ALADI – Promoting the Latin American Common Market

Where trade agreements such as NAFTA and CARICOM seek to strengthen free trade ties between countries of a shared region – NAFTA for North America and CARICOM for the Caribbean – so the ALADI agreement seeks to meet this goal for much of South America. With its roots in the Treaty of Montevideo in 1980, the nation members of ALADI (AsociaciĆ³n Latinoamericana de IntegraciĆ³n, or Latin American Integration Association) work together to foster the success of the Latin American common market while forging positive relationships with similar unions throughout the world.

As the largest economic association on the continent, ALADI is comprised of twelve primary nation members:

  • Argentina – Largely agricultural in terms of global trade, Argentina exports soy products and grains to their major trade partners, including ALADI nations Brazil and Chile.
  • Bolivia – Much of Bolivia’s export product comes from the mining industry. Here one will find one of the largest lithium deposits in the world, as well as natural gas reserves.
  • Brazil – One of the richer nations in this free trade zone, Brazil is known for their production of machinery and transportation equipment. Agriculture, however, remains vital to the economy through their production of coffee and soy.
  • Chile – Copper mining is an important industry here; much of the world became familiar with Chile by way of the courageous rescue of 33 miners trapped in a mine collapse in 2010.
  • Colombia – Colombia is one of the world’s top producers of nickel, coffee, and natural fuels. Of the ALADI nations, Colombia exports the majority of goods to Venezuela.
  • Cuba – While not a South American nation, Cuba was accepted into the agreement in 1999 by virtue of their association with Latin America.
  • Ecuador – A country of diverse economic stature, Ecuador relies upon mainly agricultural exports like bananas and shrimp for trade with the United States.
  • Mexico – Mexico benefits greatly in trade through this treaty and NAFTA. Silver is a primary export, along with food and livestock, particularly brands popular in the US.
  • Paraguay – The majority of Paraguay’s export trade is done within the continent, with soybeans and cotton among their more popular cash crops.
  • Peru – Precious metals are sought-after commodities from main trade partners China, Canada, and the US. Copper, zinc, and gold mines keep a good percentage of the labor force at work.
  • Uruguay – Nearly forty percent of the country’s export product is beef. Dairy also accounts for a significant amount of export income.
  • Venezuela – Unlike her more agricultural neighbors, Venezuela generates revenues mainly through exporting natural gases and chemicals.

The trade agreement established between the ALADI nations is designed to promote exchange of goods and services across open borders, with preferential treatment given to the less developed member nations as a means of compensating for what they lack to compete with the larger economies on a global scale. Countries within the agreement are obliged to grant each other reductions in tariffs as they might with non-members, while ALADI also works to strength these relations with non-member Latin American countries and beyond. With ALADI’s additional participation in bi-lateral trade agreements – mainly with North America and Asia – the less developed nations of South America have the opportunity to expand their reach. Eventually, one may find ALADI absorbed by similar organizations like MERCOSUR (the Common Southern Market) and the Adean Community of Nations, both of which are designed to establish a common Union of South American Nations, or UNASUR, to resemble the EU model. Whatever the future holds for ALADI, its place in the South American economy has left an indelible mark.