Mercosur was finally created in 1991 by the Treaty of Asuncion on the basis of the Buenos Aires Act, the Treaty of Asuncion set rules and conditions for the creation of a free trade area among its four signatories. Similarly, it was decided that all common market construction measures should be completed by 31 December 1994 with the amendment of the Treaty of Ouro Preto.  In 2001, the Mercosur flag was raised for the first time at Mercosur`s headquarters in Montevideo. Since its inception, MERCOSUR has been founded on the principles of democracy and economic development, which reinforce the fundamental values of human integration. In a closer approach to these, several agreements have been added on migration, labour, culture and social protection – to name but a few that are of the utmost importance to the inhabitants. Mercosur was born out of a series of economic cooperation agreements between Argentina and Brazil after their diplomatic rapprochement in the 1980s, and was established in 1991 with the signing of the Treaty of Asuncion. This agreement has placed Argentina, Brazil, Paraguay and Uruguay in a customs union with the ultimate goal of a common market. The 1994 Ouro Preto Protocol defined the institutional structure of the institution. In 2016, Brazilian President Dilma Rousseff, then Michel Temer, and Argentine President Macri, began pushing to negotiate a free trade agreement between Mercosur and the European Union and other Latin American nations.  In June 2019, the free trade agreement between the European Union and Mercosur was confirmed.  The bilateral trade agreement opens up 100% of EU trade and 90% of Mercosur`s trade.  However, the agreement has yet to be ratified. Mercosur members respect a number of agreements that govern currency change, investments, tax issues and training exchanges.
The aim is to harmonize the rules between Member States in order to facilitate trade. The bloc also has a series of free trade agreements (FTAs) with third parties, including Chile, Colombia and Peru, as well as Israel and the Palestinian Authority. Negotiations for a free trade agreement with the European Union began in 1995, were suspended in 2004 and are still under discussion. In addition, the Committee on Trade should decide on the issues raised by Member States regarding the application and respect of common sea tariffs and other common trade policy instruments. The Commission meets at least once a month, at the request of the Executive Agency Mercosur or a Member State. The Commission can make decisions on the management and implementation of trade policies decided within the framework of the Southern Common Market and, if necessary, submit proposals to the executive body to regulate the territories under its control; In addition, it may propose new guidelines or amend existing trade and customs guidelines under Mercosur. In this context, the Committee on Trade may propose a change in import duties on certain posts within the framework of common external tariffs, including cases related to the development of mercosur`s new production activities. In order to better achieve its objectives, the Trade Commission can set up technical committees to manage and monitor the work it refines. It can also adopt internal operating rules. The proposals and decisions of the Trade Commission are taken by consensus among the representatives appointed by each member country. All disputes arising from the application, interpretation or compliance of the acts adopted by the Committee on Trade are referred to the Mercosur executive body and should be resolved on the basis of the directives of the Southern Common Market Dispute Settlement System.