Two long years of negotiations preceded the culmination of the treaty which was one of the outstanding points of the Mercosur presidential summit held in Montevideo, with Argentina taking over the rotating Mercosur chair from Uruguay for the next six months.
The Mercosur/Israel free trade agreement covers 90% of items with a calendar of progressive tariff reductions in four phases: immediate, 4, 8 and 10 years.
According to Israel's Statistics Bureau during the first ten months of this year, the four Mercosur country members, Argentina, Brazil, Paraguay and Uruguay exported US$ 460.2 million, (22% over the same period a year ago) and imports totaled US$ 653 million, up 40% over 2006.
Mercosur founded in 1991 has become South America's main trade block with annual exports totaling US$ 217 billion and US$ 150 billion in imports.
The original ceremony was scheduled for Monday but had to be postponed 24 hours until the Brazilian Foreign Affairs minister Celso Amorim arrived in Montevideo.
The agreement was signed by Argentina's Foreign Affairs minister Jorge Taiana, Brazil's Celso Amorim, Uruguay's Reinaldo Gargano and Paraguay's Ruben Ramirez Lezcano.
"It's a very complex and wide ranging, with products that will have zero tariff from the start and others in the coming four and plus years," said Yoel Barnea, the Israeli ambassador in Montevideo.
From New York the American Jewish Committee welcomed the free trade pact signed between Israel and Mercosur.
"This landmark trade agreement will enable Latin American nations and Israel to expand their economic and commercial relations," said Dina Siegel Vann, director of AJC's Latino and Latin American Institute. This the second trade pact Israel has signed in Latin America. The first was with Mexico in 2000.
"We are hopeful the Israel-Mercosur agreement will benefit the Latin America region by providing new opportunities to foster economic growth and strengthen democracy," Siegel Vann said.
The Mercosur agenda includes other agreements with out of the region partners beginning with the South African Customs Union, followed by the Cooperation Council of the Gulf (Arab countries) and India.
With Africa the first step is to sign a fixed preferences agreement that includes Botswana, Lesotho, Namibia, South Africa and Swaziland.
Mercopress