CAN underscores improvement in access to Southern markets

Lima, July 12, 2000. The signing of Economic Complementarity Agreements (ECAs) with Argentina and Brazil has done much to improve the access of Andean products to the Mercosur. In the former case, the agreement will enter into effect on August 1 and in the latter, the Administrative Committee of the Agreement signed in 1999 with Brazil is scheduled to hold its first meeting on July 13 and 14 in Lima.

So announced Víctor Rico, Director General of the Andean Community (CAN) Secretariat, who considered these developments a ratification of the political will of the Andean countries and Mercosur to "move progressively toward the creation of a Free Trade Area between the two trade blocs by the year 2001."

Economic Complementarity Agreement No. 48 signed last week with Argentina in Montevideo at the headquarters of the Latin American Integration Association (LAIA), falls within the first stage of CAN-Mercosur negotiations in which four of the Andean countries –Colombia, Ecuador, Peru, and Venezuela— are establishing fixed tariff preferences with the Southern bloc partners.

Brazil and those Andean countries have granted each other under Economic Complementarity Agreement 39 signed in July 1999 tariff preferences to a universe of 2,734 products representing more than 90 percent of Andean trade with Brazil and almost 50 percent of Brazil’s exports to the region.

The first meeting of the ECA 39 Administrative Committee will take place at CAN headquarters in Lima to approve its regulations, evaluate the agreement, and further develop it for the benefit of both parties.

The Economic Complementarity Agreement signed with Argentina, for its part, increases to 2,608 from 1,559 the number of sub-items that are given preferential treatment and that account for over 90 percent of the subregion’s trade with that Southern country.

A breakdown of the products negotiated reveals that most correspond to the industrial sector (2,019 sub-items), followed by agriculture with 550 sub-items, and the automotive sector with 37 sub-items.

Andean exports to Argentina include oil, bananas, coffee, canned tuna fish, hearts of palm, zinc ore, silver, flowers, books, and lingerie, while the CAN imports soybean and sunflower seed oils, wheat, medicinal products, milk, rice, cotton, aluminum, and iron pipes from that country.

The beneficiaries of the respective Economic Complementarity Agreements signed by the CAN with Brazil and Argentina are a population of more than 300 million inhabitants (102 in the Andean subregion and 205 in the two largest Mercosur countries).

At the same time, as the Andean Community prepares to negotiate tariff preferences with the two other members of Mercosur, Paraguay and Uruguay, bilateral agreements with those countries have been extended to December 31, 2000.

Bolivia, for its part, has already signed an Economic Complementarity Agreement with Mercosur (No. 36), in effect since 1997, that targets the creation of a Free Trade Area.

CAN statistics place the growth between 1969 and 1999 of Andean exports to Mercosur countries at 8.5 percent, while imports from those countries increased by 10.8 percent.