Interview with Ambassador Sebastián Alegrett, Andean Community Secretary General, published on October 1, 2000 in the special supplement on "Reportajes," or News Features, dealing with the subject of South American Integration, in Bolivia’s newspaper Presencia.

The alignment of the Andean Community and Mercosur is the key to South America’s integration. With a population of 111 million persons inhabiting an area in the neighborhood of 4,700,000 kilometers, endowed with a wealth of mineral and energy resources, and washed by two oceans, the Atlantic and the Pacific, the Andean subregion offers a huge potential for development that has been taking shape over the 31 year history of its integration. The Andean Community has a strong institutional framework in place that ensures legal security and in looking beyond commercial aspects alone, constitutes an important step forward in the area of integration. We possess financial institutions, like the Andean Development Corporation (CAF) and the Latin American Reserve Fund (FLAR); supranational Community bodies, like the Andean Court of Justice and the CAN General Secretariat; consultative institutions, like the Andean Labor and Business Advisory Councils, and a deliberating body, which is the Andean Parliament.

Mercosur, for its part, is a less institutionalized integration movement, but one that has had a large commercial success because it encompasses the most important development areas in South America. Its member countries are endowed with plentiful natural resources and have attained significant economic and industrial development and the growth of that market has been vigorous, despite temporary problems that arise from time to time.

If we were to combine Chile, Mercosur, and the Andean Community, we would be speaking of a market of 340 million persons, which would place Latin America’s integration in a different class and set in motion new prospects not limited to the area of trade. The progressive alignment of the two subregions will open up a harmonious and balanced area that will place us in a more competitive position within the international economy where we can unquestionably make our political weight felt.

To our way of thinking, the relationship between the Andean Community and Mercosur should rest on the simultaneous deepening and reinforcement of integration within each group, their growing interconnection, and a rapid movement toward the new common objective. This relationship can prove to be mutually beneficial if we start off by tackling specific tasks such as the harmonizing of standards to link up telecommunication and transportation systems, health measures, customs procedures and other practices that will boost our trade. We can also take steps toward developing physical infrastructure at the border crossings, thereby making this geographical area a market that is truly active and operating.

2. ¿What is the CAN’s present situation? Do all of the member countries benefit from it equally?

The Andean Community is an extremely active free trade area and a still imperfect customs union with clearly defined playing rules. The latter is a major advantage, for it gives the subregion the necessary security to bolster integration and make its course foreseeable. The large body of law developed by the CAN in different areas, such as investment, intellectual property, customs standards, and transportation, constitutes a strong foundation on which the integration process can rest.

The institutionalization of the Presidential Council and the Andean Council of Foreign Ministers with the transformation of the Andean Pact into the Andean Community, has made it possible to address the political agenda and has equipped the CAN more fully to move toward growing supranationality.

The smallest CAN member countries are very actively involved in intra-Community trade and their participation tends to be larger, percentage wise, than the bigger members. Bolivia is a case in point: over 20 percent of its exports, most of which are manufactured goods, go to the Andean market. Ecuador, for its part, sells 12 percent of its exports to the other Andean countries and is expected to benefit even further, as a result of the peace achieved with Peru. All of this augurs well for the formation of a new integration area within the CAN.

But beyond the trade-related benefits, integration has given Bolivia and Ecuador enormous financial support. The CAF is funding infrastructural works to link up Bolivia with both the Pacific and Mercosur and is earmarking resources for developing Ecuador’s infrastructure. The FLAR, also, has contributed heavily to financial stability in both Bolivia and Ecuador, in the latter case through sums that are even larger than those disbursed by the multilateral organizations. To sum up: the small countries are the big beneficiaries of Andean integration.

Here, we should recall that with the support of the Andean Group, Bolivia has been able to establish trade relations with Mercosur. This should allow it to reap direct benefits from the building of the South American area; in fact, its land-locked condition, which for a long time has been looked upon as a major disadvantage, should become a major advantage, as Bolivia becomes a privileged point of interconnection of the two major South American markets.

Alegrett: I consider that the CAN’s accomplishments are not limited to the area of trade, although it is worth emphasizing that intra-Andean trade in 1998 was 5.4 billion dollars and, what is even more important, there are signs of recovery, despite the sharp impact of the Asian crisis and the financial turmoil it unleashed, which depressed trade levels.

One of the most important advances of Andean integration has been the growth and strengthening of its institutions. This is particularly noteworthy in the case of the CAF. The success of this financial institution and its good international rating has enabled it to channel more than 20 billion dollars toward the Andean region over the past decade. Although to a different extent, the FLAR has played an outstanding role, as well, in helping the member countries with their balances of payments problems.

Another major step has been the establishment of the Advisory Council of Treasury, Finance, and Planning Ministers and Central Banks, which is giving serious and responsible attention to macroeconomic policy harmonization. At the same time, advances have been made with the common agricultural policy and the conception of a social agenda. Decisions have been adopted for the development of border areas, even in the sphere of transportation and, despite existing problems in the transshipment of goods, continue to constitute a very broad provision that has contributed to the growth of trade.

The Andean Council of Foreign Ministers, for its part, has approved the Common Foreign Policy guidelines and in the area of international economic relations is negotiating under a single spokesmanship the creation of the Free Trade Area of the Americas (FTAA), as growing efforts at coordination lead us to take more concerted action in regard to the European Union and the World Trade Organization.

The most important challenge facing the Andean Community is without a doubt the building of the Common Market by the year 2005. This is a very complicated undertaking and we hope soon to devote our efforts to perfecting the Common External Tariff and ensuring its application by all of the member countries. We are already working on the unrestricted circulation of persons and the liberalization of services, which has been agreed upon by our countries and is being progressively implemented.

The Andean Community has a host of problems deriving from the different interests that must be harmonized in an economic process of this kind. In addition to the transportation problems we are trying to solve, our jurisdictional bodies are handling other problems resulting from failure to comply with our provisions fairly successfully. Decisions and rulings are being handed down thanks to the existence of these provisions and the countries are making an effort to put them into practice. What is important here is that the Andean Community has the institutions in place to deal with these problems through its legal system.