Aide-Mémoire of the Third Negotiation Meeting between the Andean Community and the MERCOSUR

Lima, October 19, 2001

The Third Negotiation Meeting for the creation of a Free Trade Area between the Andean Community and the MERCOSUR was held in Lima, Peru on October 17 to 19, 2001.

The Agenda is set out in Annex 1 and the List of Participants appears in Annex II.

1. The delegations addressed the following issues in connection with the Liberalization Program:

1.1. Coverage

The delegations exchanged criteria regarding their positions on the products to be covered by the Agreement and agreed to continue looking into the matter at their following meeting.

1.2. Timeframes

The delegations continued their study of the proposals put forward by each with reference to the timeframes for the general schedule, the tariff reduction of the items on which individual agreements had existed in the past, or Historical Legacy, and the deadlines for the elimination of tariffs on sensitive products.

1.3. Agricultural sector

The Andean Community delegation gave an explanation of the agricultural price stabilization systems applied by the Andean countries and this was followed by an exchange of viewpoints about the methods used by and operational aspects of those mechanisms.

At the Andean Community’s request, the Republic of Argentina will make a presentation at the next meeting on the mechanism of additional variable duties it applies to sugar.

The MERCOSUR delivered a list of further questions to be answered about the Andean price bands system.

1.4. Base rate

The MERCOSUR pointed out the need to have a base rate, which is understood as being the rate in effect at the signing of the Agreement, to which the tariff preferences would be applied. The Andean delegation, for its part, reiterated its proposal for the margins of preference to be applied to the tariffs that are in effect at the moment of their application.

1.5. Ecuador’s and Paraguay’s Special Lists

The Delegations exchanged viewpoints with regard to the scope of those lists.

1.6. Product Lists

The delegations agreed to exchange their respective lists of sensitive products this coming November 14 for study at the next Negotiation Meeting. It was decided to ask the ALADI General Secretariat to update the items on which individual agreements had existed in the past as recorded in the respective Agreements.

1.7. Treatment of the Historical Legacies

The MERCOSUR stated that the tariff phase-out schedule for the historical legacy should take preference over the two lists –the list of sensitive products and the list for the general tariff reduction schedule.

The Andean Community, for its part, maintained that the treatment that is agreed upon for sensitive products could be applied to products with a historical legacy. It accordingly reaffirmed the Andean proposal contained in the draft Agreement of the Second Meeting, held on August 22 to 24, 2001.

2. The Delegations discussed the following issues with regard to the rules:

2.1 Safeguards

Both Delegations explained their internal rules and answered all questions that were asked. The Andean Community Delegation delivered the CAN’s rules on intra-Community safeguards and safeguards vis-à-vis third countries, together with its counterproposal on Safeguards. After an initial exchange of ideas, the two Delegations agreed to review the articles one-by-one at the next meeting.

Both Delegations also made statements about their rules on trade competition. The Andean Community delivered its rules on the subject, which are contained in Decisions 283, 285, 456, and 457, together with Resolution 327.

2.2 Origin

The MERCOSUR explained its proposal on origin and agreed to complete it as rapidly as possible. This was followed by an exchange of initial observations about that proposal.

The MERCOSUR delegation then proceeded to deliver for the Andean Community’s consideration the certificate of origin form that is used for agreements between the MERCOSUR and Bolivia and the MERCOSUR and Chile.

The Andean Community then agreed to deliver its counterproposal on origin to the MERCOSUR by November 14, 2001 at the latest.

2.3 Dispute Settlement

The two Delegations continued to exchange viewpoints on the subject.

2.4 Sanitary and Phytosanitary Measures

The MERCOSUR delegation announced that it is still studying the counterproposal delivered by the Andean Delegation and committed itself to send its observations to the CAN no later than this coming November 14.

3. Exchange of tariff data and trade statistics

In addressing Agenda item 3, the Andean Community delivered information about the CAN’s worldwide imports and exports, classified by subheadings and country for the 1998-2000 period, and the national tariffs of the Andean countries. The MERCOSUR delegation, in turn, presented its data and offered to provide further information about the integration group’s Common External Tariff, national tariffs, and trade, in as much detail as that given by the Andean Community.

The two delegations agreed on the importance of having access to that information in order to move ahead with the negotiation process.

4. Determination of the dates and agenda for the next meeting

Under this agenda item, it was agreed to hold the next meeting in Lima on November 29 and 30, 2001, at which time two negotiating committees will be created. One will take up the Tariff Reduction Program and Origin and will study the Lists of Sensitive Prices that have been exchanged. The other committee will address regulatory matters, in particular Safeguards and Dispute Settlement.

That meeting will also deal with the motor vehicle sector and to that end, the two delegations agreed to exchange pertinent information on November 14, 2001about their respective rules in this area.

For the Andean Community Delegation
JUAN CARLOS ELORZA

For the MERCOSUR Delegation
RICARDO NARIO