Establishment: On March 26, 1991, presidents of the four countries of Argentina, Brazil, Paraguay and Uruguay signed the "Asunción Treaty" in the capital city of Paraguay, declaring the establishment of the South Common Market. The treaty entered into effect on the 29th of November of the same year. On January 1, 1995, the South Common (Mercosur) was officially opened to operation and the tariff union began to take effect.

It shall make effective use of resources, protect environment, harmonize the macroeconomic policy and strengthen mutual economic complementarily for technological upgrading, economic modernization, this improving the lives of the peoples, and giving an imptus to the economic integration in Latin America region.

Members: Four members: Argentina, Brazil, Paraguay and Uruguay. Chile and Bolivia became the "countries to be connected with" of the Mercosur respectively in 1996 and 1997.

Organizational structure: 1. The council: the supreme decision-making organ, which is composed of ministers of foreign affairs and of economy of the member states. Foreign ministers of the treaty countries will assume Presidency of the council by turns with its terms of office lasting six months. The summit meeting of the member states will be held at least once a year (or several times if necessary) and the council is in charge of preparing and organizing the summit meeting; 2. The common market group: it is an executive body, which is in charge of carrying out the resolutions made by the council, and putting forward proposals concerning trade opening program, coordinating of macroeconomic policy, discussing and signing economic and trade agreements with a third country. The group of the common market consists of the members from the member states with each country nominating four formal and four alternative ones to represent the country's foreign ministry, the ministry of economy and the central bank. The affiliates under the group are 10 working groups respectively dealing with trade affairs, customs, technical standards, taxation and financial policies, transportation by land, and by sea, industrial and technological policies, agricultural policy, policy of energy resources and harmonization of macroeconomic policy. The administrative secretariat of the Mercosur is located in Montevideo, the capital city of Uruguay.

Major Activities:

In June 1992, the 4th summit meeting of the Mercosur decided to add into the treaty of the Mercosur the clause of "practicing democratic system".

On 1 July 1993, the 4th summit meeting declared that the internal trade tariff within the Mercosur would deduct 75% since 1 July 1993 and later on it would reduce another 7% every half a year. By the end of 1994, it would have basically abolished all tariff and non-tariff barriers for a free trade zone.

On 16 December 1994, the 7th summit meeting declared that the Mercosur would officially enter into operation as of 1 January 1995 onwards, and the tariff union began to take effect, which carry out the unified tariff rate to the outside areas.

In June 1996, the Mercosur signed the free trade agreement with Chile, deciding to reduce mutually tariffs within the coming 8 - 15 years and finally realizing free trade. In September, Chile became a "country to be connected with" of the Mercosur. In December of the same year, it signed a free trade treaty with Bolivia, and the two sides committed themselves to achieving free trade in 2015. In March 1997, Bolivia formally became the second "country to be connected with" of the Mercosur. In June 1997, the Mercosur began talks with Peru in regard with accepting it as a member of the Mercosur in the model of "four plus one".

In 1997, the Mercosur decided that from 1 December 1997 to 31 December 2000, the unified tariff rate to the outside would be raised by 3%, i.e. the highest unified tariff rate that would reach 23% (not to be carried out by Uruguay and Paraguay).

In 1997, the 13th summit meeting decided to begin talks as regards the opening of service trade among the member states of the Mercosur, and also discussed the matters concerning the system of government purchases.

On 16 April 1998, the Mercosur signed a frame agreement with La Comunidad Andina with a view to establishing a free trade zone between the two groups in 2000. On 29 June, the two groups exchanged a list of products enjoying mutually preferential tariff treatment. But the negotiation bogged down into a dilemma for the moment, but Brazil alone reached the preferential tariff agreement with La Comunidad Andina.

In July 1998, the 14th summit meeting reached an agreement on mutually opening service trade in the fields of communication, transportation, finance and energy resources. The meeting published a "Joint Communiqué", declaring that the Mercosur countries and its countries to be connected with were a "peaceful zone free of weapons of mass destruction", and stressing that the democratic system was the fundamental guarantee for the integration.

In June 1999, the 16th summit meeting set the strategic objective for the establishment of the regional monetary union by harmonizing the macroeconomic policies among the member countries. The meeting reiterated that no autocratic government would be allowed within the Mercosur, and that the continuous implementation of the democratic system constituted the basic condition for the realization of the integration of the Mercosur. The meeting also expressed its support for the new Paraguay government that was established after 3 months of political crisis.

Between July 4 and 5, 2002, the 22nd Summit was held in Buenos Aires, Capital City of Argentina. As special guest, Mexican President Vicente Fox attended this summit for the first time. A framework agreement was signed between South Common Market and Mexico, allowing members of this group individually to develop bilateral free trade with Mexico. Bilateral agreements on expanding automobile trade was signed between Argentina, Brazil and Uruguay. The summit instructed the South Common Market team to study the possibility of converting the administrative secretariat to a technological secretariat, and apply the anti-dumping provisions of the WTO in the mechanisms of the standing arbitrary court of South Common Market.

Foreign Relations: The Mercosur is actively developing relations with major countries and groups of the world. In December 1995, the Mercosur signed a "Frame Agreement for Regional Cooperation" with the European Union, and decided to set up a transcontinental free trade zone in2005. On 22 July 1998, the European Commission decided to start the negotiations with the four countries of the Mercosur and Chile in an effort to establish a free trade zone. The 14th summit meeting of the Mercosur made an active response to the proposal put forward by the European Union in the negotiation, and reached a common consensus with European Union in this regard at the 16th summit meeting. In June 1999, the European Union, the Mercosur and Chile jointly declared that they would start official consultations in November on the principle, style and non-custom tariff that were related to the establishment of a free trade zone. On 1 July 2001, they would start the talks regarding custom-tariff and sensitive products. In July 1998, the heads of the Mercosur and the "countries to be connected with", signed with Mandela, President of the Republic of South Africa the memorandum of understanding in regard with the expansion of trade between the Mercosur and the 14 member states of the "South Africa Development Community". In May, 2002, the South Common Market and European Union decided at the 2nd Euro-Latin American Summit that another round of talks on free trade would start in July.

Up to now, the Mercosur has already established dialogue or cooperative mechanism with China, the European Union, Japan, Russia and the Republic of Korea.

Relations with China: In November 1996, Vice Premier and Foreign Minister Qian Qichen sent a telegram to foreign minister Lanpulia of Brazil, the rotating presidency of the presiding-over country, proposing to establish a dialogue mechanism between China and the Mercosur, which received an active response and support from the Mercosur.

In October 1997, the Mercosur Delegation headed by ambassador Aispirosa of Uruguay, the rotating presidency of the presiding-over country, paid a visit to China and held the first dialogue with the Chinese side. The foreign delegation held respective talks with Deputy Foreign Minisrter Li Zhaoxin and Deputy Minister of Foreign Trade and Economic Cooperation Sun Zhenyu on bilateral political and economic relations and international issues of common interest. Vice-premier Qian Qichen and Assistant Foreign MinisterYang Jiechi, met with the delegation respectively, and the two sides signed for the first time the minutes of the dialogue.

On 9 October 1998, the 2nd dialogue between China and the Mercosur occurred in Brasilia, Capital of Brazil. The dialogue was held between the Chinese delegation jointly headed by Chinese Deputy Foreign Minister Yang Jiechi and Assistant Minister of Foreign Trade and Economic Cooperation Gao Hucheng, and the Mercosur Delegation headed by Renato Marques, President on duty by turns and Brazilian Foreign Minister. The two sides stressed unanimously to further strengthen the economic and trade cooperation and cooperation between the enterprises, and also held consultations over technical cooperation. The two sides signed the minutes of the second dialogue and held the entrepreneur forum.

On October 18, 2000, invited by Chinese Foreign Minister, Deputy Foreign Minister of Brazil, on duty by turns, headed a delegation to China and held the third dialogue with China in Beijing. Vice Premier Wen Jiabao received the delegation. Deputy Foreign Minister Yang Jichi and Deputy Minister of Foreign Trade and Economic Cooperation Thou Keren held the working talks with the delegation respectively. President of China Council for the Promotion of International Trade (CCPIT) gave a banquet for the delegation. Deputy Foreign Minister Yang and President of the delegation and Brazilian Deputy Foreign Minister Lima signed the minutes of the dialogue third.