Argentina and Venezuela will collaborate to build a trainer jet for deployment in member countries of the Union of South American States, officials said.
Unasur became operational in 2011 after more than two years of preparations and aims to become a defense and economic pact to the exclusion of North American states Canada and the United States.
Loosely modeled on the European Union, Unasur also aims to replace other regional organizations including Mercosur and the Organization of American States, which has headquarters in Washington.
Plans for extensive multi-faceted cooperation between the 12 member states have snagged on differences over existing regional trade organizations Mercosur and the Andean Community of Nations.
Unasur has a combined population of more than 396 million in Central and South America.
Even after the statement over the planned joint trainer jet project it was unclear if regional aviation giant Embraer of Brazil would play any role in the making of the plane.
Defense analysts said current plans focused on Argentina drawing state funding from Venezuela as part of its strategy to revive its defense industry.
The joint defense deal followed negotiations between Argentine officials and a Venezuelan military delegation following up on agreements signed in July.
Senior Argentine officials said the joint jet trainer project aimed to kick-start regional defense cooperation, touted for several years regional leaders but not implemented.
Officials say the joint trainer project will aim to harmonize armed forces
training programs and operations. However, Brazil's absence from the plans is likely to slow progress.
Alongside the trainer aircraft there are plans afoot to explore joint production of a light armored
transport vehicle tank likely to be deployed in border security operations, missiles and various naval vessels.
Argentine defense industry has suffered through several decades of neglect that coincided with the return to democratic rule. Successive elected governments veered away from defense modernization because of the military's past association with Argentine dictatorships.
Until the 1960s Argentina was well on way to becoming a significant aircraft manufacturer but a U.S. arms embargo in response to the dictators' human rights abuses led to a decline in defense production. Subsequent privatizations of defense plants extinguished what remained of defense production.
A government review of the country's neglected defense industry led to the reopening of several plants that had been abandoned. A new emphasis on technological transfer partnerships with foreign suppliers has focused on developing electronics and avionics capacity.