Lima, October 18, 2004. Andean Community Secretary General, Allan Wagner, remarked that a major step has been taken towards the establishment of a South American Community of Nations, with the recording of the Free Trade Agreement signed by the CAN and MERCOSUR in the Latin American Integration Association, ALADI, headquartered in Montevideo, Uruguay.

The official recording in ALADI, made within the framework of the 12th Meeting of the Andean Council of Foreign Affairs Ministries of this organization, marks the end of a process which started with the signing of the Peru - MERCOSUR Agreement (ACE 58), in August 2003; and the signing of the CAN - MERCOSUR Agreement (ACE 59), in December of the same year.

Concerning the possible impact of the CAN - MERCOSUR Agreement on Andean economies, Wagner noted that in any opening-up process there are interests which could be affected; therefore, the capacity of production sectors should be reinforced so that they will be able to compete in open markets. "Besides, the negotiation itself does establish longer terms, so they can adjust themselves to the new reality", he added.

Wagner pointed out that it is very important for Andean countries to continue their search for larger markets, as our local markets are too limited to be able to support a dynamic development process.

He stated that the South American Community is more than just a trade-related agenda. "It is essentially a development agenda"; but, for investments to be made and for decentralized development to occur, there must be open markets.

He indicated that during one of its most difficult years (2003), the South American territory’s trade was approximately US$31 billion. Total exports from that territory to the world exceeded US$180 billion; plus, there is an important potential for manufacturing exchange.

Furthermore, he observed that the combined Gross Domestic Product of the countries comprising the South American Integration territory was US$974 billion, a figure which is higher than Canada’s GDP (US$834 billion), as well as higher than the GDP of ASEAN, the economic block comprised of the so-called “Asian Tigers”, which stood at US$682 billion.

The Secretary General of the CAN commented that because of all of the above, the plan is to go beyond trade integration, and have a scope wider than one of a Free Trade Agreement, to develop infrastructure, financial cooperation, political cooperation and economic and social development.