PURPOSES, PRINCIPLES AND INSTRUMENTS
The States Parties decide to establish a common market, which shall be in place by 31 December 1994 and shall be called the "common market of the southern cone" (MERCOSUR).
This common market shall involve:
• The free movement of goods, services and factors of production between countries through, inter alia, the elimination ofcustoms duties and non-tariff restrictions on the movement of goods, and any other equivalent measures;
• The establishment of a common external tariff and the adoption of a common trade policy in relation to third States or groups of States, and the co-ordination of positions in regional and international economic and commercial forums;
• The co-ordination of macroeconomic and sectoralpolicies between the States Parties in the areas of foreign trade, agriculture, industry, fiscal and monetary matters, foreign exchange and capital, services, customs, transport and communications and any other areas that may be agreed upon, in order to ensure proper competition between the States Parties;
• The commitment by States Parties to harmonize their legislation in the relevant areasin order to strengthen the integration process.
The common market shall be based on reciprocity of rights and obligations between the States Parties .
During the transition period, which shall last from the entry into force of this Treaty until 31 December 1994, and in order to facilitate the formation of the common market, the States Parties shall adopt general rules oforigin, a system for the settlement of disputes and safeguard clauses, as contained in Annexes II, III and IV respectively to this Treaty.
The States Parties shall ensure equitable trade terms in their relations with third countries. To that end, they shall apply their domestic legislation to restrict imports whose prices are influenced by subsidies, dumping or any other unfair practice.At the same time, States Parties shall co-ordinate their respective domestic policies with a view to drafting common rules for trade competition.
During the transition period, the main instruments for putting in place the common market shall be:
• A trade liberalization programma, which shall consist of progressive, linear and automatic tariff reductions accompanied by theelimination of non-tariff restrictions or equivalent measures, as well as any other restrictions on trade between the States Parties, with a view to arriving at a zero tariff and no non-tariff restrictions for the entire tariff area by 31 December 1994 (Annex I);
• The co-ordination of macroeconomic policies, which shall be carried out gradually and in parallel with the programmes for the reductionof tariffs and the elimination of non-tariff restrictions referred to in the preceding paragraph;
• A common external tariff which encourages the foreign competitiveness of the States Parties;
• The adoption of sectoral agreements in order to optimize the use and mobility of factors of production and to achieve efficient scales of operation.
The States parties recognizecertain differentials in the rate at which the Republic of Paraguay and the Eastern Republic of Uruguay will make the transition. These differentials are indicated in the trade liberalization programme (Annex 1).
In the area of taxes, charges and other internal duties, products originating in the territory of one State Party shall enjoy, in the other States Parties, the same treatment asdomestically produced products .
The States Parties undertake to abide by commitments made prior to the date of signing of this Treaty, including agreements signed in the framework of the Latin American Integration Association (ALADI), and to co-ordinate their positions in any external trade negotiations they may undertake during the transitional period. To that end:
• They shall...