An economic alliance of 13 Latin American countries. The permanent members of LAIA are Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay, and Venezuela. The association was formed by the Treaty of Montevideo (1980) to replace the Latin American Free Trade Area (LAFTA); it began operations in 1981. LAFTA had been established in 1960 to increase trade between member countries and to promote their economic and social development. LAFTA, however, had only limited success, being considered overambitious and inflexible. LAIA was created by the members of LAFTA to continue LAFTA’s policies, but without fixed timetables for the introduction of such measures as reductions in trade tariffs and with greater allowance for differences between member nations. See also andean community; mercosur.