1

UNIVERSITY OF MUMBAI

A PROJECT REPORT ON
“A STUDY ON MERCOSUR”

SUBMITTED BY
Mr. Thaikadan Sebastian Vincent
UNDER THE GUIDANCE OF
Prof. Koel Roy.Choudhury

FOR THE ACADEMIC YEAR 2014-15

IN FULFILLMENT OF THE REQUIREMENT FOR THE
DEGREE OF MASTERS OF COMMERCE (M.com Part-I)
SEMESTER -I

SIES (Nerul) College of Arts, Science & Commerce

Sri. Chandrasekarendra Saraswathy Vidyapuram, Plot 1C,
Sector 5, Nerul, Navi Mumbai-400706.
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DECLARATION

I Mr. Thaikadan Sebastian Vincent, a student of SIES (Nerul) College in

M.Com (Part- I) hereby declare that I have completed the project on the
topic “A Study on Mercosur” for the academic year 2014-2015 under the
kind guidance of Prof. Koel Roy Choudhury as a fulfillment of the course
curriculum in the first year M.com(part-I)- Semester 1.

The information submitted herein is true and original to the best of

my knowledge and belief.

Date:

Place: Navi Mumbai STUDENT

SEBASTIAN VINCENT
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ACKNOWLEGEMENT

I would sincerely like to give my heartfelt acknowledgement and

thanks to my parents. Any amount of thanks given to them will never
be sufficient.

I would like to thank the University of Mumbai, for introducing

post graduation Course in Accountancy, thereby giving the student a
platform to abreast with changing business scenario, with the help of
theory as a base and practical as a solution.

I would sincerely like to thank our Principal DR. RITA BASU. I

would also like to thank my project guide Prof. KOEL ROY
CHOUDHURY for Her valuable support and guidance whenever
needed.

I also feel heartiest sense of obligation my library staff members &

seniors who helped in collection of Data and materials and also in this
processing as well as in drafting manuscript.

Last, but not the least, I would like to thank my friends &
colleagues for always being there.

Name of the Student

SEBASTIAN VINCENT
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INDEX

Sr.No Particulars Page No

1 Introduction 5-6
2 Latin American Integration – Previous Attempts and The Birth
of Mercosur 7-9

3 Institutional Framework 10-18

4 Trade opening programme 19-20
5 Mercosur: Difficulties and Obstacles 21-24
6 Mercosur: An Evaluation 25-35
7 Conclusion 36-37
8 Bibliography 38
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I – INTRODUCTION

Nobody can deny that today’s world is intertwined in every aspect of life; social, cultural and
political, and especially economical. After the end of the Cold War the world faced a huge
transformation, which resulted in the end of the American domination and gave rise to emerging
powers as China, Russia, India, and Latin- America. Latin-America went through a phase of
transition. In 1980 most of the Latin-American countries were still ruled by authoritarian
leadership. But these were soon to be replaced by a form of democracy. In this more open world the
concept of globalization was an opportunity, as well as a challenge for Latin-America to integrate
their (economic) relationships to give an answer to the fast changing world. The attempt to bring
their economies closer together had already started in the 1960s. After the great depression, the
Latin- American countries began to industrialize. In order to develop more, processes of integration
came into the minds of the country’s leaders. In 1985 Brazil and Argentina started a process of
economic integration that paved the way for the creation of The Common Market of the South,
Mercosur (Mercosur in Portuguese) in 1991. Mercosur was in a way a response to the various
changes and developments in the international system. The rest of the world saw Mercosur as a
promising integration plan for Latin America, because of its final objective of creating a common
market and by representing a powerful bloc more independent from the United States. In general,
Mercosur has been considered as the most sophisticated and long lasting example of integration of
the region. No other Latin-American integration project has reached (in theory) the level of
Mercosur. Nonetheless, the bloc is far from reaching its initial goals the founders dreamed of.

There have been a lot of attempts in Latin America in the past years to strengthen and widen
their regional trading arrangements. As in previous years, efforts to deepen integration among
members of existing schemes in the Americas have focused mostly on market access and
institutional issues. In South America, the Southern Common Market –Mercosur is following its
program of integration, and has widened the scope of its free trade area by signing association
agreements with Chile and Bolivia and an economic cooperation agreement with the European
Union. The creation of Mercosur is certainly the most economic significant fact for the economies
of Brazil, Argentina, Uruguay and Paraguay.

The purpose of Mercosur was to establish a common market which would include the
free movement of goods, services and factors of production, the elimination of customs duties and
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non-tariff restrictions, the establishment of a common external tariff and the adoption of a
common trade policy, and the coordination of macroeconomic and sectoral policies. The
fundamental elements of a common market were achieved by January 1, 1995 with the
establishment of a common external tariff and the reduction in stages of internal tariffs subject to
a number of sub-sector exceptions.

The four countries which made up the Customs Union cover a territory of approximately
12 million square km., covering 59% of Latin America total area. The Mercosur population
represents almost 50% of the Latin America population. The Gross Domestic Product (GDP) of
the Mercosur is running at more than US$1 trillion and the per capita income of its inhabitants is
US$3,259. It is now the fourth largest economic entity in the world, after the EU, the US and
Japan.

When the integration project was launched, initiated by the Presidents Sarney and
Alfonsin (from Brazil and Argentina, respectively), it was seen, by the people in general, as only
another attempt to reach Latin-American integration. An attempt full of good intentions, but
addressed, apparently, to utopian goals. Other questions about the future of the less competitive
sectors were raised.

With the discussion that took shape in the society, an extremely creative focus emerges. It
is the idea of facing Mercosur not only as a market and competition enhancement, but also as a
learning process for the globalization.
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II - Latin American Integration – Previous Attempts and The Birth of

Mercosur

The first studies of economic integration in Latin America date from 1940s and 1950s.
The United Nations Economic Commission for Latin America (ECLA) started first studies for a
Latin American common market. Under the development oriented perspective at that time, based
on the import substitution model, the creation of a Latin American common market would have
mainly the function to enhance the limited national markets. The goal was to obtain economies of
scale by taking advantages of each country characteristics, and so supporting and accelerating the
industrial development. Thereby, because the high level of industrialization reached by the end of
the 50’s it seemed that the possibilities and the fundamental conditions existed in order to initiate
the integration process.

The very first attempt to create a common market in Latin America occurred in the early
60s with Treaty of Montevideo establishing the Latin America Free Trade Association (LAFTA).
The Treaty provided for the creation of a free-trade zone by negotiations between its member
states: Argentina, Brazil, Chile, Mexico, Paraguay, and Peru. Uruguay, Colombia, Equator
and Venezuela also joined the Association later on. LAFTA’s goal was the achievement of a
regional common market in 12 years time. This would be accomplished mainly because of the
markets development and growth that was to happen as a result of the removal of protectionism
measures through multilateral negotiations, resulting from tariff reductions. LAFTA was accepted
as a mechanism to provide greater trade liberalization to the most developed countries of the
region (Argentina, Brazil and Mexico). As regards the other lesser developed countries, the
objective was to stimulate their industrial growth and to complement their economies. The
LAFTA trade opening developed reasonably well in its early years, but it lost impetus as of 1965.
The distance between its original objectives and the results was very great.

Some efforts had been made in order to prevent LAFTA from ending. This way, one of
the solutions presented was in fact implemented in 1969, through the Cartagena Sub- Regional
Integration Agreement. It was when Bolivia, Chile, Colombia, Equator and Peru created the
Andean Group as an attempt to give dynamism to the region's integration. Cartagena Agreement
intended to implement a duty lifting program, a common external tariff, a differentiated treatment
as regards foreign investments. Despite the pragmatism of the initial proposal in 1987, the
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participants of the Andean Group at that time reunited in Quito, recognized that the Cartagena
Agreement had been totally disregarded by the signatories.

At the beginning of the 80s, due to the growing external balance difficulties faced by Latin
American countries and due to the creation of other economic blocs and to a growing
protectionism, the integration process reached a new dimension. The Latin American Integration
Association-LAIA was created to replace LAFTA. It used other means to attempt integration of
member states and an economic preference zone was established. New instruments were defined
to allow regional trade between the participants. This created favorable conditions for the growth
of bilateral initiatives, as a prelude to the institution of multilateral relationships in Latin America.
The emphasis on those bilateral agreements was a consequence of the particularities of each
country member as well as the recognition of the failure of the previous experience based on
multilateral agreements and the recent experience of the agreements signed by Brazil, Argentina
and Uruguay in the mid 70s.

Among the new instruments created by LAIA, the RCP-Regional Customs Preference
(PAR-Preferencia Alfandegaria Regional), which became effective in 1984, had a special
importance. The RCP established a gradual reduction of customs duties on imports of regional
goods among member countries, taking into consideration their level of development. It sought to
adopt more flexible and pragmatic instruments of integration, as compared to those of LAFTA.

Argentina and Brazil have been rivals historically because of opposite political and
economic interests. The search for increasing trade liberalization was mainly accomplished by the
bilateral agreements signed by Brazil and Argentina in July 1986 called PEIC (Program for
Economic Integration and Cooperation). This program, focused on the creation of a common
economic space, concluded several sectoral agreements aimed at increasing trade in products
included in various sectors such as energy, transport, nuclear energy and air transport. Under the
LAIA system these two countries initially signed 12 commercial protocols but in 1988 they were
already 24.

Brazil and Argentina signed, in November 1988, the Treaty for Integration, Cooperation
and Development (TICD), setting the stage for a common market between them within ten years.
It was established that this agreement would be open to all other Latin American countries. The
Treaty introduced radical changes in the mechanism for sectoral negotiation through the list of
 9

products used by PEIC. Its objective was the elimination of all tariff and non-tariff barriers on the
trade in goods and services by a gradual process. For the first time an agreement was reached to
proceed with the gradual harmonization of economic policies and coordination of monetary, fiscal
and exchange with the purpose of constituting a common market.

The success of this new strategy resulted in a significant increase in trade flow between
both countries. Thus, in July 1990, by signing the Act of Buenos Aires, the Presidents Fernando
Collor de Melo (Brazil) and Carlos Menem (Argentina) decided to accelerate the integration
process started in 1985 by anticipating to December 1994 the establishment of a free trade area.

The Act introduced an important change in the previously applied strategy. Instead of
adopting sectoral protocols, which looked for commercial and industrial complementation among
sectors, a general and automatic integration scheme was adopted. The impact of this measure was
immediate. In 1990, Paraguay and Uruguay were invited to participate with Brazil and Argentina
on the establishment of a market until the end of 1994. As a result, the four countries signed the
Treaty of Asuncion on 26 March 1991, providing for the creation of a common market among the
four participants, to be known as the Southern Common Market - MERCOSUR.

The evolution of these events shows the development of the idea of integration in Latin
America, a continent that cannot stay lethargic, observing the formation of economic blocs by the
developed countries. It started by integrating countries geographically and historically closer and
then expanding with the adhesion of others, as the intended improvements become reality.

The Asunción Treaty was only the first step in the transition towards the establishment of
the Common Market. Such transition ended on December 31, 1994. In order to ease the transition
the Member States adopted a General Rule of Origins, a Disputes' Settlement Mechanism and a
Safeguards Mechanism.

The transition phase concluded with the Ouro Preto Protocol, signed in 1994, a common
external tariff that created a flexible customs union was established thus mapping the road toward
a better customs union.
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III - Institutional Framework

The Asuncion Treaty and Ouro Preto Protocol established the basis for the institutional
MERCOSUR structure, creating the Common Market Council and the Common Market Group,
both of which are to function at the outset of the transition phase. As provided for in this Treaty,
before establishing the common market the member nations must call a special meeting in order
to determine the definitive institutional structure for the public agencies managing MERCOSUR,
as well as define the specific functions of each agency and the decision making process.

Common Market Council

Functions: The Council is the highest-level agency of MERCOSUR with authority to conduct its
policy, and responsibility for compliance with the objects and time frames set forth in the
Asuncion Treaty.

The following are duties and functions of the Council of the Common Market:

I. To supervise the implementation of the Treaty of Asuncion, its protocols, and agreements
signed within its context;

II. To formulate policies and promote the measures necessary to build the common market;

III. To assume the legal personality of Mercosur;

IV. To negotiate and sign agreements, on behalf of Mercosur, with third countries, groups of
countries and international organisations. These functions may be delegated, by express mandate,
to the Common Market Group under the conditions laid down in paragraph VII of Article 14;

V. To rule on proposals submitted to it by the Common Market Group;

VI. To arrange meetings of ministers and rule on agreements which those meetings refer to it;

VII. To establish the organs it considers appropriate, and to modify or abolish them;
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VIII. To clarify, when it considers necessary, the substance and scope of its decisions;

IX. To appoint the Director of the Mercosur Administrative Secretariat;

X. To adopt financial and budgetary decisions;

XI. To approve the rules of procedure of the Common Market Group.

Composition: The Council is comprised of the Ministers of Foreign Affairs and the Economy (or
the equivalent) of all four countries. Member states preside over the Council in rotating
alphabetical order, for 6-month periods.

Meetings: Council members shall meet whenever necessary, but at least once a year. The
presidents of the member nations shall partake of the annual Common Market Council meeting
whenever possible.

Decision Making: Council decisions shall be made by consensus, with representation of all
member states.

Common Market Group

Functions: The Common Market Group is the executive body of MERCOSUR, and is
coordinated by the Ministries of Foreign Affairs of the member states. Its basic duties are to cause
compliance with the Asuncion Treaty and to take resolutions required for implementation of the
decisions made by the Council. Furthermore, it can initiate practical measures for trade opening,
coordination of macroeconomic policies, and negotiation of agreements with nonmember states
and international agencies, participating when need be in resolution of controversies under
MERCOSUR. It has the authority to organize, coordinate and supervise Work Subgroups and to
call special meetings to deal with issues of interest.

The following are duties and functions of the Common Market Group:
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I. To monitor, within the limits of its competence, compliance with the Treaty of Asuncion, its
Protocols, and agreements signed within its framework;

II. To propose draft Decisions to the Council of the Common Market;

III. To take the measures necessary to enforce the Decisions adopted by the Council of the
Common Market;

IV. To draw up programmes of work to ensure progress towards the establishment of the common
market;

V. To establish, modify or abolish organs such as working groups and special meetings for the
purpose of achieving its objectives;

VI. To express its views on any proposals or recommendations submitted to it by other Mercosur
organs within their sphere of competence;

VII. To negotiate, with the participation of representatives of all the States Parties, when
expressly so delegated by the Council of the Common Market and within the limits laid down in
special mandates granted for that purpose, agreements on behalf of Mercosur with third countries,
groups of countries and international organisations. When so mandated, the Common Market
Group shall sign the aforementioned agreements. When so authorised by the Council of the
Common Market, the Common Market Group may delegate these powers to the Mercosur Trade
Commission;

VIII. To approve the budget and the annual statement of accounts presented by the Mercosur
Administrative Secretariat;

IX. To adopt financial and budgetary Resolutions based on the guidelines laid down by the
Council;

X. To submit its rules of procedure to the Council of the Common Market;

XI. To organise the meetings of the Council of the Common Market and to prepare the reports
and studies requested by the latter;
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XII. To choose the Director of the Mercosur Administrative Secretariat;

XIII. To supervise the activities of the Mercosur Administrative Secretariat;

XIV. To approve the rules of procedure of the Trade Commission and the Economic-Social
Consultative Forum.

Composition: The Common Market Group shall be made up of four permanent members and four
alternates from each member state, representing the following public agencies:

(i) the Ministry of Foreign Affairs;

(ii) the Ministry of the Economy, or the equivalent (from industry, foreign affairs and/or
economic coordination); and
(iii) the Central Bank. The members of the Common Market Group appointed by a given
member state will constitute the National Section of the Common Market Group for
that particular nation.

Meetings: The Common Market Group will meet ordinarily at least once every quarter in the
member states, in rotating alphabetical order. Special meetings may be freely called at any time,
at any previously scheduled place. The meetings will be coordinated by the Head of the
Delegation of the host member state.

Decision Making: Common Market Group decisions shall be made by consensus, with the
representation of all member states.

Language: The official MERCOSUR languages will be Portuguese and Spanish, and the official
version of all work papers will be prepared in the language of the country hosting the meeting.

Administrative Office and Socioeconomic Advisory Forum

The Administrative Office will keep documents and issue the MERCOSUR official bulletin in
both Spanish and Portuguese, and will also be charged with communicating the activities of the
Common Market Group so as to allow for the maximum disclosure of decisions and the relevant
documentation. The Socioeconomic Advisory Forum is consultative by nature, and represents the
various socioeconomic sectors of the member nations.
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Work Subgroups

Functions: Directly subordinated to the Common Market Group, the Work Subgroups draw up
the minutes of the decisions to be submitted for the consideration of the Council, and conduct
studies on specific MERCOSUR concerns. Currently, the Work Subgroups are the following:
Commercial Matters; Customs Matters; Technical Standards; Tax and Monetary Policies Relating
to Trade; Land Transport; Sea Transport; Industrial and Technology Policies; Agricultural Policy;
Energy Policy; Coordination of Macroeconomic Policies; and Labor, Employment and Social
Security Matters.

Meetings: The meetings of the Work subgroups will be held quarterly, alternating in every
member state, in alphabetical order, or at the Common Market Group Administrative Office.
Activities will be carried out by the Work Subgroups in two stages: preparatory and conclusive.
In the preparatory stage, the members of the Work Subgroups may request the participation of
representatives from the private sector of each member state.

Decision Making: The decision-making stage is reserved exclusively for official representatives
of the member states. Representatives from the Private Sector. The delegations of representatives
from the private sector in the preparatory stage of the Work Subgroup activities will have a
maximum of three representatives for each member state directly involved in any of the stages of
the production, distribution or consumption process for the products that fall within the scope of
the subgroup's activities.

Joint Parliamentary Committee

Functions: The Committee will have both an advisory and decision-making nature, with powers
to submit proposals as well. It will be competent, inter alia, to: Follow up on the integration
process and keep the respective Congresses informed; Take the necessary steps for the future
instatement of a MERCOSUR parliament; Organize subcommittees to examine matters relating to
the integration process; Submit its recommendations to the Common Market Council and Group
as to how the integration process should be conducted and MERCOSUR formed; Make the
adjustments necessary to harmonize the laws of the different member states and submit them to
 15

the respective Congresses; Establish relationships with private entities in each of the member
states, as well as international agencies and bureaus so as to obtain information and specialized
assistance with matters of interest: Establish relationships targeting cooperation with Congresses
of the nonmember nations and entities involved in regional integration schemes; Subscribe to
cooperation and technical assistance accords with public and/or private entities whether domestic,
supranational or international; and Approve the budget, lobbying vis-à-vis the member states for
other financings.

Composition: The Committee will be composed of a maximum of 64 acting parliamentary

members, 16 per member state, and an equal number of alternates, appointed by the Congress to
which they pertain, and with a term of office of at least two years. The meetings shall be
conducted by a directors' board consisting of four Presidents (one for each member state).

Meetings: The Committee will ordinarily meet twice a year, and extraordinarily whenever
summoned by any of its four Presidents. Meetings are to be held in the territory of each member
state on a successive and alternating basis.

Decision Making: Meetings of the Joint Parliamentary Committee will only be valid when
attended by parliamentary delegations from all member states. Decisions by the Joint
Parliamentary Committee will be made by consensus vote of the majority of the members
accredited by the respective Congresses of each member state.

Language: Portuguese and Spanish are the official languages of the Joint Parliamentary
Committee.

Trade Commission

Functions: The Trade Commission will assist the MERCOSUR executive body, always striving
to apply the instruments of common trade policy agreed to by the member states for operation of
the customs unification. Additionally, the commission should also follow up on the development
of issues and matters related to common trade policies, the intra-MERCOSUR trade and trade
with other countries.
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The following are duties and functions of the Mercosur Trade Commission:

I. To monitor the application of the common trade policy instruments both within Mercosur and
with respect to third countries, international organisations and trade agreements;

II. To consider and rule upon the requests submitted by the States Parties in connection with the
application of and compliance with the common external tariff and other instruments of common
trade policy;

III. To follow up the application of the common trade policy instruments in the States Parties;

IV. To analyse the development of the common trade policy instruments relating to the operation
of the customs union and to submit Proposals in this respect to the Common Market Group;

V. To take decisions connected with the administration and application of the common external
tariff and the common trade policy instruments agreed by the States Parties;

VI. To report to the Common Market Group on the development and application of the common
trade policy instruments, on the consideration of requests received and on the decisions taken with
respect to such requests;

VII. To propose to the Common Market Group new Mercosur trade and customs regulations or
changes in the existing regulations;

VIII. To propose the revision of the tariff rates for specific items of the common external tariff,
inter alia, in order to deal with cases relating to new production activities within Mercosur;

IX. To set up the technical committees needed for it to perform its duties properly, and to direct
and supervise their activities;

X. To perform tasks connected with the common trade policy requested by the Common Market
Group;

XI. To adopt rules of procedure to be submitted to the Common Market Group for approval.
 17

Composition: The commission will have four actual members and four alternates, with each
member nation's indicating a member.

Purpose: The Trade Commission shall exert every effort to apply common trade policy
instruments such as: Trade agreements with other countries or international entities;
Administrative/commercial product lists; Final adaptation system for MERCOSUR customs
unification; Origin system; Free-trade zone system, special customs areas and export processing
zones; System to discourage unfair trade practices; Elimination and harmonization of tariff
restrictions; Nonmember country safeguard systems; Customs coordination and harmonization;
Consumer protection systems; and Export incentive harmonization. Furthermore, the trade
commission should speak out regarding the issues raised by the member states regarding
application and compliance with common offshore tariffs and other common trade policy
instruments.

Meetings: The commission shall meet at least once a month, as well as whenever asked to by the
MERCOSUR executive agency or by a member state.

Decision Making: The commission can take decisions entailing administration and application of
trade policies adopted under MERCOSUR, and whenever necessary submit proposals to the
executive body regarding regulation of the areas under its authority; additionally, it can propose
new guidelines or modify those in existence in MERCOSUR trade and customs matters. In this
respect, the trade commission can propose a change in the import duty on specific items under
common external tariffs, including cases referring to development of new MERCOSUR
production activities. In order to better achieve its objectives, the trade commission can create
technical committees targeting direction and supervision of the work it engages in. It can also
adopt internal operating regulations. Proposals and decisions of the trade commission will be
taken by a consensus of the representatives indicated by each member nation.

Dispute Resolution: Any disputes ensuing from the application, interpretation or compliance with
the acts issued by the trade commission are to be referred to the MERCOSUR executive body,
and should be resolved using the directives set forth in the Dispute Resolution System adopted
under MERCOSUR.
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The Administrative Secretariat of MERCOSUR

The Administrative Secretariat of MERCOSUR, as originally conceived in the Treaty of

Asuncion, consisted of a documents registry and an instrument to facilitate the activities of its
institutions

Function: Mercosur shall have an Administrative Secretariat to provide operational support. The
Mercosur Administrative Secretariat shall be responsible for providing services to the other
Mercosur organs and shall be headquartered in the city of Montevideo.

The Mercosur Administrative Secretariat shall carry out the following activities:
I. Serve as the official archive for Mercosur documentation;
II. Publish and circulate the decisions adopted within the framework of Mercosur. In this context,
it shall;
i. Make, in co-ordination with the States Parties, authentic translations in Spanish and Portuguese
of all the decisions adopted by the organs of the Mercosur institutional structure, in accordance
with the provisions of Article 39;
ii. Publish the Mercosur official journal.
III. Organise the logistical aspects of the meetings of the Council of the Common Market, the
Common Market Group and the Mercosur Trade Commission and, as far as possible, the other
Mercosur organs, when those meetings are held at its headquarters. In the case of meetings held
outside its headquarters, the Mercosur Administrative Secretariat shall provide support for the
State in which the meeting is held;
IV. Regularly inform the States Parties about the measures taken by each country to incorporate
in its legal system the decisions adopted by the Mercosur organs provided for in Article 2 of this
Protocol;
V. Compile national lists of arbitrators and experts, and perform other tasks defined in the Brasilia
Protocol of 17 December 1991;
VI. Perform tasks requested by the Council of the Common Market, the Common Market Group
and the Mercosur Trade Commission;
VII. Draw up its draft budget and, once this has been approved by the Common Market Group,
do everything necessary to ensure its proper implementation;
VIII. Submit its statement of accounts annually to the Common Market Group, together with a
report on its activities.
 19

IV Trade opening programme

Mechanism

The trade opening program targeted the end of duty and other nontariff restrictions on trading
between Argentina and Brazil by December 31, 1994, and by December 31, 1995 for trade with
Uruguay and Paraguay. Duty includes customs rights and any tariffs on foreign trade, whether
fiscal, monetary, exchange or otherwise, other than charges and like measures corresponding to
the approximate cost of services rendered. Nontariff restrictions are any measures taken
unilaterally by a member state to impede or hamper mutual trading. These do not include any
measures taken as a result of the situations provided for in article 50 of the 1980 Montevideo
Treaty (trading of gold, silver, armaments and radioactive products, and protection of life, health,
moral principles, and the historical and artistic heritage).

Lifting of Duty

The lifting of import duty is the object of a progressive, direct and automatic project that will
benefit all products subject to tariffs in member states, according to the following schedule:
 20

Application Basis

The lifting of tariffs was applied to tariffs in effect, and represents an easing of the more favorable
tariffs on import of products from countries not participating in ALADI. In the event any of the
member states increases the tariffs in force on January 1, 1991 on imports from nonmember
countries the schedule will continue to apply to the original tariffs. In the event of common tariff
reductions, the reductions will automatically apply to the other member states, on the date such
reductions take effect.

List of Exceptions

This general lifting of duties and other nontariff restrictions in the member state trading does
however allow each nation to have a list of exceptions considered ''sensitive''.(l) Products
included on these lists are initially excluded from the schedules for trade opening. These
exceptions will be reduced at the end of each calendar year. Based on this schedule, Brazil and
Argentina will discontinue their exceptions lists by December 31, 1994, and Paraguay and
Uruguay will discontinue their lists by December 31 1995.(2) The establishment of exceptions by
the Asuncion Treaty signatories seeks to ensure that such nations offer their most important
production sectors a longer term as from 1995 for adapting to the new unrestricted trade
interchange under MERCOSUR (3). In addition to the exceptions lists, various systems such as
the capital goods systems have been established, whereby products must be brought into keeping
with TEC as of January 1, 2005, and the computer science and telecommunications goods
systems which have until January 1, 2006. Moreover, a 20% charge for interzonal and extrazonal
import duties has been established for the sugar cane sector, and it was as well decided that
specific import duties for merchandise in the textile and footwear sectors will only take effect
until December 31, 1995. A technical committee was also created to prepare a proposed common
automotive vehicle system, which should include a total listing of controls on intrazonal trade and
TEC, with no incentives whatsoever regarding vehicle import for parts and accessories for
terminals and parts producers
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IV – Mercosur: Difficulties and Obstacles

Although the idea of Latin American economic integration had had its origins at the
beginning of the 50’s, under the impulse of the ECLA and having different purposes than those
existing nowadays, a more effective regional integration just happened to come lately. In this
way, the countries involved in what some people call project of integration (Mercosur) have
among themselves the characteristics of being democracies that were recently implanted. They all
face internal adjustment problems (inflation) and external (external debt) and have important
agro-industrial systems, even though suffering strong disadvantages in terms of trade due to the
European protectionism policy.

In contrast to the previous motionless years, nowadays there is a clear disposition

(inclination) of the governments of the region to act in two distinct plans (levels): the
strengthening of sub regional schemes of integration, and the adoption of commitments in order to
create free trade areas.

Mercosur and other instruments of integration show, without doubt, this new era", more
mature and advantageous to all countries of the region which are making efforts to create a
powerful economic space, not only in terms of regional but also in terms of international trade.

Perhaps one of the main difficulties is the harmonization of economic policies. The
traditional stabilization policies, via fiscal and monetary adjustments and those via price controls,
so common in Latin America, create an obstacle to meet the goals of integration.

The Common External Tariff, another important factor characterizing the Common
Market, in view of the enormous difficulties that its adoption conveys, will be adopted definitely
only in 2006.

Paraguay and Uruguay, in particular, with their free market economies, a unique rate
exchange and no restrictions on capital movements and the dividend remittances to the original
country of investment can aspire to be Mercosur financial centers.
 22

Regarding agro-industrial policies, the Mercosur countries must meet some natural
comparative advantages and put an end to the unfair practices in agricultural trade. The industrial
sectors in Paraguay and Uruguay are very incipient. In contrast to the lack of industrialization in
those two countries, Argentina is a leader in the food processing sector. Brazil has also a very
good industrial and technological productive structure, besides counting on a subsidies program
for the agriculture sector, and sometimes, with an export promotional regime – points in which
there can be noticed some differences from Argentina.

The Brazilian rural sector does not accept the agricultural sector zero tariff for the free
trade area, while the member countries do not achieve harmonization of economic policies. The
major difficulties in the agricultural area are related to wheat, dairyproducts, fruits, sugar, alcohol,
and, to a lesser extent, poultry.

The free flow of goods will also require the standardization of technical and sanitary
specifications for agricultural and manufactured products of the member countries as well as
improvement of the criteria to determine the origin of the products, since the Annexes of the
Treaty of Asuncion present some omissions.

With regards the fiscal situation, Brazil and Argentina have very distinct profiles.
Brazilian products are in general highly taxed, chiefly by indirect taxes. Meanwhile, Paraguay and
Uruguay have very low tax rates and Argentina, because of its domestic market opening, has also
lower taxes when compared to Brazil. It is, thus, necessary that member countries achieve tax
system harmonization, in order to make taxation as neutral as possible over the costs of
production.

One of the main aspects in the integration process of energy sources among the Mercosur
countries is to better adjust the use of natural sources in economic and environmental terms. This
will permit growth of efficient energy production with cost reduction. Thus, parallel with the
development and operation of the first free trade agreement, the countries of the sub region
promoted joint hydro-electric projects on the frontier rivers which are among the most important
in the world. Currently, the charges for power in Argentina are high if compared to Brazil. Brazil
and Paraguay have an excess of energy production, in view of the construction of 12,600 MW
 23

Brazilian- Paraguayan Itaipu Hydroelectric on the Parana River and the 3,100 MW Yacireta one
constructed by Argentina and Paraguay on the same river. Uruguay has scarce and expensive
energy, but when the

1,890 MW Salto Grande dam, on its border with Argentina, is operating at full capacity,
the situation should improve. These undertakings could bring about positive change in relations
among the countries as occurred in the last decades, especially with the signing of the tripartite
agreement between Argentina, Brazil and Paraguay. The agreement solved the differences
regarding the utilization of the hydroelectric resources of the Parana River, which has one of the
greatest potentials on the planet. Thus, formulating an integration plan as well as a survey on the
opportunities to exchange energy production is extremely important. Besides any other effort, it is
vital to encourage studies on investigating new technologies to preserve and save energy and to
create credit lines through international agents with a view to implement the integration in this
sector.

The free circulation of human resources demands the creation of an integrated system of
technical and professional certificates for those who do not have a college degree. There must be
established ways to make the diplomas equivalent on the various levels - university, technical and
high school, diminishing the bureaucracy on recognizing foreign diplomas. It would also help in
achieving a better coordination of policies and programs of education in order to obtain a
reasonable educational standard.

Transportation is another question of great importance, since one of Mercosur’s goals is to

accelerate the circulation of goods and services, with transportation and insurance reductions cost.
The growth of trade in the sub region has not been accompanied by an integrated solution of the
problems in the transport sector, and that is creating bottlenecks for the near future. Therefore it is
necessary to enhance the railroad, highway and maritime systems. In addition to that, the
reduction of customs bureaucracy would facilitate trade within the region, resulting in better
exports and services.
 24

Mercosur has 200,000 km of paving roads, 68,000 km of railroads, an ocean coast of

12,000 km and an extension of 3,000 km on navigable rivers. The annual movement is superior to
twelve million tons, 70% of which between Argentina and Brazil, being 90% (ninety per cent) by
maritime means. An emergency program has to be created to quickly restore the transportation
system, as well as equipment and installations of regional interest. In southern Brazil, states such
as Rio Grande do Sul and Mato Grosso do Sul already took the initiative to rehabilitate their
highway system, although, with external loans.
 25

VI MERCOSUR: AN EVALUATION

Mercosur first, faced many challenges, mostly related to macroeconomic problems in the
two largest economies.

In order to follow the integration timetable, agreed in Ouro Preto (Brazil) by the end of
1994, a lot of concessions were given, especially by Brazil who gave its partners privileged
treatment on different matters. Argentina, for instance, maintained restrictions to the importation
of many Brazilian goods even after having a guaranteed open access to the national market. This
was the case for automobiles and steel products. Uruguay also kept the preferential agreements
already existent with Brazil and Argentina. These agreements permitted that country to export
various goods without customs tariffs and a nationalization rate of 50% instead of the 60%
established by the bloc.

It is also worth mentioning that only a few months after the creation of the customs union,
however, the countries of Mercosur faced the challenge posed by the economic situation of their
largest members. To counter the effects of the financial crisis and fiscal troubles in Argentina, and
Brazil’s trade imbalance, these countries adopted, inter alia, trade policy measures that included
increasing tariffs and expanding the list of exceptions.

To restore confidence in the Convertibility Plan, the Argentine Government launched a

fiscal adjustment program in March 1995 with trade measures that have had the indirect effect of
making the imports from other Mercosur members relatively more competitive.

These measures were:

 the elimination of export subsidies;

 the restoration of the "statistical rate" of 3% on non-Mercosur imports, and
 an increase in tariffs on capital goods from 0 to 10% and on telecommunications
equipment from 2 to 10%.
 26

In April 1995, Brazil adopted a number of measures to stop the emerging tide of imports.
These measures were:

 Increase the tariffs on 109 products (mainly automobiles and durable goods) from 32
to 70%;
 Tariff reduction for a number of products to alleviate inflationary pressures;
 Broadening of the list of exceptions from 300 to 450 products for one year, and
 Establishment of an import quota on cars to 5% of national production, or 8.500 units
per year.

The first three measures applied only to goods originating in non-Mercosur countries. The
other safeguards measure like quotas on the imports of footwear products and steel products
followed these measures.

Although these measures undoubtedly raise trade barriers with non-member countries, they
also have an impact on interregional trade. While higher tariffs Brazil granted real tariff
preferences to related exports from its Mercosur partners, the quotas on imports may in fact
significantly restrict Argentine exports, which helped reverse that country’s trade deficit with
Brazil at first, but were later attenuated.

But, in spite of the difficulties faced, which demonstrate how complex formalizing any
integration process among economies with so distinct sizes and characteristics can be, the
customs union has showed good results after its first years. Mercosur consolidated as a group
always in search of increasing internal cohesion as well as flexibility in the external negotiations.
This scenario occurred in a context of undeniable operational and institutional agility as proof that
the expectations of the agreements maintained in Buenos Aires in August 1994, as well as the
ones signed in Ouro Preto in December of that same year were achieved. Since then, Mercosur
exists in its actual configuration.

The period started with the adoption of the common external tariff, with the implementation
of the customs union among Brazil, Argentina, Paraguay and Uruguay. These countries developed
a series of actions that reflected the strengthening of their relationship. It is important to
emphasize the following aspects:
 27

A) Trade

Export trade:
 28

Import trade:
 29

B) Integration Process

In December 1995, the “Punta Del Este Summit" approved the "Mercosur Action Program
until the Year 2000". The program defines the main guidelines for the consolidation and
improvement of the customs union and for the transition toward the common market. The
document lists a series of actions to be taken in various sectors, ranging from the free trade among
the four countries to the competition conditions, the perfecting of the common trade policy and
the legal and institutional development.

Based on this program, during the pro-tempore Brazilian presidency of Mercosur, in the
second semester of 1996, special emphasis was given to the celebration of agreements related to
competition and consumer defense. As a result, two important documents were signed in
Fortaleza – Brazil (December 1996):

1. Mercosur Regulation of safeguard measures face to third countries. Its aim was to protect
the industries of the regional market against an expected increase of harmful imports, originated
from non-member countries. This instrument would allow Mercosur to adopt safeguard measures
as a unique entity or on behalf of one of its members. It also created the Commercial Defense and
Safeguards Committee to be in charge of the Decision’s implementation.

2. Protocol to Defend Competition. This defines which practices are restrictive to competition
and the applicable sanctions. The Trade Commission and the Competition Defense Committee are
designated as enforcement agencies.

Steps were also taken for the development of a program to eliminate special treatment for the
automotive industry, for which a common regime does not yet exist. At the Fortaleza summit, the
four countries also announced the establishment of a Mercosur development bank to finance
investment projects related to integration. It was also announced the creation of a Mercosur
Secretariat with headquarter in Montevideo (Uruguay), which will provide administrative support
to the integration process.
 30

C) Major questions

The very first years were remarkable for Mercosur by the intense mobilization of its
negotiations, due to the conjugation of many internal and external factors, which can be
summarized below:

1. The "Plano Real" administration introduced new variables to the Brazilian foreign trade.
So, adjustments on the system in operation among the member countries became necessary. Some
examples of that were the Resolution 7/95, about the guarantee of raw materials and input supply,
and the Resolution 70/96, about exceptions to the Common External Tariff.

2. Brazil settled new sectorial regimes. In fact, these were the results of the efforts specially
held during the Meeting in Ouro Preto, 1994, when the country concentrated its actions on the
prior project of the customs union viability. Meanwhile, Argentina gave priority to the regime of
adaptation, Uruguay gave priority to certain CEP aspects survival, and Paraguay was worried
about enlarging the number of exceptions to CET. In this context, it is important to emphasize the
Brazilian automotive regime, by the Provisional Measure 1024, in June 1995;

3. For Brazil, Mercosur is no longer an exclusive external policy variable to become, at the
same time, an internal economic policy, and

4. The Mercosur international projection, reinforced by the Brazilian economic recovery,

made the Customs Union a target for criticisms from the parts not interested on the success of this
experience.

Two questions, although isolated, can be considered as representative of the Mercosur

controversy in the analyzed period.

The first one, of internal nature, is regarding investments. The only two instruments of the
customs union dealing with this subject are the "Protocol of Colonia to Investments Reciprocal
Promotion and Protection in Mercosur" (January 1994) and the "Protocol for Investments coming
from Mercosur non-Member Countries" (August 1994). Both instruments contain minimum
standards of investment protection, such as national treatment, rules on expropriation and
compensations, capital transfers, etc. With regard investments promotion, the second protocol
 31

only foresees that "each Member State will promote, in its territory, those products originated in
third countries and will accept them according to its own legislation and regulations". In other
words, the accord does not define common parameters and remits to the national legislation the
study of the theme. Besides these instruments, the only one that brings up the incentive issue, in
Mercosur, is the Decision 10/94. The Decision settles common criteria to the incentive
concession, to exports but not to investments. Therefore, there is no juridical settlement to the
matter, in Mercosur, which leads to no argumentation in terms of violation or conflict of its rules.

At this point, it is important to analyze the actual scenario as well as the political wiliness
to move forwards on this subject. One must distinguish between the investments coming from the
enterprises already installed in some of the Mercosur members and those of new investors. In the
first case, it is expected that any surplus in the balance trade between the two countries be
destined to the purchase of assets in the country in deficit. It would be considered as a way to
minimize the operational costs. That explains a great part of the Brazilian investments in
Argentina, which registered, in the last years, the installation of 378 national enterprises in that
country. In the second case – of the new investments, originated in countries outside Mercosur-,
there is not how to deny that the macroeconomic stabilization, consequence of the "Plano Real"
success, created conditions for direct capital flows toward Brazil. Nevertheless, Argentina, with a
smaller economy than Brazil’s, had a proportionally better performance, attracting more than
US$4 billion in the same period.

It remains to be considered the question of the “incentives “in order to know if there is any
kind of distortion. The first element to be stressed is that, parallel to the macroeconomic
stabilization process and the market opening, the Brazilian Government has made efforts to
reduce the called “Brazil Cost ". Without considering irrelevant aspects on the economic
perspective, such as the concession of areas for industries installation, the eventual reduction of
the internal fiscal structure by a Mercosur member country should not be understood as a change
on the rules of the game. After all, no country consolidated its inner tributary level by signing the
Treaty of Asuncion in March 26, 1991.
 32

The question of the incentives, still unsolved at the beginning of this year, has to be
submitted to the good judgment and common sense that has prevailed until now. The fundamental
problems faced by Mercosur are a result of the existing deepness and diversified relationship and
should be seen as natural and be maintained in the real dimension. In this sense, the Parts are
engaged in reaching increasing understandings, through mechanisms that reflect the real
"Mercosur dimension" when dealing with this issue (the incentives). This initiative will make the
bloc even stronger.

Mercosur has recently been the subject of serious criticism. Moreover, underlying the
criticism is a broader concern about the growing regionalism of the 1990s, which has witnessed
the rise of NAFTA, deeper integration in Europe, the creation of APEC, the emergence of more
than a dozen free trade arrangements in Latin America and the beginnings of the construction of
the Free Trade Area of the Americas.

Concern has been expressed in some circles because intra-Mercosur exports have
intensified significantly relative to exports to the rest of the world. In addition, some relatively
simple calculations have been used to argue that intra-Mercosur exports are in sectors for which
Mercosur does not have a comparative advantage. According to this view, a "perverse" diversion
of trade is developing in Mercosur which is harmful to the countries involved and the world
community at large. The trade diversion is attributed to Mercosur’s trade preferences and rent-
seeking behavior of exporters in the area.

However, trade diversion must be examined not from the angle of Mercosur’s exports, but
from the angle of its imports, i.e., intra-Mercosur imports relative to imports from the rest of the
world. Imports, not exports, should be examined because if preferences divert trade, their
application in favor of a few selected partners should be reflected by a "crowding out" of imports
from other, presumably more efficient, sources.
 33

This was the other issue about Mercosur, very much - the "Yeats episode". The discussion
generated by this case comprised all the economic elements in debate at that time. First of all, it
raised the controversy around the possible co-existence between multilateralism and regionalism.
This contributed to warm the atmosphere which preceded the economic summit occurred in
December 1995, in Singapore. Second, it approached major part of the agenda regarding
Mercosur being compatible to WTO, in the context of the article XXIV of GATT 94. After all,
Mercosur as a whole, and Brazil in particular, have experienced, during the last years, an
important process of opening, which destroyed the previous protectionist structure. The Brazilian
tariff reform, ended in June 1993, lowered the average tax rate to about 14%. The growing of
trade intra- Mercosur was followed by a significant increasing of the imports from third countries
(to Brazil, 140% from 91-96). Besides, the allegation that the Brazilian goods exported to
Mercosur are known as non competitive goods and have low quality make contrast with the fact
that these same items are the most important ones in the bloc’s exports to NAFTA (18% of
machines and equipment’s to Mercosur, 21% to NAFTA; 7,3% of steel goods to Mercosur, 13%
to NAFTA). In this case, it is correct to suppose that without the imposed restrictions in some of
those markets, their access would certainly be even larger.

The ‘ Yeats report’ promoted an unexpected exposition of Mercosur, generating reactions

of many other institutions (such as IDB and OAS) and promoted interesting debate, in which the
facts and numbers were favorable to Mercosur.

By analyzing all these facts, we can affirm that the last two years were characterized by
important progresses in Mercosur normative and some concrete results. In the first case, besides
the examples mentioned before, that has to do basically with the Decisions agreed by the Council,
it is worth register the renewal impetus that Mercosur has brought to great part of the Brazilian
regulation. It is specially reflected in the agriculture and public health sectors – Mercosur has
been and instrument of modernization by stimulating the debate and the revision of rules created
in circumstances totally overcome today.
 34

Mercosur plays a fundamental role in the context of the changes already reached or the
ones intended to in the Brazilian process of constitutional revision. The periods known as "crisis"
(since the automotive to the textile or the nourishing goods) were alarms. Brazil never imported
so much (of these and other sectors), be from third countries or from Mercosur. The numbers
reflect great increase of imports never seen before and a dramatic reversion of the Brazilian
surplus in the region. Besides all this, it is possible to conclude that the period considered here
was positive, as Brazil took an increasing projection in Mercosur and the bloc was consolidated as
customs union, becoming an important reference for the foreign investors.

There still remain, nevertheless, important tasks to be accomplished such as the definition
of final regimes of the automotive and sugar sectors, the formulation of a policy for the services
sector (including the financial one) and governmental purchases, the intensification of the
transportation and energy connections in the region. Simultaneously, negotiations in three
different external areas must be developed:

 In LAIA, for the negotiations of free trade with the Andean Group countries and the
renegotiation of the bilateral agreements with Mexico;
 In the Americas, for the formation of the FTAA; and
 In Europe. The Mercosur agenda will be, as it can be seen, full and complex.
 35

D) WTO and MERCOSUR

By July 2003, only three WTO members — Macau, Mongolia and Taiwan — were not
party to a regional trade agreement. The surge in these agreements has continued unabated since
the early 1990s. By May 2003, over 265 had been notified to the WTO (and its predecessor,
GATT). Of these, 138 were notified after the WTO was created in January 1995. Over 190 are
currently in force; another 60 are believed to be operational although not yet notified. Judging by
the number of agreements reportedly planned or already under negotiation, the total number of
regional trade agreements in force might well approach 300 by 2005.

One of the most frequently asked question is whether these regional groups help or hinder
the WTO’s multilateral trading system. They seem to be contradictory, but often regional trade
agreements can actually support the WTO’s multilateral trading system. Regional agreements
have allowed groups of countries to negotiate rules and commitments that go beyond what was
possible at the time multilaterally. In turn, some of these rules have paved the way for agreement
in the WTO. Normally, setting up a customs union or free trade area would violate the WTO’s
principle of equal treatment for all trading partners. But GATT’s Article 24 allows regional
trading arrangements to be set up as a special exception, provided certain strict criteria are met.
Article 24 says if a free trade area or customs union is created, duties and other trade barriers
should be reduced or removed on substantially all sectors of trade in the group.9 Non-members
should not find trade with the group any more restrictive than before the group was set up.

In the light of these articles and regulations we can say that Mercosur is a WTO
compatible regional integration initiative and it really targets more liberalization of trade in its
area which contributes global trade liberalization and prosperity.

The Agreement established Mercosur was presented to the WTO Committee on Regional
Trade Agreements in 1995 and it is widely negotiated and debates took place on several issues.
 36

CONCLUSION

The growing liberalization of hemispheric trade may possibly lead to “economic” Pan-
American integration under USA leadership. Similarly, and much more probable, that integration
process will occur between the United States and its immediate sphere of influence in Latin
America, that is, Mexico, Central America and the Caribbean.

On the other hand, the deep integration process between Latin American and Caribbean
countries may be polarizing them into two regions: South America on the hand and Central
America, Mexico and the Caribbean on the other. The first such deep integration area would take
shape around Brazil, the second around Mexico. The second, however, would be subordinated to
the United States market and, probably, would join NAFTA.

Finally, MERCOSUR's strategic role in South America's future integration explains the
interest in an analysis of this integration program. The Argentina-Brazil duo generates a powerful
force which will pull other South American countries. Brazil is the strategically decisive actor in
South America's socio-economic integration.

An economic integration agreement between Brazil and its South American neighbors -
only Chile and Ecuador do not share a border with Brazil- through MERCOSUR requires the
Ecuador’s full participation in order to balance Brazil's productive and negotiating power and to
avoid creating a market area that mirrors the center-periphery type of relationship. Such scenario
would spoil the opportunity to turn South America's integration into an adventure among equals,
the aim of which is shared development.

Besides some sectoral endurance, there is a consensus about the positive results of the
economic integration. The integration generates more possibilities of openness to the world
market and questions such as national self-sufficiency must be faced under another perspective.
From an inside point of view, the advantages for the consumer and the market will be clear, once
the natural monopolistic structures in certain countries would no longer be able to impose prices.
The opening of the markets is, fully coherent with the ideas of the liberalization of the economy.
Besides the gains occurring from the augmentation of trade in the region, Mercosur ended up
functioning in the last couple of years as a stabilizing mechanism for the two largest Southern
American economies – the Brazil and the Argentina. In this case, the matter is not only the
 37

inflation control via increases in imports, but also the positive effects of the regional tariff
reduction, as a moderating element of the slow cycles and economic recession. From 1991 to
1993, in a period of low economic growth in Brazil, the Brazilian production benefited largely
from the access to the Argentine market, then "warmed". This is something that explains the
series of Brazilian high bilateral surplus, as well as the employment level maintenance in various
Brazilian productive sectors. After 1994, the inverse occurred. The Brazilian economy gave signs
of "heating up", while the economy in Argentina started a recession. Nevertheless, the huge
increase of Argentine exports to Brazil has helped to change this situation.

It should be emphasized that the understanding, shared by the entire group, that the
preservation and strengthening of the "Plano Real" is a common interest of the Mercosur
countries, whose economies, since the signature of the Treaty of Asuncion, are becoming
interconnected. Recently, it became clear that the construction of the Mercosur requires the
strengthening the national economies and their stabilization.

Mercosur has been exceeded all prediction made when the original framework was signed
and is now recognized as one of the most dynamic trading blocs in the world. Since it’s incepting
in 1991 Mercosur has been moving in the right direction. Its "open regionalism" has served as an
instrument of trade creation, investment and modernization. This process has been good for the
member countries, but it should be good for the world to.
 38

BIBLIOGRAPHY
 http://www.ekonomi.gov.tr/upload/BF09AE98-D8D3-8566
4520B0D124E5614D/Mehmet_Ekizoglu.pdf
 http://www.ie-ei.eu/Ressources/file/memoires/2013/BAKKER_Thesis.pdf
 http://www.wto.org/english/res_e/statis_e/its2013_e/its2013_e.pdf