Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

SOUTH AMERICA: High-Level Efforts to Save Andean Trade Bloc

Ángel Páez

LIMA, Apr 21 2006 (IPS) - The secretary-general of the Andean Community, Peruvian diplomat Allan Wagner, told IPS that he has “initiated actions at the highest level with all of the bloc’s member countries” to keep Venezuela from withdrawing.

Wagner acknowledged that if Venezuela pulls out of the bloc, it would deal a terrible blow to the economy of the Andean region. “The withdrawal of any of our members would be critical,” he said.

The official was in Brussels for a meeting of representatives of the Andean Community and the European Union, to discuss trade negotiations, when President Hugo Chávez declared Wednesday that Colombia and Peru had “killed” the Andean Community by signing free trade agreements with the United States, and announced that Venezuela would begin to take formal steps to withdraw from the bloc, whose other two members are Bolivia and Ecuador.

Chávez made the announcement in Asunción, where he was meeting with his counterparts Nicanor Duarte of Paraguay, Evo Morales of Bolivia and Tabaré Vázquez of Uruguay to discuss energy integration.

Morales also criticised the free trade deal that Colombia reached with the United States, because it will hurt Bolivia’s exports to Colombia.

When asked about the crisis by IPS, Wagner was calm. “Before speaking on this matter in a more in-depth manner, we have to see the reach of President Chávez’s statements. We are going to continue with the contacts that we have begun to make. We have to wait and see what options take shape.” He said he was dealing directly with the heads of state involved.

“We have had two similar experiences. The first occurred when Chile pulled out (in 1976), but it was agreed that a certain kind of relations would be maintained, because there is an agreement that trade liberation measures must be kept in place for five years even in the event that a member country formally withdraws.”

“The second was when (former president) Alberto Fujimori announced Peru’s withdrawal in 1994, although in the end that did not happen,” said Wagner.

“We have to wait and see how this plays out, to see what alternatives present themselves. We have not yet received formal notification of a withdrawal by Venezuela, so in diplomatic terms, all that can be done is to wait. That is all I can say for now,” he added.

Chávez’s announcement, which he had already given some indication of several months ago, was reported in Peru just when the country’s leading business associations said they would launch a major offensive to lobby the Peruvian Congress to approve the free trade accord that outgoing President Alejandro Toledo signed in Washington on Apr. 12.

The winner of the first round of presidential elections in Peru, nationalist candidate Ollanta Humala, has spoken out against the free trade agreement with the United States, and has suggested two options: allowing voters to decide in a referendum whether or not they want the agreement, or submit it for consideration by the new legislature that will be installed on Jul. 28.

It is not clear who Humala will face off with in the second round in late May or early June, whether social democratic former president Alan García or conservative former Congresswoman Lourdes Flores, since the final vote count is not yet in.

But García, who is leading Flores by a slight margin, has stated that it preferable for the free trade agreement with the United States to be carefully evaluated, especially with respect to the compensation to be offered to the economic sectors affected by the treaty.

Venezuela and Bolivia’s objections to the free trade treaty had not previously been clearly voiced in the Andean Community, which was founded in 1969.

According to María Clara Gutiérrez, at the Andean Community office of legal affairs, Venezuela and Bolivia were thoroughly informed of the trade negotiations that Peru and Colombia were involved in with the United States.

Gutiérrez told IPS that the bloc’s internal mechanisms stipulate that members must inform their partners of any agreements that they negotiate on an individual basis with third party countries, in compliance with provision 598.

That provision was adopted by the Andean Community in July 2004, precisely because Peru and Colombia informed the rest of the members of the bloc that they were entering into free trade talks with the United States.

“Both countries duly reported on the progress of the negotiations of the free trade agreement,” said Gutiérrez. “And they did so in compliance with provision 598.”

Peru’s farmers have been observing the latest developments with concern. Godoy Muñoz, secretary-general of the National Convention of Peruvian Agriculture (CONVEAGRO), Peru’s largest farm union, warned that Venezuela’s withdrawal would trigger a crisis in the region.

“If Venezuela pulls out, and if Bolivia follows suit, only three of the five members would be left, and the Andean Community would no longer be representative (of the region). It would also become clear that in spite of all the efforts, the Andean countries have been incapable of consolidating economic integration,” said Muñoz.

“Without Venezuela and Bolivia, the regional trade system would be seriously affected,” he said. “Unfortunately President Toledo preferred a free trade deal with the United States to stepping up regional integration efforts. That is why we are opposed to the free trade agreement, because our country’s priority is the Andean Community.”

Toledo said he still harboured hopes that Chávez would back down, “because I don’t believe he wants to destroy the Andean Community – he is an integrationist.” He added that he preferred to consider the Venezuelan president’s remarks in Asunción “a momentary reaction.”

The Peruvian leader also said he hoped the five member countries will take part in the fourth summit meeting of European Union, Latin American and Caribbean heads of state and government on May 12-13 in Vienna, Austria.

But in the view of Fabián Novak, an analyst at the Catholic Pontifical University’s Institute of International Studies, Chávez’s announcement was coldly calculated.

“Since Chávez first expressed an interest in joining Mercosur (Southern Common Market), he has said this (about the Andean Community) several times,” said Novak. “Specifically, his compatibility with the governments in power in those countries must be highlighted.”

Venezuela is in the process of becoming the fifth full member of Mercosur, Latin America’s biggest trade bloc, made up of Argentina, Brazil, Paraguay and Uruguay. Although it was accepted as a member in late 2005, the admission process will take several years. For the time being, it has a voice but no vote in the bloc.

“Chávez’s friendship with Kirchner, Tabaré and Lula is obvious,” said Novak, referring to the left-leaning presidents of Argentina, Uruguay and Brazil.

“On the other hand, he has had several clashes with Colombian President Álvaro Uribe and Toledo. Chávez’s decision is not only related to his interest in joining Mercosur. He has also seen that he does not fit in with the countries of the Andean Community,” argued the analyst.

“The free trade agreements (with Washington) were the last straw for Venezuela. Chávez’s anti-imperialist rhetoric is aimed at breaking down the ties between the United States and the countries of Latin America. By signing the free trade treaties, Peru and Colombia have demonstrated their independence with respect to Chávez and have reaffirmed the U.S. presence in Latin America,” said Novak.