1. MERCOSUR

In negotiating Fixed Tariff Preference Agreements as a step toward reaching an agreement to establish a Free Trade Area between the Andean Community and MERCOSUR, the CAN, after holding 6 meetings with Argentina between October 1999 and May 2000, signed the ACE No. 48 Agreement with that country, covering 2, 608 subitems representing roughly 92% of the total exports of Colombia, Ecuador, Peru and Venezuela to Argentina.

In the case of the Agreement signed with Brazil (ACE No. 39), it is important to point out that two meetings of the Administrative Committee were held in 2000, at which the Committee’s Regulations were approved; the trade flows since the signing of the Agreement were examined and an increase was identified, stemming from the agreed preferences; and the Agreement was expanded to bring in new products or improve the preferences. In September 2001, the Parties signed a new Additional Protocol to the Agreement, once again enlarging upon the preferences and incorporating new products.

As for the CAN’s negotiations with Paraguay and Uruguay, during the first quarter of this year, General Secretariat officials visited the authorities of their Foreign Ministries and other Ministries responsible for trade to discuss the possibility of negotiating Fixed Tariff Preference Agreements simultaneously with the start of the bloc-by-bloc negotiation of the Free Trade Agreement.

In the case of Paraguay, a meeting was held in Asuncion on April 26, 2001, at which that country reiterated its interest in negotiating a Fixed Preferences Agreement as soon as possible. The Andean Community, for its part, expressed its interest in moving ahead with that negotiation despite the shortness of the timeframe. The two parties committed themselves to exchange lists of products of interest and regulatory texts prior to the negotiation meeting initially scheduled for June 13 to 15 in Lima. The lists in question were finally exchanged at the end of May, but Paraguay requested the postponement of the negotiation meeting until June 26 to 28 and subsequently communicated its decision not to hold that negotiation because it considered that the Andean margins of preference offered failed to meet its expectations.

No negotiations were conducted with Uruguay, for that country reported on April 27 of this year that it was not interested in negotiating a Fixed Tariff Preferences Agreement and that it would state its interests in the course of negotiating the Free Trade Agreement.

As for the negotiation of a Free Trade Area between the Andean Community and the Mercosur, the Representatives on the Committee, at its meeting in February 2001, reiterated their intention of advancing the negotiations within the timeframes stipulated by the Presidents at the Brasilia Summit. The first meeting accordingly took place in Asuncion this April 27 to deal with the scope of the Agreement and the timetable for the negotiations, with a view to concluding them during the course of that year.

At that time, the Mercosur made a commitment to send the Andean Community its proposals on regulatory matters and guidelines for the Liberalization Program before May 23 and the Andean Community agreed to remit its counterproposal on June 22. It was also agreed to hold the next negotiation meeting in Montevideo on July 24 to 27 of that year. It was only on June 12, 2001, however, that the Mercosur transmitted its proposals on the Text of the Agreement, the Dispute Settlement System, and the Annex on Sanitary and Phytosanitary Measures. For that reason, the Andean Community proposed holding the meeting on August 22 to 24 in Montevideo, and this was accepted by the Mercosur. The Andean counterproposal was sent to the Mercosur prior to that meeting, on July 18, 2001.

At the Second Meeting, held in August 2001 in Montevideo, the parties made a detailed examination of their respective regulatory proposals and agreed to continue the process, as well as to address the issue of the tariff deregulation lists at their next meeting, planned for October 17 to 19, 2001, in Lima.

The Third Negotiation Meeting was held as scheduled. Aspects of the Liberalization Program were taken up and the discussions of the rules and regulations with regard to Safeguards, Origin, Dispute Settlement and Sanitary and Phytosanitary measures were continued.

Finally, the Fourth Negotiation Meeting took place on November 29 and 30, 2001 in Lima and on that occasion the Parties discussed the previously exchanged lists of sensitive products at length, centering on the treatment to be given to the products belonging to the historical heritage.

While the following meeting had been planed for February 2002, in Buenos Aires, and the two Parties had accordingly agreed upon a timetable for the exchange of product lists and trade information, the Mercosur requested its postponement to March 5 because the starting date coincided with the bloc’s Presidential Summit.

2. United States

The efforts of the public and private sectors of the Andean countries with regard to their main trading partner were aimed throughout 2001 at securing the renewal and broadening of the United States Andean Tariff Preferences Act (ATPA) and Venezuela’s incorporation –in other words, at bringing about a substantial expansion in time, space and sectoral scope, with the full inclusion of the production chains thus far excluded from ATPA coverage.

The Heads of State of the Member Countries met with the President of the United States during the Summit of the Americas, in the city of Quebec, and delivered a joint communiqué from the ATPA beneficiary countries. In it, they pointed out the favorable impact that law had exerted on trade, investment and employment, and the contributions they had made to the efforts to control illegal drug trafficking and related offenses. By reason of the foregoing, they drew attention to the importance of ensuring its prompt renewal and expansion and reiterated their support for Venezuela’s incorporation.

The Foreign Trade Ministers, for their part, had made a visit to Washington, D.C. on May 8 and 9, 2001, during which they met with the United States Trade Representative, other high-level executive officials, well-known Senators and Members of the House, and representatives of the private sector, to obtain their backing for the renewal and expansion of that act.

It should be pointed out here that the dramatic events of September 11 have, as is to be expected, triggered a reshuffling of priorities on the agenda of the United States Administration and Congress at the levels of both politics and economics and trade. United States public opinion quite naturally harbors expectations that the necessary consensuses will be reached between republicans and democrats, the House and the Senate, to vote extraordinary acts into law for boosting economic activities and employment in the country.

In that context, the Congressional debate of the renewal and broadening of the ATPA was relegated to the "fast track" procedure for the negotiation of international trade agreements (TPA), which occupied a large part of the economic and commercial agenda for the Congressional sessions in the final months of last year.

Despite the efforts of the ATPA beneficiary countries to the contrary, the trade preferences ceased to be applied as of December 4, 2001. Even so, it looks as though a virtual bipartisan consensus has been reached in regard to the need for and desirability of harmonizing the two legislative initiatives (HR 3009 -ATPEA) for renewing and expanding the ATPA.

3. FTAA

Meetings of the FTAA Groups and Committees were resumed in May 2001 for the purpose of moving ahead with the tasks mandated in the Buenos Aires Declaration signed on April 7, 2001.

That Declaration establishes the following mandates, among others: to step up efforts to settle differences and reach a consensus for eliminating as many of the brackets in the draft texts as possible; for the Negotiating Groups with responsibility for access matters to put forward recommendations of negotiating methods and modalities by the deadline date of April 1, 2002, for evaluation by the TNC so that negotiations may be started no later than May 15, 2002; and for the TNC to formulate recommendations or guidelines on how to treat differences in levels of development and sizes of the economies, including among them the smaller economies, by November 1, 2001, at the latest.

The Andean Community is participating jointly and with single spokesmen in all of the FTAA bodies and has submitted joint proposals on issues being negotiated.

Following the Buenos Aires Ministerial Meeting, Ecuador assumed the chair of the FTAA and will be responsible for preparing the Seventh Ministerial Meeting to be held in October 2002. It will also be in charge of chairing any TNC Meetings that are held during this negotiation period and, in general, of leading the negotiation process.

The TNC, at its September 2001 meeting in Managua, approved the Guidelines or Recommendations for the Treatment of the differences in Levels of Development and Size of the Economies. The Committee’s next meeting is scheduled for April 24 to 26, 2002 and there the Hemisphere Vice-Ministers will approve the pertinent definitions so that the negotiation of access to the markets can be launched by May 15, 2002, at the latest.

4. EUROPEAN UNION

At their Meeting of February 24, 2000 in Valamoura, Portugal, the Foreign Ministers of the Andean Community and the European Union agreed to have the General Secretariat and the European Commission prepare a diagnosis (known as a "photograph") of the present state of and prospects for the economic and commercial relations between the Andean Community and the European Union. The end purpose of this diagnosis is its use in the possible negotiation of a Fourth Generation Association Agreement between the two regions. The Ministerial Meeting held on March 28, 2001 in Santiago, Chile laid down the terms of reference for that study.

The two bodies have taken steps to coordinate the launching of the study on February 4, 2002, so that it can be concluded before the next Summit between the European Union and Latin America and the Caribbean, scheduled for May 17 and 18, 2002 in Madrid.

Furthermore, with regard to the proposal on Andean-Central American and Panamanian Accumulated Preferential Origin, the Secretariats of the Andean Community and SIECA on June 28, 2001 sent the European Commission a joint communiqué stating their intention to set up the CAN-CACM Permanent Joint Committee on Origin as a joint spokesman for the two Secretariats with the European Commission.

On November 20, 2001, the latter’s Director for Latin America confirmed the Commission’s acceptance of this arrangement in principle, subject to the effective formation of the CAN-CACM Permanent Joint Committee on Origin, the fulfillment of the established procedure for formalizing the written commitment of the eleven member countries, and a review of current European legislation on the subject.

In regard to the Generalized System of Preferences (GSP), the Council of the European Union on December 10, 2001 approved Regulation 2501 "on the implementation of a plan of generalized tariff preferences for the period from January 1, 2002 to December 31, 2004," which covers the Andean preferences.

The Proposal considers the possible renewal of the Andean preferential system for the decade of 2005-2014, if the findings of the evaluation conducted during the three-year period of 2002-04 are positive and the beneficiary countries observe the ILO’s principal labor standards and rules and those of environmental conservation, among other things.

Lastly, and as planned, the Sixth Mixed Andean-European Commission met on December 3, 2001, coordinated by the Bolivian Embassy in Brussels with the European Commission.

5. WTO

The World Trade Organization (WTO) is the most important forum for international trade negotiations and in it the rules and standards that govern international trade are defined. With the admission of the People’s Republic of China and Taipei to the Organization last November, the WTO now groups together 144 countries and economic territories.

The five Andean Community countries are members of the WTO and as such, attended its Fourth Ministerial Conference on November 9 to 14, 2001 in Doha, Qatar, after holding a series of coordination meetings through the various Community bodies and their missions in Geneva. It was at that Ministerial Conference that a working program was adopted which, in practice, involves the start of the first general round of multilateral trade negotiations since the Uruguay Round of the GATT, launched in 1986.