The Mercosur came into existence when Argentina, Brazil, Paraguay and Uruguay signed the Treaty of Asuncion in March of 1991. Its goal was to create a common market and customs union between the four participating countries. It was modeled on various forms of economic co-operation that had been taking place between Argentina and Brazil since 1986. A transition phase began in 1995 and was scheduled to last until 2006. In 1996, association agreements were signed with Chile and Bolivia including them in the free trade relationship. The six countries also created a common mechanism for political consultations which was formalized in 1998 in which Argentina, Brazil, Paraguay and Uruguay along with Bolivia and Chile participate as full members of the Political Mercosur (Mercosur, 2004).
Recent History: According to the CIA World Factbook online, Venezuela continues to be highly dependent on the petroleum sector, which accounts for roughly one-third of GDP, around 80% of export earnings, and more than half of government operating revenues. Despite higher oil prices at the end of 2002 and into 2003, domestic political instability culminated in a two-month national oil strike from December 2002 to February 2003 which virtually brought Venezuela's economy to a standstill. The national economy continued downward into a depression in 2003. In late 2003, President Chavez agreed to $1 billion in spending on new social programs - money that can only be funded with deficits (2005).
According to the Venezuela Information Office website, as an associate member of Mercosur, Venezuela will be joining one of the largest free trade areas of the world. It will benefit from the group's preferential trade treatment for member nations. The Mercosur which represents nations with a total combined population of over 371 million people has been an advocate for good governance and a level economic playing field among its members
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