CAN Director underscores economic and political importance of the Tariff Preferences Agreement with Brazil

Lima, 5 July 1999. The Director General of the Andean Community Secretariat, Víctor Rico, today underscored the economic and political importance to the region of the Tariff Preferences Agreement concluded last night with Brazil.

He pointed up the fact that, from the economic point of view, the agreement "will make it possible to generate new trade and investment flows for a market of 265 million persons," of which 105 million are in the Andean Community and 160 million are located in Brazil.

"While it is not a free-trade agreement, the preferences negotiated within the framework of the agreement amount, in many cases, to 100 percent of the tariff or are above 70 percent of it, thus allowing for fairly broad access by the products of both parties to these markets, " he explained.

As for the political importance of the CAN-Brazil Tariff Preferences Agreement, he went on to point out that "it is an important step toward the construction of a region-wide or, more specifically, a South American, economic space."

Rico rated the results of the negotiations between the CAN and Brazil as "highly satisfactory," for it has been possible to maintain the essential portion of the historical inheritance, which is what generates the greater part of the Andean trade with that South American country.

He also considers that the agreement constitutes "a very clear demonstration that negotiation as a bloc is the best way of achieving results that are positive for all of the Andean countries."

On being asked about the negotiations that are pending with the other Mercosur countries, he replied that the subject has not yet been evaluated at the Andean level and that that the Community Trade Ministers will most likely examine the matter at their planned meeting of July 16.

In his judgment, the most direct route toward the creation of a Free-Trade Zone between the Andean Community and Mercosur "would not be to negotiate tariff preferences agreements with Argentina, with Uruguay, and with Paraguay," although he does not rule out that possibility.

The most desirable course would be to start Free-Trade Zone negotiations with the four Mercosur countries, while maintaining the existing preferences with Argentina, Uruguay, and Paraguay until that process concludes.