The South American Community of Nations:
A great decentralized development program

Reflections of Andean Community Secretary General, Allan Wagner

  • When the Cusco Presidential Declaration is signed, the South American Community of Nations will become the fifth ranking world power, with a GDP of one trillion dollars; and the fourth in population, with 361 million inhabitants; and will cover an area of over 17 million km2.
     

  • Beyond its economic dimension, the South American Community will constitute, above all, a great decentralized development program for our countries by creating decentralized regional economies within the areas of influence of the major South American Integration and Development Hubs.
     

  • These emerging regions will consist basically of conglomerates of small and medium-size urban and rural enterprises that can extend their influence to markets within the hemisphere and toward the two great world basins.
     

  • For all of these reasons, the South American Community will be a socially inclusive integration process that will improve our development qualitatively by providing real backing for our countries’ decentralization processes, reinforcing social cohesion and democratic governance and giving a dimension of quality to our growing trade presence.
     

  • The South American Community will take shape from the progressive dovetailing of the CAN and MERCOSUR, with the addition of Chile. Guyana and Suriname, also South American nations, will be associated with the process. Regional organizations like the LAIA, ACTO and SELA will contribute, as well.
     

  • This means that we will not start from scratch, but will build on existing strengths, like the two subregional integration processes that, within the South American sphere, must progressively harmonize and resize their legal system and programs through the joint efforts of their bodies and institutions.
     

  • The CAN will contribute approximately one-third of the South American market, the greatest energy potential and major resources stemming from its biodiversity, and water, among other things. The CAN has also attained the highest level of legal and institutional development and, as a regional integration process, has made considerable progress in the political, economic and social areas. Furthermore, together with Chile, it will serve as the hinge that articulates the relationship between the South American Community and the Asian-Pacific.
     

  • As a result, the CAN’s contribution to the building of the South American Community goes far beyond its existing trade dimension, making it fundamental for the materialization and impact of the new Community.
     

  • There are also extremely important processes underway that will provide firm foundations for the new Community, such as the IIRSA South American infrastructure development program and the free trade agreement between the CAN and MERCOSUR.
     

  • In IIRSA’s case, the South American countries have completed the design and planning stage of the ten major South American Integration and Development Hubs. Thirty-two “anchor projects” (fundamental for organizing the main hubs) have been identified from among the 350 projects that comprise the program. With a cost of US$ 4.2 billion, they will be executed over a five-year period. This project portfolio and the agreed program will be delivered to the Presidents at the South American Summit for their approval.
     

  • The next stage of the IIRSA will be the execution of the cited “anchor projects.” In order to carry them out, it is necessary to develop innovative financial mechanisms for use together with CAF and IDB loans. The so-called “sectoral processes” must also be launched. These consist of creating special rules and regulations, reinforcing regional institutions and boosting business initiatives in the Hubs’ areas of influence in order to enhance their value. This is a task in which the CAN and MERCOSUR can play an important role.
     

  • The CAN-MERCOSUR and the Peru-MERCOSUR free trade agreements will become effective on January 1, 2005, immediately liberalizing 80% of the trade between the two blocs. Tariffs will be eliminated on the remaining 20%, which include sensitive products, particularly agricultural products, within a period of 14 years. This will immediately boost regional trade and it is important for Chile to complete its network of free trade agreements with the Andean countries as rapidly as possible so that a South American free trade area can be created.
     

  • As a result of those agreements, Andean production chains will have an opportunity to resize at the South American level in order to increase their productivity and international competitiveness and to resolve their present market problems. The service sector will also find new dimensions for its growth, including investments, banking and tourism.
     

  • The 14 Andean city-regions identified as being extremely active in the subregional integration process are called upon to take the lead in building the integrated South American area. Because they consist mainly of small and medium-size enterprises, like the regions that will emerge over the South American hubs, they will help reinforce and improve the quality of our development and increasing trade presence.
     

  • The South American Community will begin to yield tangible results for the Andean people as of the very moment of its creation, thanks to the enlargement of markets and the socially inclusive vision of territorial development.
     

  • In 15 years’ time, with a new political economy, a new demography, a new position in the world and, we hope, a fuller and more participatory democracy in place, the map of South America will have changed.

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