Development & Aid, Headlines, Latin America & the Caribbean

ANDEAN COMMUNITY-OUTLOOK: Not Just Another Year for Andean Integration

Estrella Gutierrez

CARACAS, Dec 24 1997 (IPS) - This year was something of a watershed in the 28 years-long process of integration in the Andean region. Peru left the Andean Community (CA) to return later and the bloc was given a face-lift and gained a new name to further the dream of becoming a viable common market.

The Community also threaded a craeful path through various regional crises which saw three presidents emerge in the month of February which could have rattled the Andean Community, comprising Bolivia, Colombia, Ecuador, Peru and Venezuela. In particular, the election of Hugo Banzer – a general who held power as a dictator 30 years ago – as president of Bolivia failed to produce any political fallout.

While it followed a successful route internally, the community failed in its main main external endeavour. The Andean nations had hoped to seal, withnthe Common Market of the South (Mercosur) which has led the running in Latin America with its economic potential affecting nearly 200 million inhabitants and fast-paced progress towards integration.

The Andean community had staked a lot on a trade accord with the four members of Mercosur – Argentina, Brazil, Paraguay and Uruguay – but the failure to reach a signed agreement was countermanded somewhat by the renewal of political talks with the European Union (EU) in September.

Venezuelan Minister of Industry and Commerce, Freddy Rojas, and the president of the Andean Foment Corporation (CAF), Enrique Garcia, agreed that the bloc’s return to the EU agenda was the most positive result on the CA’s external front in 1997.

The year had begun with Peru receiving an ultimatum from the rest of the members: the government of Alberto Fujimori was given a March deadline to stop playing the one foot in-one foot out game it had started in August 1992.

The tense search for a formula that would satisfy all five members lasted until April, when the trade ministers “broke off the engagement” on Apr. 11, and in a gesture that was taken as definitive, Fujimori announced Peru’s withdrawal from the bloc.

The cause of the separation lay in Peru’s refusal to adopt the group’s common foreign tariff, in effect since February 1995. Lima has a single tariff rather than the CA’s four-scaled scheme, in which duties rise along with a product’s level of processing.

But the touchiest issue was Peru’s refusal to join the free trade zone operating between the rest of the members since 1993, even though Lima and its partners partially protected their mutual flows of trade through bilateral accords.

The four active members undertook a two-pronged strategy: a barrage of activities to show Peru and the rest of the world that the discrepancy had been the only obstacle to the growth of the bloc of 100 million consumers and a great show of relief that the uncertainty had been overcome, alongside permanent negotiations with Lima to keep the separation from turning into divorce.

Peru, meanwhile, did not make its withdrawal formal, and found the outlook bleak if it became isolated from its natural bloc, where its products enjoy the highest level of competitiveness, and from which it receives more than 500 million dollars a year in credits from CAF alone.

At a late April summit in Sucre, Bolivia, to which Fujimori was not invited, the other four presidents began an in-depth institutional renovation of the bloc. Fujimori, at the time, launched an armed raid on the Japanese Embassy which had been occupied by the guerrillas for 126 days, an event which overshadowed the Sucre summit both within the Andean sub-region and elsewhere.

At the summit, the Andean Pact became the Andean Community of Nations, and the technical Junta turned into the General Secretariat, with heightened political power and a prominent figure in Latin America at its head, Venezuelan diplomat Sebastian Alegrett.

The Presidential Council and the Council of Ministers of Foreign Relations began to act above the Commission of Trade Ministers, with a Broadened Council of both foreign relations and trade ministers.

The new Andean System of Integration, in which the bloc’s financial, legal, cultural and social bodies are coordinated, thus acquired a higher profile, balancing the priority put on the liberalisation of trade since 1989.

From 1989 to 1992, the Andean partners took enormous strides towards integration, with greater achievements than in the previous 20 years, while setting a neoliberal stamp on the process. Since 1992, institutional crises in Peru and Venezuela, Colombia’s 1995-96 political crisis, the discrepancy with Lima and national economic recessions joined together to hinder the integration process until June this year.

In Sucre, the presidents decided that if the crisis with Peru were not overcome within two months, Bogota would replace Lima as the bloc’s headquarters. But the negotiations gave fruit, and on Aug. 1 Lima joined the free trade zone, returning to the bloc it had been a founding member of in 1969.

Peru’s adhesion to the common foreign tariff was never the main point of friction, and although that country has until 1999 to adopt the CA’s tariff scheme, the rest of the members are confident that the process will come about naturally, sooner rather than later, perhaps along with a reduction in the bloc’s tariffs.

Peru’s return and the CA’s new institutional framework encouraged the bloc to push towards an accord with Mercosur. But in the Southern Cone the political will was not reflected at the technical negotiating table.

The aim was the simplest kind of accord, to include only merchandise. But differences with respect to the timeframes for liberalisation, the quantity of national input which products must contain in order to be covered by the agreement, and the agricultural sector became unsurmountable obstacles, at least for the time being.

Mercosur “does not negotiate, but says ‘here it is, take it or leave it’,” according to Pedro Carmona, the representative of the Venezuelan private sector closest to the negotiations and Andean integration, which he coordinated 15 years ago.

The new deadline for signing the accord is March, says Minister Rojas. But in the Southern Cone the idea has arisen that the agreement could be signed in April, at the continent-wide summit that will launch the negotiations for the Free Trade Area of the Americas.

Meanwhile, intra-Andean trade continues its slow approach to five billion dollars a year. This year it grew 16 percent, compared to 34 percent in the early 1990s and Secretary Alegrett said he was confident that economic recovery in Colombia and Venezuela, the bloc’s engines, would boost trade as of 1998.

Although 1998 is election year in Colombia and Venezuela, Rojas said the bloc’s plans should not suffer, including the initial steps towards macroeconomic coordination, with ministerial meetings in the first quarter of 1998 which are to pave the way towards a common market.

“It won’t be an easy task,” said Rojas, who will step down as the senior Andean minister of trade in January to promote the process from his new post as finance minister. “But we are ready to begin to take the step.”

Setting out on the route towards a common market – the goal with which the group emerged almost 30 years ago – was another of the key aims set forth at the Sucre summit.

 
Republish | | Print |

Related Tags



grip challenge