Aide-Mémoire of the Sixth Andean Community - Mercosur Meeting
Lima, October 18, 2002

The Sixth Negotiation Meeting for the creation of the Free Trade Area between the Andean Community and Mercosur took place in Lima on October 16 to 18, 2002.

The agenda for the meeting is set out in Annex I and the list of participants in Annex II.

The two delegations were of the opinion that this Sixth Negotiation Meeting offered a major opportunity for moving ahead with the negotiations that are underway in compliance with the mandate handed down by the Heads of State at the Guayaquil Summit to conclude them during the present year.

Pursuant to this mandate, the Andean Community and Mercosur made an effort to put forward proposals that are a pragmatic indication of their political determination to seek concrete points of agreement between the two blocs. Mercosur also announced its intention not to regress in its proposals.

1. Origin

In regard to this issue, the two delegations engaged in a wide-ranging exchange of observations and opinions on Mercosur’s latest proposal to the Andean Community.

The Andean Community expressed its concern over the timing of the presentation and the characteristics of the proposal, inasmuch as it corresponds to a conception that is different from that upheld thus far in the negotiation; as a result, it could jeopardize the conclusion of the negotiation by the foreseen deadline. The Andean Community, accordingly, asked to see the annex to the specific rules as soon as possible in order to express an opinion on the matter.

Mercosur maintained that its proposal is aimed at offering a flexible response to the misgivings expressed by the Andean Community with regard to origin. It committed itself to send the annex to its proposal within a week’s time so that the Andean Community can study it and it can be taken up at the next meeting.

Mercosur also stated that its more flexible position on origin will not jeopardize the attainment of the deadline set by the Heads of State for concluding the negotiations that are underway.

2. Sensitive products

The Andean Community reiterated its willingness to reduce the number of its sensitive products and it was agreed to continue dealing with the issue at the next meeting. At that time, the two parties will also address the various regulatory issues that have a bearing on access, such as rules of origin, technical standards, sanitary and phytosanitary measures, non-tariff measures and dispute settlement.

Mercosur dwelled on the need to have precise information about the subject and reiterated its proposal for the Andean Community to make a substantial reduction in the list in question.

It went on to stress the need to receive the Andean Community’s proposal with the substantial reduction in its list of sensitive products before the next meeting. The Andean Community thereupon committed itself to send the revised list within a maximum of seven days after receiving the annex to Mercosur’s proposal on origin.

The Andean Community then explained its position on the treatment of the Historical Heritage and emphasized that the matter of sensitivity prevails over that of Historical Heritage.

Mercosur, for its part, emphasized its proposal that the products considered to belong to the Historical Heritage not be treated as sensitive products.

3. Agricultural products

The Mercosur delegation made the explanations requested by the Andean Community on the various elements of its proposal for the treatment of the agricultural sector in the negotiation, pointing out that negotiations in this area should reflect a balance among the different components:

-reduction of fixed and variable duties;

-tariff rate quotas on the products covered by the Andean Price Bands System; and

-temporary preferential trade mechanism.

The two delegations agreed on the importance of the agricultural sector and centered their discussions on the Andean Price Bands System and on the proposals put forward by Mercosur regarding its treatment in the context of the agreement.

In that connection, Mercosur, because of the importance of the issue, asked the Andean Community to define its position and give an answer with regard to the more flexible approach to the sector that had been presented.

The Andean Community emphasized its position that the existing price stabilization mechanisms need to be kept.

The Parties agreed to continue addressing agricultural product-related subjects at their next negotiation meeting.

4. Tariff reduction periods and rates

The Andean Community delegation drew attention to the extensive effort it had made to reduce the maximum tariff reduction period for sensitive products to 15 years and to establish an additional specific 13-year timetable with a view to drawing closer to Mercosur’s proposal.

The two delegations exchanged ideas about the products on which the tariff is being generally reduced and the non-sensitive historical heritage and its relationship to the preferences that exist in the framework of the PAR.

Mercosur valued the effort made by the Andean Community. The two parties agreed on the need to strive for a closer alignment of the proposals presented.

On the other hand, Mercosur requested the Andean Community to extend to Paraguay and Uruguay the same special and differentiated treatment offered by Argentina and Brazil to the Andean Community countries, in terms of the tariff reduction period.

The Andean Community delegation committed itself to give Mercosur an answer to its request before the next negotiation meeting.

5. Motor vehicle sector

The delegations met at a motor vehicle bargaining table, which is part of the negotiation process, to deal with aspects of that sector that will constitute an integral part of the free trade agreement.

They agreed, by this coming October 23, to exchange their respective proposals on the sphere, as well as the inventory of technical and environmental standards in effect and of public policy elements for the motor vehicle sector in each of the Parties’ countries.

They also agreed that the work should center on the negotiating sphere, which should encompass all motor vehicles and autoparts without a priori exclusions, rules of origin and tariff reduction periods.

In this connection, the delegations of Peru and Paraguay stated that they had taken note of the commitments assumed in the sector, and stated for the record that these will be submitted to their authorities for consideration, without hindrance to the other countries’ continuing treatment of the subject.

The two delegations thanked the Andean Community General Secretariat for its presentation on the motor vehicle sector.

Mercosur proposed that the next meeting take place in the week of October 28. The Andean Community, for its part, proposed holding the meeting in question in the week of November 11, considering previous commitments.

It was agreed that the following topics will be taken up at the Seventh Andean Community - Mercosur Meeting

1. Market access:

-Trade liberalization program: timetable for tariff reduction and sensitive products;

-Rules of origin;

2. Regulatory aspects of the agreement:

-Dispute settlement;

-Safeguards;

-Sanitary and Phytosanitary Measures;

-Technical standards;

-Non-tariff measures;

3. Motor Vehicle Sector:

-Sphere;

-Environmental measures and technical standards;

-Analysis of the multilateral commitments that affect the sector, including public policies;

-Analysis of the evolution of trade between the Parties in sector products;

-Conditions under which the trade in sector products will develop;

o Rules of origin;

o Tariff reduction program;

o Others 

For the Andean Community delegation
LUZ MARINA MONROY ACEVEDO

For the MERCOSUR delegation
JOSE ANTONIO MARCONDES DE CARVALHO