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Mercosur was created in 1991 by the Treaty of Asuncion and encompasses four Latin American countries: Argentina, Brazil, Paraguay and Uruguay. The European Union has favoured the strengthening of Mercosur and supported its initiatives, notably through the Interinstitutional Agreement to provide technical and institutional support for its newly created structures.
In 1995, the EU and Mercosur signed an Interregional Framework Cooperation Agreement, which entered into force in 1999. A joint declaration annexed to the Agreement provides the basis for the political dialogue between the parties, which takes place regularly at Heads of State, Ministerial and Senior Official levels.
In 2000 the parties opened negotiations for an Association Agreement based on three pillars: political dialogue, cooperation and a free trade area. Negotiations were suspended in 2004 over fundamental differences in the trade chapter. Political relations have nevertheless evolved, with an agreement made at the last Summit in Lima (2008) to extend relations to three new areas, science and technology, infrastructure and renewable energy  .
The EU provides assistance to Mercosur through its 2007-2013 Regional Programme     adopted in August 2007 in the framework of the Regional Strategy for Mercosur. The Regional programme provides €50 million to support projects in three priority areas.
1. Mercosur institutional strengthening
2. Supporting Mercosur in preparing for the implementation of the Association Agreement
3. Fostering the participation of civil society to Mercosur integration process.
The EU is by far the largest supplier of assistance to Mercosur.
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