Background notes for the press conference given by CAN Secretary General, Sebastián Alegrett, on the Situation and Prospects of the Andean Community

The year that is drawing to a close has been a particularly significant one for the Andean Community, which reached its Thirtieth Anniversary in a positive position. This is borne out in the proliferation of economic and trade links among the five member countries, a more prominent international presence, and the reinforcement of its institutional and policy-making development.

The year 1999 saw ten noteworthy accomplishments and five worthwhile targets have been identified for 2000.

Accomplishments:

1. The commitment of the five presidents to establish the Andean Common Market by the year 2005 at the latest is a major step toward accelerating the integration process, in that it involves creating favorable conditions for not only the free circulation of goods and the start-up of service deregulation, but also the free movement of capital and persons.
    

2. The Andean Council of Foreign Ministers, for its part, approved the guidelines for the Common Foreign Policy by establishing the principles, objectives, priorities, mechanisms and areas of action -in other words, a set of instruments that will enable the Community to enhance its international presence and influence and to strengthen the cohesion among its five Member States.
    

3. Another significant development was the signing, in April 1999, of the Economic Complementarity Agreement between the Andean Community and Brazil. The importance of this agreement is two-fold: it is the first trade agreement the Community has negotiated jointly as a unit and its coverage is broad both in terms of the products (2,734) and of the trades involved (93.67%). Negotiations were started with Argentina, as well, for the signing of an agreement similar to that sought with Brazil and we expect to launch negotiations with Paraguay and Uruguay in February and March 2000. In this way, the negotiation of a free trade area between CAN and Mercosur may be concluded in 20 months' time.
    

4. At their third meeting, in May 1999, the Finance Ministers, Central Banks and Planning Officers established the criteria for aligning their economic policies. The first of these is to maintain economic stability and to bring down inflation to a single-digit figure, a target that Colombia, Bolivia and Peru reached this year.
    

5. In September 1999, Colombia, Venezuela and Ecuador approved the Complementarity Agreement in the Automotive Sector, which will enter into effect on January 1, 2000. The countries expect the application of this instrument to raise the production of vehicles in the subregion from 212,000 units a year to 500,000 in the course of its first decade.
    

6. The Andean Community has consolidated its presence as a trade bloc on the international scene, in consonance with the principles of open regionalism, by speaking with a single voice and winning two chairs and four vice-chairs in the Negotiating Groups for the Free Trade Area of the Americas (FTAA); increasing the level of coordination in dealing with the World Trade Organization (WTO); signing the Cooperation Understanding on Trade and Investment with Canada in May 1999; launching the Andean United States Council on Trade and Investment and proposing an Association Agreement with the European Union that takes into consideration the level of development of the countries of the two regions and safeguards the system of preferential access to the European market, granted in the context of the war against drugs, and which was extended this year to 2004.
    

7. In May 1999, the Andean countries approved Decision 462, which will deregulate all telecommunication services, except for radio broadcasting and television, starting on January 1, 2002. The Andean satellite project, for its part, was given new life with the establishment of a strategic alliance between the Andean multinational enterprise Andesat and the French firm of Alcatel Space for the purpose of putting the Simón Bolívar Satellite into orbit in 2002.
    

8. Decision 459 on the Community Policy for Border Integration and Development was approved in May 1999 in order to improve the quality of life of the people living in those areas. Border Integration Zones were created, where programs and projects for the urban and productive development of those regions will be carried out.
    

9. In August, the Protocol of Amendment to the Treaty Creating the Andean Court of Justice came into force. This basic instrument strengthens the dispute settlement system in the Andean Community by reinforcing its functions and assigning it new areas of jurisdiction, like the possibility of acting as arbitrator in particular cases and allowing private individuals to appeal directly to the Court.
    

10. Meetings of the Education, Environment, and Labor Ministers, as well as of those responsible for Culture and Science and Technology were held over the year, with a view to moving forward on key aspects of the social agenda approved by the Presidents, in order to lay the groundwork for specific policies in each of these fields.

Context of recession and signs of recovery

These results are even more significant if we consider that they were attained in a context of recession in the Andean countries brought on by the Asian crisis and the volatility of capital flows. This was expressed in a 6.1 percent drop in the overall gross domestic product of the Member Countries during the first half of 1999, as compared with the same period of the previous year.

Trade received the impact of the recession. In the first nine months of 1999, intra-Community exports dropped 31 percent vis-a-vis the same period in 1998, a performance that was unusual given the average annual growth rates of almost 20 percent attained between 1990 and 1998.

Even so, the outlook is encouraging. Intra-Community exports continue to show signs of recovery for the second straight quarter, with a growth of 12 percent in the third quarter of 1999 as compared with the second.

Targets for 2000

1. To continue moving toward the creation of a favorable climate and the preparation of a work schedule for reaching the ambitious target of establishing the Andean Common Market in 2005.
    

2. To return to the stable levels of trade growth characteristic of the 1990s.
    

3. To conclude the definition of a new Andean Common Agricultural Policy and to adopt a Plan of Action.
    

4. To incorporate new criteria for alignment of macroeconomic policies, particularly with regard to fiscal balance.
    

5. To reestablish the necessary conditions for guaranteeing the free circulation of transport between the Andean countries.