Argentina's President Cristina Fernandez de Kirchner (C) addresses the audience during a meeting of the annual Mercosur trade bloc presidential summit in Mendoza
The Mercosur trade bloc - which includes regional heavyweights Brazil and Argentina - will make Venezuela a full member next month, uniting South America's biggest grains and energy exporters, reports Reuters.
At a presidential summit on Friday, Mercosur's leftist leaders also decided to extend Paraguay's suspension over the ouster of President Fernando Lugo until democracy is restored via new elections, scheduled for April 2013.
No economic sanctions were adopted against Paraguay but its officials will be banned from participating in Mercosur meetings. The suspension opened the way for Venezuela to be incorporated into the bloc since opposition in Paraguay's Congress was the only remaining obstacle after a six-year wait.
Brazilian President Dilma Rousseff praised the joining of forces, saying "food and energy security are becoming more and more relevant" globally.
The Mercosur customs union - which groups Brazil, Argentina, Uruguay and Paraguay - also agreed to allow individual members to raise tariffs on imports from outside the bloc to up to 35 percent on 200 products to protect local industry.
This doubled the number agreed in December and reflected worries that dumping could increase as global growth drags.
Argentine President Cristina Fernandez called on South America to band together more broadly to better confront global economic woes, just after making the announcement on Venezuela's membership.
Venezuela has the world's biggest crude oil reserves and belongs to OPEC. Socialist firebrand Hugo Chavez has governed there since 1999 and he is running for re-election again this year, despite his battle with cancer.
The Andean nation will be fully incorporated into Mercosur on July 31 at a meeting in Rio de Janeiro.
"This is a historic day for ... integration," Chavez told Telesur television station by telephone. "This is win-win for everybody."
Alicia Barcena, head of the United Nations' Economic Commission for Latin America and the Caribbean, said she viewed the move positively.
"Mercosur has a third of the world's water reserves, a third of arable lands, more than 45 percent of soy production ... and now with Venezuela's incorporation there's an expectation that energy integration could increase," she said on the sidelines of the summit in the western Argentine city of Mendoza.
Being a full member of Mercosur requires that countries end tariffs between member states and adopt a common tariff that ranges up to 20 percent, with some exceptions.
The bloc is rife with internal divisions, however. Brazil and Argentina, which are often at odds over trade, have limited each other's imports despite Mercosur accords that promote free trade among member countries.
Argentine officials said earlier this month that they had reached a deal with Brazil to ease the entry of Argentine goods including lemons, king prawns and medicines.
However, Brazilian Industry Minister Fernando Pimentel told Reuters: "There's still no agreement that would motivate a change on the (non-automatic import) licenses."
Chinese Premier Wen Jiabao proposed this week that his country and Mercosur evaluate a possible free-trade agreement.
Mercosur did not address this in its final declaration. But a separate, joint statement was later released, saying officials from China and Mercosur would meet to "explore mechanisms and actions aimed at increasing and facilitating trade."
Analysts say Brazil and Argentina would probably be wary of a deal with China as both nations take protectionist measures aimed at shielding local industry from imported goods.