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

ANDEAN COMMUNITY-EU: More Suspense Than Negotiations

Humberto Márquez

CARACAS, May 10 2006 (IPS) - Venezuela’s planned withdrawal from the Andean Community of Nations (CAN) has thrown a wrench into negotiations of a free trade agreement between the South American trade bloc and the European Union (EU), ahead of the fourth EU-Latin America/Caribbean summit in Vienna.

Friday’s meeting in the Austrian capital that will bring together the heads of state and government of the 25 EU member countries and the 33 nations of Latin America and the Caribbean was the occasion chosen for the launch of the negotiations between the two blocs.

But on Apr. 19, Venezuelan President Hugo Chávez – who holds the rotating presidency of CAN – announced in the Paraguayan capital that his country would pull out of the bloc, which is also made up of Bolivia, Colombia, Ecuador and Peru.

CAN, which was born in 1969 as the Andean Pact, “is dead,” said the left-leaning Chávez, who maintained that it was “fatally wounded” when Colombia and Peru signed free trade accords with the United States.

Bolivia’s leftist President Evo Morales, who takes over the rotating presidency of CAN in June, agrees that the bloc was badly damaged by the free trade deals with the United States, and complained – in the same Apr. 19 press conference in Paraguay – about the likely loss of market in Colombia for soybeans from Bolivia.

However, he urged Chávez to wait for a summit of the group’s five leaders before reaching an irreversible decision.

In a letter sent last Friday to the governments of the Andean countries, CAN Secretary-General Allan Wagner suggested that the foreign ministers of the five member nations meet in Vienna to discuss the situation and possible solutions.

“That could lead to a meeting of Andean presidents as Morales has been calling for,” said Wagner.

Meanwhile, Peruvian President Alejandro Toledo, whose term ends in July, said “the door is open for Bolivia and Venezuela to take part in the negotiations” with the EU. “They (EU leaders) would have preferred to negotiate with five countries, but there will only be three of us,” he added.

Toledo will hand over the reins to the winner of the Jun. 4 runoff – either nationalist candidate Ollanta Humala, who won the first round of elections, or his rival, former president Alan García (1985-1990).

A European diplomat in Caracas told IPS that the EU’s stance is “to wait until the Andean countries explain what they want, and then reach a decision.”

Another said that an eventual withdrawal by Venezuela from CAN would not stand in the way of negotiations, but that if Bolivia decided to do so as well, “the EU would be dealing with a completely different grouping.”

Unlike the free trade agreements negotiated by the United States, the ones sought by the EU include political dialogue and development aid, the diplomats pointed out.

They also noted that it is European policy to sign them with blocs, like CAN or the Southern Common Market (Mercosur – made up of Argentina, Brazil, Paraguay and Uruguay).

But the negotiations between the EU and Mercosur have stalled, while the talks with CAN are about to take off, although with clipped wings.

The European bloc has already signed free trade treaties with Chile and Mexico, major Latin American exporters that do not belong to any of the subregional groupings.

At any rate, the Andean nations, “once the negotiations are launched, will have to assess whether or not the terms offered are in their best interests, because European products manufactured by technologically advanced companies would enter the region tariff-free,” warned former EU delegate in Venezuela Cesare de Montis.

Last year, CAN exported 10.2 billion dollars worth of goods to the EU and imported 9.0 billion dollars in products from that bloc. At the same time, CAN’s exports to the United States amounted to 45 billion dollars, while imports stood at 20 billion dollars, according to Andean Community statistics.

Venezuela, which exports nearly 50 billion dollars in oil annually, is the bloc’s biggest exporter, while sales from the rest of the members consist mainly of other commodities like farm products and minerals, as well as manufactured goods.

CAN would like an eventual agreement with the EU to encompass not only trade but also social issues like the treatment of migrants. Hundreds of thousands of people from the Andean bloc – mainly Ecuadorians and Colombians – have emigrated to western Europe, especially Spain.

On Europe’s part, “there is interest in human rights and respect for the environment in the Andean countries, which are also Amazonian countries,” Carlos Romero, director of graduate studies in international affairs at the Central University of Venezuela, told IPS.

In addition, the EU has “foreseen some 500 million dollars in aid for the Andean countries for the 2002-2006 period, including 150 million in donations and 170 million in assistance for the anti-drug fight,” said Aimee Kanner, adjunct professor of European politics at. Florida International University in the United States.

The EU “has linked that cooperation to poverty reduction, the strengthening of regional stability, democratic development and respect for human rights,” said the analyst. “The prospect of the Andean countries developing good governance on their own is fragile at the very least.”

“CAN is still alive and will not be fatally wounded by Venezuela’s withdrawal, or even by Bolivia’s eventual departure,” said Romero. “But the EU bureaucrats in Brussels are unlikely to commit themselves to any agreements with the Andean bloc until it is clear how things will pan out.”

Some of the diplomatic efforts made in the run-up to the Vienna summit have not borne fruit, because Venezuela and Peru recalled their ambassadors, after an exchange of accusations between Chávez and Peruvian political leaders.

Furthermore, Chávez did not attend the swearing-in ceremony of President Oscar Arias Monday in Costa Rica, where Colombian President Álvaro Uribe had hoped to discuss with him the crisis in the Andean bloc.

Morales, on the other hand, after having lunch Monday with Humala – who enjoys the public support of both Chávez and the Bolivian leader – said he had agreed with the Peruvian presidential candidate “to do everything possible to save CAN.”

Chávez, in the meantime, is calling for a new, “more political,” South American alliance, and last Sunday announced that Venezuela would also pull out of the Group of Three (G3), a trade agreement that went into effect in 1995 between Colombia, Mexico and Venezuela.

According to the president, the G3 “is hurting Venezuela and only benefits a handful of large corporations.”

He also proposed a reworking of the San José Pact, under which Venezuela and Mexico have sold 160,000 barrels a day of oil, divided in equal parts, to nations in Central America and the Caribbean on preferential terms since 1980, with financing for up to 20 percent of the total cost.

Venezuela is in the process of becoming the fifth full member of Mercosur, which will take several years.