Alegrett: Andean Summit to face challenge of perfecting customs union

Lima, Jan 24, 2002. Andean Community (CAN) Secretary General Sebastián Alegrett stated today that the Presidential summit, to be held next week in Bolivia, offers a "crucial opportunity for perfecting the customs union and moving ahead with the construction of the Common Market."

He brought up the subject on being questioned by journalists about the importance of the meeting of Andean Ministers scheduled for January 28 and 29 in Santa Cruz de la Sierra, with the participation of the Ministers of Trade and Integration, the Treasury, Foreign Affairs, Agriculture and Economic Development.

The Presidents of the five Andean countries at their Summit on Wednesday, January 30, will examine the agreements reached by the Ministers and assume the necessary commitments at the highest political level.

The CAN Secretary General warned that this could be the "last opportunity" for the Andean integration process, while expressing his trust that the Santa Cruz meetings "will put to the test the political will and capacity of the Presidents to continue advancing towards the goals that have been set."

According to Alegrett, Andean integration is "the best option open to these countries for counteracting the undesirable effects of globalization and for participating dynamically and advantageously in its evolution."

He went on to stress that the Andean integration process is an open one and constitutes "a balancing factor in the shaping of the broad South American expanse."

In summing up the evolution of the process, he drew attention to the "sweeping changes and the new challenges" that have surfaced in the past five years. In the area of trade, intra-Community exports in 2001, despite the worldwide recession, amounted to 5 billion 680 million dollars, an increase of 10 percent over the previous year’s figure.

"Above and beyond the commercial gains," Alegrett emphasized, "the political dimension of integration was bolstered and the economic and social vision broadened."

These advances, however, are "not sufficient to guarantee that a Common Market will be in place by the year 2005," making it "unavoidable" at this point to perfect the customs union with the full participation of all CAN countries in order to offer the world a common front as a united economic and trading bloc."

The key issue to be addressed at the Santa Cruz meetings is the need to consolidate the CAN by perfecting the customs union, going beyond common tariffs to also take in the other instruments that should be harmonized in order to avoid distorting trade.

These instruments include the agricultural price stabilization system, the special customs regimes, the rules of origin and trade preferences for third countries.

Colombia, Ecuador and Venezuela adopted the CAN’s four-level (5, 10, 15 and 20 percent) Common External Tariff (CET) in 1995. Bolivia enjoys preferential treatment through the application of the 5 and 10 percent levels and Peru has remained aloof from commitments in this area.

Alegrett is of the opinion that consolidation of the Customs Union "will ensure a progressive advance toward the formation of an ever-more transparent Common Market and its more profitable use by each of the countries, through clearly-defined playing rules that will bring order to the existing trade conflicts."

The Andean Ministers will, among other things, look into the present problems of the agroindustrial chains and the subregion’s relations with the Mercosur, the United States and the European Union and the positions it takes in the Free Trade Area of the Americas (FTAA) and the World Trade Organization (WTO).

In addition to tariff matters and their impact on the CAN’s relations, the Ministers will probe specific aspects of the subregion’s physical integration, efforts at drug control, macroeconomic convergence, proposals for restructuring the international financial system, competitive position and digital gap.