Community Market Decision Cmc N? 18/2005 - Incorporation - Full Text Of The Norm

Original Language Title: MERCADO COMUN DEL SUR DECISION CMC N? 18/2005 - INCORPORACION - Texto completo de la norma

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MERCADO COMUN DEL SUR Ley 26.147 Incorporate into the national legal system the Decision of the Council of the Common Market of Mercosur No. 18/2005, Integration and Operation of the Fund for Structural Convergence and Strengthening the Institutional Structure of Mercosur. Sanctioned: September 27, 2006. Cast: October 19, 2006.

The Senate and Chamber of Deputies

of the Argentine Nation gathered in Congress, etc.

forcefully sanctioned


ARTICLE 1 Incorporate into the national legal system, for the purposes provided for in Article 40 of the Ouro Preto Protocol, the Decision of the Common Market Council of MERCOSUR No. 18/05, whose authenticated photocopy is added as Annex I to this Law. ARTICLE 2 The regulations incorporated herein shall enter into force in accordance with Article 40 of the Ouro Preto Protocol. Article 3 Contact the national executive branch.



ALBERTO BALESTRINI. . JOSE J. B. PAMPURO. . Enrique Hidalgo. . Juan H. Estrada.

Annex I





Reginaldo Braga Arcuri




VISTO: The Treaty of Assumption, the Protocol of Ouro Preto, Decisions No. 11/03, 27/03, 3/04, 19/04 and 45/04 of the Council of the Common Market.


That the Treaty of Assumption signed by the States Parties creates the Common Market of the South (MERCOSUR).

That in order to ensure the consolidation of the process of convergence towards the Common Market, it is necessary to promote the integration process by strengthening the principle of solidarity.

It is a priority to develop actions to promote the competitiveness of States parties and structural convergence.

That the benefits resulting from the expansion of markets cannot be fully exploited by the smaller economies, while strong asymmetry conditions remain.

That States parties have decided to establish the Fund for the Structural Convergence of MERCOSUR (FOCEM) in order to promote structural convergence, develop competitiveness, promote social cohesion, in particular of the smaller economies, and strengthen the institutional structure of MERCOSUR.



FOCEM objectives

Art. 1 - The Fund for Structural Convergence of MERCOSUR (FOCEM), created by CMC Decision No. 45/04, is intended to fund programmes to promote structural convergence; develop competitiveness; promote social cohesion, in particular of the smaller economies and less developed regions, and support the functioning of the institutional structure and strengthening of the integration process.

Art. 2 - Based on the provisions of the previous article, the following Programmes shall be developed:

I. Structural Convergence Program

II. Competitiveness Development Programme

III. Social Cohesion Programme

IV. Strengthening the Institutional Structure and the Integration Process.

Art. 3 - Programme I projects should contribute to the development and structural adjustment of smaller economies and less developed regions, including the improvement of border integration systems and communication systems in general.

Programme II projects should contribute to competitiveness within MERCOSUR, including processes of productive and labour conversion that facilitate the creation of MERCOSUR intra-trade, and projects for the integration of productive chains and for the strengthening of public and private institutionality in aspects related to the quality of production (technical standards, certification, assessment of conformity, animal and plant health, etc.); as well as research and development of new products.

Programme III projects should contribute to social development, particularly in border areas, and may include community-based projects in areas of human health, poverty reduction and unemployment.

Programme IV projects should address the improvement of the institutional structure of MERCOSUR and its eventual development. Once the objectives of the projects are met, the structures and activities that may result will be funded equally by States parties.

FOCEM Integration

Art. 4 - FOCEM shall be integrated with annual contributions from States Parties, made in semi-annual assessments. Such contributions shall be deposited in a financial institution of the States Parties, selected in accordance with the criteria and procedures established by the FOCEM Regulations, provided for in articles 19 and 20 of this Decision.

Art. 5 - The contributions of States Parties to FOCEM shall be non-reimbursable contributions.

Art. 6 - The total annual contribution of States Parties to FOCEM shall be $100 million and shall be integrated in accordance with the following percentages, which have been established taking into account the historical average GDP of MERCOSUR:

: Argentina: 27%

: Brazil: 70%

: Paraguay: 1%

: Uruguay: 2%

Art. 7 - The first semi-annual contribution of States parties to the establishment of the FOCEM shall be made within 90 days of the completion of the process of incorporation of this Decision into national legal systems and the corresponding budgetary allocations in the four States Parties have been approved.

In the first budget year of the FOCEM, States Parties shall comprise 50 per cent of their annual contributions for the implementation of pilot projects under Article 21. In the second budget year of the Fund, 75 per cent of its annual contributions should be integrated. As of the third year, they integrate 100% of their annual contributions.

Art. 8 - FOCEM may receive contributions from third countries, institutions or international agencies for the development of projects.

Art. 9 - The FOCEM will require the completion of the initial contributions by the four States Parties. From that time on, States parties should be up to date with their semi-annual contributions to FOCEM, and with the quotas established for the operation of the MERCOSUR institutional structure, so that their projects are approved.

Resources distribution

Article 10 - The FOCEM resources for the financing of the projects of Programmes I, II and III, provided for in Article 2 of this Decision, shall be distributed among the States Parties, in accordance with the following percentages:

Projects submitted by Paraguay: 48%

To projects submitted by Uruguay: 32%

To the projects presented by Argentina: 10%

To the projects presented by Brazil: 10%

The resources not allocated during each budget year shall be added to the resources of the next year, and shall be distributed in accordance with the provisions of the preceding paragraph.

The FOCEM should also provide for the necessary resources for the financing of the activities within the MERCOSUR Secretariat, provided for in article 15 of this Decision.

Art. 11 - The relevant States Parties shall participate in the financing of the projects approved in their favour by the MERCOSUR Common Market Council, with their own equivalent funds, at least 15% of the total value of such projects.

Art. 12 - The resources of the FOCEM for the first four years will be devoted primarily to Article 2 Programme I of this Decision. Up to 0.5 per cent of the Fund ' s resources for Programme IV may be allocated during that period.

Art. 13 - For the first four years, FOCEM financial resources allocated to projects under Programme I should be used primarily to increase the physical infrastructure of States Parties, in particular to facilitate the integration process.

From the fourth year of the effective operation of the FOCEM, the States Parties shall undertake a general evaluation of the FOCEM and a review of the priorities, the results of which shall be applied from the fifth year of operation.

Art. 14 - FOCEM resources allocated to approved projects shall be non-reimbursable contributions. However, alternatives to reimbursable loans may be considered.

Procedures and Institutional Aspects

Article 15 - The regulation of the procedural and institutional aspects of the operation of the FOCEM shall include the following bases:

(a) Projects under Article 2 of this Decision shall be submitted by the States Parties to the Commission of Permanent Representatives of MERCOSUR, assisted by the representatives that each State Party deems appropriate, shall verify compliance with the requirements established for the submission of projects and their eligibility.

(b) A technical body within the MERCOSUR Secretariat, together with an Ad Hoc Group of Experts made available by States Parties, will be responsible for the evaluation and monitoring of project implementation.

(c) Such a technical body shall prepare a preliminary draft of the FOCEM Budget, make available the disbursements of resources for States Parties; analyse the results of the external audits provided for in Article 17 of this Decision; and forward the reports of its activities, and the preliminary draft budget, to the MERCOSUR Commission of Permanent Representatives.

(d) The Commission of Permanent Representatives of MERCOSUR will raise the reports received and its own report to the Common Market Group.

(e) The Common Market Group will elevate to the Common Market Council the draft budget and projects, accompanied by its report, in accordance with the criteria set out in the Regulations.

(f) The Common Market Council shall approve the FOCEM Budget and projects to be funded, and shall allocate the corresponding resources according to the percentage ranges set out in Article 10 of this Decision.

Article 16 - States Parties benefiting from the transfer of resources shall submit semi-annual reports, at the appropriate time, concerning the status of implementation of each project, in accordance with the specifications set out in the FOCEM Regulations.

Art. 17 - Projects to be implemented will be subject to external, accounting and management audits, as set out in the FOCEM Regulations.

Article 18 - In the implementation of projects financed by FOCEM, preference shall be given to companies and entities based in MERCOSUR.

FOCEM Regulation

Art. 19 - The MERCOSUR High-level Panel on Structural Convergence and Financing of the Integration Process will develop the draft FOCEM Regulations by 30 November 2005. The project will be submitted in due course to the Council of the Common Market, following consideration by the Common Market Group.

Article 20 - The FOCEM Regulation shall regulate all procedural and institutional aspects of its functioning, in accordance with the provisions of this Decision. In particular, it will specify the procedures to be fulfilled by the MERCOSUR Secretariat and establish the limits of the resources of the FOCEM, which may be intended for the administration of the same.

Art. 21 - The FOCEM will begin to work through the methodology of pilot projects with strong impact on the citizens of MERCOSUR. The Regulations shall establish transitional procedures for the implementation and evaluation of such projects. This experience will guide the final formulation of the procedures and institutional aspects of FOCEM.

Monitoring and Incorporation

Art. 22 - This Decision shall be effective for 10 years from the first contribution made by one of the States Parties to the FOCEM. Following that time period, States Parties shall assess the effectiveness of FOCEM programmes and the desirability of their continuity.

Art. 23 - States Parties shall incorporate this Decision into their national legal systems.

XXVIII CMC - Assumption, 19/VI/05