Economy & Trade, Headlines, Latin America & the Caribbean, North America

TRADE-AMERICAS: Andean Bloc a Power at Summit

Estrella Gutierrez

CARACAS, Apr 14 1998 (IPS) - The Andean Community heads toward the second Summit of the Americas in Santiago at the weekend riding high after securing special treatment in negotiations on the formation of a Free Trade Association of the Americas (FTAA).

The Andean bloc has received the go-ahead from the 34 nations involved in the FTAA process to agree that commitments and obligations will differ according to the level of development of each country, a demand that was put on the negotiating table at the end of the preparatory phase of talks.

The Andean negotiators from Bolivia, Colombia, Ecuador, Peru and Venezuela drew fire at the March ministerial meeting in San Jose – which defined the rules to govern the final stage of negotiations to be launched at the April 18-19 summit – for bringing up an item on which discussions had already been closed.

But they obtained a concrete objective in a last minute victory that changed Andean perceptions of the route toward free trade that have existed since 1995.

During the three years of preparatory talks on the FTAA, the Andean Community – one of the four blocs of the Americas aiming at a common market – had been shaken by storms which jeopardised its very survival, which finally abated in 1997.

Two months after the 34 members of the Organisation of American States (OAS) decided in December 1994 to create an FTAA by the year 2005, Ecuador and Peru engaged in a short, undeclared war over a disputed stretch of border.

It was the start of a tragic period for the bloc, marked by political crisis in Colombia, the country that seemed to be the most keen on Andean integration, Venezuela’s abandoned economic controls, and the February 1997 impeachment of Ecuadorean President Abdala Bucaram.

The crowning touch came when an abyss opened between Peru and its partners. A year ago, the government of Alberto Fujimori announced that Peru would pull out of the bloc, a dramatic watershed that paradoxically served to pull the group of nations – combined population 104 million – together again.

New presidents will take office this year in Colombia, Ecuador and Venezuela. Nevertheless, analysts agree that Andean Cummunity participation in the FTAA will now be more active, due to the interests at stake and because the Andean countries want to transmit an image of “a bloc that can be counted on.”

The five Andean countries will negotiate as a bloc in the FTAA trade talks, as will Argentina, Brazil, Paraguay and Uruguay – who form the Southern Common Market (Mercosur) – and the Central American Common Market plus the English-speaking Caribbean Community.

The Andean Community and Mercosur will sign a framework accord in Buenos Aires on Thursday to launch a free trade area in the year 2000, which will help the two blocs agree on shared positions throughout the FTAA negotiations.

The governments involved stress that the bloc will act independently, through a single voice to be expressed by Ecuador up to July, and by Colombia for the next year.

“We will maintain our independent profile, even though there will be communicating ducts connecting us with Mercosur, just as we will have differences in other cases,” said the general- secretary of the Andean Community, Sebastian Alegrett of Venezuela.

Alegrett said the varying commitments depending on level of development demonstrates a recognition of the assymetry in the continent, where there are five big powers – the United States, Brazil, Canada, Mexico and Argentina – a group of medium-sized countries, and a number of small economies.

“We made our presence felt with a proposal for a new orientation, which did not seek traditional assymetries or open- handed cooperation, but rather differentiated treatment that will make an FTAA possible,” said Alegrett.

Seventy percent of the CA’s total exports of 49.8 billion dollars in 1997 – according to Inter-American Development Bank figures – go to other countries of the Americas, far higher than the continent-wide average of 55 percent.

The United States absorbs 51 percent of the bloc’s exports, which makes the goal of tariff-free access to the big northern market a higher priority for the CA than for Mercosur, which has much stronger commercial ties to Europe.

Venezuela’s technical negotiator in the CA, Gerardo Arellano, commented that in the past few months there had been intense meetings at CA headquarters in Lima, dedicated to fine-tuning positions towards the FTAA project.

Costa Rican Deputy Minister of Trade Carlos Murillo even travelled to Lima twice to meet with the bloc’s negotiators and contribute to setting CA priorities for the last preparatory meetings, held in San Jose.

The CA presidential summit that ended Apr. 4 in the Ecuadorean city of Guayaquil confirmed that the five countries would negotiate as a bloc, and expressed “great satisfaction” with the role the bloc would play in the negotiations.

Venezuelan government sources told IPS the only objective not met was for Colombia to host the talks during one of the 18-month phases into which the negotiations were broken down. But Panama will host the talks as of March 2001, an initiative that had decisive support from the Andean bloc, because Panama is involved in an intense process of trade and political integration with the CA, which was consolidated in Guayaquil.

The San Jose Declaration establishes that for the next 18 months, CA members will preside over the key working group on market access, to be chaired by Colombia. Bolivia will be the assistant chair.

Of the other eight working groups into which the negotiations will be divided, Venezuela will chair the group on intellectual property, with Ecuador as assistant chair, while Peru will chair the working group on competition.

Ecuador will also be assistant chair of the negotiations from November 1999 to May 2000, when it will assume the presidency for 18 months, and Bolivia will host one of the rounds of talks. Trade ministers and foreign ministers consulted by IPS in Guayaquil said the bloc would make its voice felt in a very active manner during the negotiations.

To do that, the CA has commissioned a study – by two of the negotiators who participated in the preparatory phase of FTAA talks – on what the group’s objectives should be in the first year of negotiations, the bloc’s projected losses and earnings, and the best negotiating strategies.

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