whose responsibilities were of a technical nature, the Commission, with political responsibilities, and, from 1976, the Andean Tribunal. However, GRAN did not adopt the super-national aspects of the European Communities, since, while the decisions of the Tribunal are legally binding for the member states, the decisions of the other two community organs must be ratified by a legislative act in each of the states prior to becoming enforceable.
Precisely as was the case for ALADI, Andean integration was re-launched a few years ago, and in 1989 at Cartagena the presidents of the member states decided to undertake this task themselves. As a result, a strategic plan for the future direction of the Andean Group was approved at Galapagos, in which were listed the steps considered necessary to strengthen integration and guide its development through the 1990s. This document sets out the objectives of consolidating the Andean economic area, improving GRAN's international relationships and renewing support for Latin American integration as a whole, taking into consideration also new aspects such as scientific and technological development, tourism, common foreign relationships and, naturally, the commercial, industrial, agricultural and service sectors.
In May 1990 at Macchu-Picchu the Andean Presidential Council was created with the task “of evaluating, encouraging and guiding integration”. The Macchu-Picchu meeting recognised the need for national economic policies which are compatible with the imperatives deriving from the integration process and for a common effort to obtain a reduction in the level of foreign debt. Moreover, it highlighted the risks connected with the unilateral initiatives of member states in the framework of the Initiative for the Americas and with bi-lateral economic co-operation and commercial liberalisation agreements among Latin American countries.
In November 1990, at La Paz, the presidents then decided to create a free trade area and apply a common external tariff, both by the end of 1991, so that the customs union would be operational by 1995. For the same deadline, GRAN also decided on a common agricultural policy and took steps to boost investments coming from outside the region. Finally, the presidents authorised the member countries to negotiate bi-lateral customs privileges with all the other members of ALADI and with the countries of Central America and the Caribbean, so that “by the end of the decade (that is, in 2000) there be established a free trade area throughout the entire hemisphere”.
Since 1992, however, difficulties arose when numerous countries decided not to undertake the consequences deriving from the adoption of the customs union and free trade area. The political events which took place in Peru, with the dissolution of the Congress by President Fujimori in April 1992 and Venezuela’s subsequent decision to break off relations with this country have only served to deteriorate the situation. At Quito, in June 1992, Peru voted against the common external tariff, the liberalisation of regional trade and the harmonising of economic policies (despite continuing until April 1994 to sign a series of bi-lateral conventions with other countries which aimed at maintaining the existing commercial channels). Almost at the same time, Ecuador announced that it was in its turn unable to respect the deadline which had been set for integration, so that “towards the middle of the year, the above-mentioned events combined to lead the Andean Group into what some observers have considered the worst crisis of this association since its foundation, although others have regarded it more as ‘a crisis of growth’.”
In July 1992, the new Ecuadorian President Sixto Duran Ballen imposed a pro-GRAN line on the policy of his own country, notwithstanding the reservations of certain national economic groups. This enabled the prospect of a way out of the crisis of Andean integration, and the launching on 1st October of a free trade area involving all the members except Peru.
At the end of 1993, INTAL was able to sum up this crucial period by stating that “the five countries of the Andean Group have responded to the national and regional crises by liberalising their economies, including with regard to foreign trade. The new Andean Group is conducting a policy of economic liberalisation at a sub-regional scale. The main features of this new strategy are the creation of a free trade area for goods, the formal adoption of a common external tariff which will soon be implemented and the liberalisation of trade among the member countries... Colombia and Venezuela have proved to be the countries with the highest rates of increase in intra-regional trade and they have given a new impulse to the process of reorganising the new GRAN.
Peru’s involvement in this process has been marginal, even though it is to be hoped that she will participate fully in the free trade area in 1995”.
Central American Common Market (MCCA).
The first official policy statement of the Central American states in favour of their economic integration dates back to the spring of 1951. An initial treaty between Guatemala, Honduras and El Salvador was signed in 1958 at Tegucigalpa, prior to the signing at Managua, May 1960, of the general treaty of economic integration between Guatemala, Honduras, Nicaragua and El Salvador, to which Costa Rica adhered in 1963.
The MCCA worked very well until the economic crisis of the 1980s (during which time regional trade was reduced by more than half, with an inversion of the growth trend starting in 1987) and political or political/military conflicts called its development into question.
In October 1989, the ministers in charge of Central American economic integration and regional development asked their advisors to elaborate a concrete proposal directed toward the “re-organisation, revitalisation and reinforcement of the Central American economic and social integration process.”
Starting in 1990, more favourable conditions existed following the placation of the main breeding ground of regional tensions (Nicaragua), which made it possible to rebuild the national economies and re-launch integration. In June, the presidents defined their objectives and expressed their intention to “re-organise, reinforce and re-activate the integration process... by adjusting or re-designing its legal and institutional framework... and by encouraging its conversion to the new strategies of openness towards the outside and to the, modernisation of the means of production” through a Central American Plan of Economic Action (PAECA). At Puntarenas in December, the same presidents called on the international community for help and re-affirmed the fundamental role of the Summit of Central American Presidents as the “superior decision-making and co-operative mechanism”.
In December 1991, at Tegucigalpa, the Summit analysed “the measures necessary for making human development more dynamic and for combating poverty” and decided to create the Regional Commission for Social Affairs. The Summit also stressed the need to involve the various social parties and groups in the integration process and to make the common external tariff rapidly effective.
Honduras, which withdrew from MCCA in 1969, signed an agreement with its partners, the first step toward its effective re-integration which took place in February 1992. Guatemala signed some bi-lateral free trade agreements with El Salvador, while Panama expressed its interest in “gradually joining the integration scheme”.
At the end of 1991, ten international and regional organisations, both public and private, were called on to give their opinion in a detailed document about the broad outlines of integration and on the steps along the way to the Central American economic community: re-organisation, reinforcement and re-launching of integration, transition towards the economic community with the harmonisation of economic policies and improvement of the mechanisms and tools of regional co-ordination; finally, the launch of the community, intended as a productive structure integrated at the regional level with a development model which provides for a just balance between the use of natural resources and the protection of the environment, while guaranteeing progress and the quality of life.
In addition, it was decided to re-activate the Organisation of Central American States (ODECA) and, already in mid-1991, to approve a plan of action for Central American agriculture (PAC), while negotiations were conducted to create a free trade area with the United States within the framework of the Initiative for the Americas, and agreements among various Central American and other Latin American countries were signed.
In 1992, El Salvador and Nicaragua moved toward constitutional normality and the path toward pacification followed its course in Guatemala. Nevertheless, the region’s most serious problem remained the process of stabilisation and structural adjustment. Faced with the danger that Mexico’s adhesion to the North American Free Trade Agreement (NAFTA) could damage Central America’s exports to Canada and the United States and hinder the flow of investments coming from these two countries, the regional authorities were convinced that the MCCA could play a fundamental role in development. They therefore broadcast a vigorous message regarding the “social debt of the region” and on the need for further integration especially in the agricultural sector, stressing their will to widen the geographic area of MCCA with the integration of Panama and by inviting Belize as an observer to some of their meetings.
On the institutional level, the Central American Parliament (PARLACEN), which was established in Guatemala City in October 1991, with the support of the European Parliament, began to meet in the presence of the representatives of four out of the five member countries, while at the same time progress was made towards the creation of a common legal system, with the creation of a Central American Court of Justice and it was decided to launch definitively, from December 1993, the Central American Integration System (SICA), which had replaced ODECA in December 1991.
The agreement of Nueva Otopeque, in El Salvador, May 1992, reaffirmed the decision of the presidents of El Salvador, Guatemala and Honduras to establish a free trade area, which was followed by the announcement of their intention to move towards political union and the creation of a federal state. Some months later, during the Panama Summit, a similar plan was proposed for the integration of the whole region, under the name of the Central American Republic, but it was not possible to debate this project.
During 1993 the tendency toward integration was generally strengthened, although with different emphasis and at different speeds from state to state: while Costa Rica announced that, despite having signed the Guatemala Protocol in October 1993, it was not willing immediately to create a customs union with its partners (in financial and monetary matters, the Guatemala Protocol limits itself to affirming that “the integration must take place in a gradual fashion”), Nicaragua instead joined El Salvador, Guatemala and Honduras to sign, in April, the Managua agreement, which looked forward “to achieving a customs and economic union as rapidly as possible” and “to work for a political union among themselves”.
Caribbean Community (CARICOM).
CARICOM was created in 1973 through a treaty signed by Barbados, Guyana, Jamaica and Trinidad and Tobago, which were later joined by other states in the region (Belize, Antigua and Barbados, the Bahamas, San Cristobal-Newis, the Dominican Republic, Grenada, Monserrat, St Lucia, St Vincent and the Grenadines).
After a period of inactivity, from 1985 onwards the heads of state have demonstrated their willingness to re-launch integration, a willingness which went from strength to strength up until the beginning of the 1990s in the face of the challenges of the globalisation of the world economy and of the creation of great regional economic blocs: the single European market of 1992 and the North American free trade area. In 1989, with the Declaration of Grande Anse, Grenada, it was decided “to define the three basic instruments for creating a common market, as foreseen in the Chaquaramas Treaty: a common external tariff, common rules of product origin and a harmonised system of fiscal incentives”.
As is the case for all the other systems of Latin American sub-regional integration, the institutionalisation of the annual meetings of the heads of state has proved fundamental for saving the process from the fatal quagmire into which it had fallen for over a decade. At the same time, two further measures for gaining support were enacted: the East Indies Commission, made up of public figures, was charged with making proposals to the political authorities, and the Regional Economic Conference, which met for the first time at the beginning of 1991. At the same time, a study was begun into the creation of a parliamentary assembly, along the lines of a project ratified by six countries at the end of 1993.
The East Indies Commission has identified the objective of creating a common monetary authority and a single currency before the year 2000 and has proposed some institutional reforms. Even though not all the suggestions have been accepted, a Bureau has been established, and each member country has designated a minister to deal with issues relating to CARICOM. The heads of state have also accepted the principle of joint representation abroad, a strengthening of the secretariat, a charter of civil society and a supreme court.
At the end of 1993 the common external tariff gradually entered into effect among eight countries, while the others committed themselves to applying it in the near future; the rules regarding product origin came into effect in May.
With the aim of enlarging the area of CARICOM, the East Indies Commission also suggested in 1992 to start negotiations designed to create an Association of Caribbean Countries (AE Car), which would include the countries of Central and South America bordering the Caribbean sea, and also the extra-regional powers with interests in the area, such as France, Holland, Great Britain and the United States. While the negotiations for the creation of AE Car seemed promising at the end of1993, there remain however doubts as to the effectiveness of CARICOM itself, given its small population (5 million inhabitants distributed across 13 countries) and its limited economic activity.
Common Market of the South (MERCOSUR).
MERCOSUR was the result of a process which began in 1985, when, after Argentina and Brazil returned to democracy, they signed the Declaration of Iguazo, which gave rise towards the end of 1986 to their programme of integration and economic co-operation.
These two countries decided in 1990 to create a common market which was to be definitively launched on 1st January 1995, and in March 1991 MERCOSUR was created, through the signing of the Asuncion Treaty by Argentina, Brazil, Uruguay and Paraguay.
The treaty provides for the free circulation of goods, services and various factors of production among the four member countries, the setting of a common external tariff and the adoption of a common trade policy toward other countries or groups of countries. The treaty states that, at the Latin American level, this should be considered “as a new step forward in the effort towards the gradual development of Latin American integration”, and emphasises the need for MERCOSUR to assume an active role in the world framework, which is characterised by the creation and consolidation of great regional entities. In fact, this policy has been put into practice by the signing of a treaty with the United States and by contacts both with the EEC and Japan.
MERCOSUR’s institutional organs are: the Council, which is its supreme political organ and is made up of the Ministers of Foreign Affairs and Economic Affairs, and the Common Market Group, its executive organ, which is composed of four permanent members and an equal number of second-rank members for each country, who are the representatives of the above-mentioned ministers and the central banks. Finally, the treaty establishes an administrative secretariat and a common parliamentary commission.
At the beginning of 1992 the Brasilia Protocol was adopted in order to solve disputes among the member states regarding the interpretation or application of the treaty; it provides for an arbitration tribunal which decides in the last resort without possibility of further appeals. Following this, with the aim of launching the various policies which should enable the effective creation of a common market (programme of trade liberalisation, co-ordination of macro-economic policies, the definition of a common external tariff and the suppression of non-tariff barriers, sectoral agreements), meetings were arranged at the level of the ministers and presidents of the central banks and an internal set of rules was approved for the Common Market Group and the sectoral sub-groups contained within the latter group.
Following its appearance, MERCOSUR has had some success in serving as a magnet for other countries and in re-vitalising the Latin American integration process as a whole.
The return of democracy, though not entirely stable, in the majority of Latin American states and the re-launching of the economic integration process provide the premises for the more ambitious objective of a real Latin American federation, which could become one of the pillars of a future federal world government. Yet in order to achieve this objective, which implies the overcoming of national sovereignty, co-operative efforts among the governments are not enough. As the history of European unification shows, the governments tend to search for joint solutions which are compatible with the maintenance of sovereignty. It is for this reason that the role of militant federalists is important and crucial, since the federalists are a group which, holding the federation as their main objective, are able to avoid being trapped by the national powers and to indicate from time to time the correct answer to the problems of the moment, until the political objective has been reached.
It is therefore important that also in Latin America an independent and super-national federalist movement be re-established.
 Cf. Jean-Francis Billion, “Latin American federalism”, in The Federalist, XXXV (1993), pp. 21-27.
 The author has studied the publications of the Institute for Latin-American Integration (lNTAL) since its foundation up until 1993 and particularly its annual reports and journals, the most recent of which, Integración Latino-americana, is currently being re-organised. On the subject of relations between Europe and Latin America see the publications of IRELA, Instituto de relaciones europeo-latinoamericanas, in Madrid.
 Cf. Fernando Fainzylber, “Technical Progress, Competitiveness and Institutional Change”, in Strategic Options for Latin America in the 90’s, Paris, Ed. OECD, 1992, pp. 101, 140.
 INTAL, El proceso de integración en América Latina y el Caribe en 1993, Buenos Aires, 1994, p. 2.
 INTAL, ibid., p. 6.
 José Maria Puppo, Director of INTAL, writes in the introduction to the Institute’s report for 1993: “It must be noted that also the uninterrupted process of democratisation seen in recent years has been fundamental. The legitimacy of the governments made it possible to achieve some international compromises... In certain cases such conditions have been reached after political and military struggles that have seriously conditioned the integration process which the adhering countries have taken part in, and which have brought about dramatic delays in the development of their economic and social conditions”. In the Preface to Antonio Toledano Laredo’ s book, Intégration et démocratie (Brussels, Editions de l’Université libre de Bruxelles, 1982), which compares the European and Latin American integration processes, Jean-Victor Louis wrote that, “integration necessarily presupposes that the national interest is not held to be the supreme goal, or more exactly that the interest of each of the states which comprise the union can no longer be defended except within a framework of common interests. Regional integration among totalitarian states can not survive and progress since the structure of these states is in substance nationalist, and hence naturally in contradiction with the liberties that are the presupposition for opening up frontiers.” Antonio Toledano Laredo has stressed the difficulties of the Latin American integration process, recalling that this sub-continent comprises “industrialised countries, democratic or otherwise, socialist countries, countries that are still far from having achieved industrialisation, countries that are exporters of petroleum and countries entirely without oil resources”; and pointing out that “the social, economic and political mix is in like proportion to the geographical extension and distances which are unheard-of in Europe”, and that “the very expression ‘Latin America’ ... is not exhaustive, since although it includes the Spanish and Portuguese elements, in a word Hispanic America, it does not however bring to mind other Indo-American (and also Afro-American) elements, each of which represents a native or imported reality that constitutes, along with the former, a combination of cultures and traditions that is enormously rich”.
 Miguel A. Ekmedjian, Professor of Constitutional Law at the University of Buenos Aires, writes that, “the will to integrate is evident in the new Latin-American political class, which having put aside provincialisms and local disputes, has ventured onto the difficult path toward integration. This change of mentality is connected to the return of democratic governments in the great majority of the countries of the sub-continent, and is therefore a fairly recent phenomenon” (Miguel A. Ekmedjian, Hacia la República Latinoamericana, Buenos Aires, Ed. Depalma, 1991, p. 31).
 The Rio meeting of December 1986 was attended by Argentina, Brazil, Columbia, Mexico, Panama, Peru, Uruguay and Venezuela, all of which possess democratic governments; Panama was temporarily suspended from the group at the beginning of 1988.
 INTAL, El proceso de integración en América Latina y el Caribe en 1990, Op. cit., p.4.
 Miguel A. Ekmedjian, Op. cit., pp. 17-18.
 Preamble to the Montevideo Treaty, in Miguel A. Ekmedjian, Op. cit., pp. 18-19, which also cites a comparative analysis of the two Montevideo treaties: Raimundo Barros Charlin, “Análisis comparativa de los Tratados de Montevideo del 1960 y 1980”, in El Derecho de la Integración en América Latina, 1979-1982, a thematic compilation edited by Eduardo R. Conessa and Jorge L. Oria, Buenos Aires, Ed. INTAL, 3 volumes, 1983.
 Miguel A. Ekmedjian, op. cit., p. 19.
 Ibid., p. 21.
 Cf. INTAL, El proceso de integración en América Latina y el Caribe en 1990, op. cit., p. 29, which states also that “on the occasion of the meeting at Ica in Peru, it was acknowledged that it was necessary to update the institutional structure of the strategies and to consider other ways to complete the integration process in the fields of communications, transport, scientific and technological co-operation and culture.”
 “The Caracas Declaration”, in ibid., p. 29.
 Ibid., p. 33.
 INTAL, El proceso de integración en América Latina y el Caribe en 1991, Buenos Aires, 1992, pp. 11 and 230.
 Ibid., p. 15.
 INTAL, El proceso de integración en América Latina y el Caribe en 1991, Buenos Aires, 1992, pp. 11 and 230.
 Ibid., pp. 23-4; among other matters, there are cited various policy stands made by Chilean and Mexican leaders in 1992.
 Doc. ALADI/CM/VIII/dt 1/Rev 1/3.2.1994, cited in INTAL, El proceso de integración en América Latina y el Caribe en 1993, op. cit., p. 27.
 INTAL, El proceso de integración en América Latina y el Caribe en 1991, op. cit., p.l03.
 INTAL, El proceso de integración en América Latina y el Caribe en 1992, op. cit., p.114.
 INTAL, El proceso de integración en América Latina y el Caribe en 1993, op. cit., p.84.
 INTAL, El proceso de integración en América Latina y el Caribe en 1991, op. cit., p.156.
 Acciones para la reactivación, fortalecimiento y restructuración de la integración y la inserción centro-americana en la economia internacional, Guatemala, November 1991, cited in INTAL, ibid., p. 160.
 Current Central American constitutions, with the exclusion of Costa Rica’s, provide for, as did those approved following the Second World War by different European countries of the EEC, the renouncing of sovereignty under condition of reciprocity; that of Honduras even asserts that this country “is a state currently ‘removed’ from the federal republic of Central America”.
 INTAL, El proceso de integración en América Latina y el Caribe en 1993, op. cit., p.125.
 INTAL, El proceso de integración en América Latina y el Caribe en 1991, op. cit., p.220.
 Cf.Wolf Grabendorff(director of lRELA), “European Integration: Implications for Latin America” in Strategic Options for Latin America in the 1990’s, op. cit., pp. 217-48.
 INTAL, El proceso de integración en América Latina y el Caribe en 1991, op. cit., p.90.
 Javier Villanueva, an analyst at INTAL, wrote in 1990 in the report on integration (p. 4) that “under the pressure of globalisation currently underway and of the need to adapt to new requirements in order to be able to join in co-operative processes and benefit from international financial flows and in a situation of limited possibilities for action and strategic decisions, both due to their debatable effectiveness, and due to exaggerated demands for material improvements, the national state has become one of the key points of the changes to introduce in the next decade.”
 On the subject of federalism, and Latin-American federalist movements which disappeared during the 1970s, see Jean-Francis Billion, “Latin American federalism”, in The Federalist, XXXV (1993), pp. 21-7, and “The Movimiento Pro Federación Americana”, in The Federalist, XXXV (1993), pp. 123-39.