“Globalization through Integration”
Speech of the Secretary General of the Andean Community, Ambassador Allan Wagner Tizón, during the official swearing-in ceremony
Lima, January 15, 2004

First of all, I would like to express my sincere thanks to the President of the Republic, for honoring me with his presence this morning, as I formally become the Secretary General of the Andean Community, as a result of the election held by the Andean Council of Foreign Affairs Ministers.

My task as Secretary General will be a continuation of a long public service career on behalf of Peru and of Andean integration, which in the past year and a half, has represented a fundamental stage in my professional and personal development, steering the Ministry of Foreign Affairs under President Alejandro Toledo’s foreign policy directives.

Mr. President, I am deeply grateful for having allowed me to once again serve my country in that position; and at the same time, also for giving me the opportunity to be a candidate to the position of Secretary General of the Andean Community.

During this introduction, I would also like to give recognition to two persons who are here this morning: Ambassador José de la Puente Rabdill, my boss at the Ministry of Foreign Affairs when I was just beginning my diplomatic career, with whom I had the pleasure to interact when I was only Fifth Assistant in the Ministry of Foreign Affairs and Ambassador De la Puente was the Director of Economic Affairs, during the organization of the Fourth Meeting of the Mixed Commission of the Declaration of Bogota, in 1967, which was really the jumping board for the creation of the Andean Community, through the Cartagena Agreement, and of the Andean Development Corporation.

Furthermore, it was Ambassador De la Puente who in late 1979, when I was a Counselor at the Peruvian Embassy in Chile, called me up one day, to invite me to become the first Head of Foreign Affairs of the then Council of the Cartagena Agreement which he was a member of. It was, thus, that invitation made by Ambassador De la Puente which caused me to first become an official of this important integration process. That is indeed a memento I dearly treasure, together with the profound friendship and affection I have for him.

Also with us today, is Doctor Javier Silva Ruete, a dear friend and First Secretary Director of the Council of the Cartagena Agreement. Javier is one of the “assets” of the Andean integration process. He was part of the meetings which resulted in the Cartagena Agreement; and as First Secretary Director, coincidently being a Peruvian, he had the job to structure what today is known as the Andean Community. My dear friend, Javier, all of us who believe in integration recognize the work you have done, as well as - naturally - that bond of friendship which exists between ourselves.

As I have stated, my relationship with the integration process is not a new one. It started off with the aforementioned Fourth Meeting of the Mixed Commission of the Declaration of Bogota, to then act as an official in the Peruvian Mission to the Latin American Free Trade Association in Montevideo, then as Alternate Representative of Peru at the Cartagena Agreement Commission, then, as the Peruvian Foreign Affairs Minister, as representative - on two occasions -, to the Andean Council of Foreign Affairs Ministers; and finally - on two occasions again -, as official of the Cartagena Agreement, first of the then Council; and most recently, of the General Secretariat.

It was the then Secretary General, Ambassador Sebastián Alegrett, to whom I again pay homage today, who, during my six-year self-imposed exile in Venezuela on behalf of democracy, welcomed me here, thus facilitating my re-insertion into Peruvian society; and once here, I had the opportunity to work towards the restoration of democracy in our country.

Mr. President, Ministers, Representatives,

The original efforts for the integration process started 34 years ago, were filled by great hope; and mainly, by a deep conviction and political will about the importance of the integration process, to enable our countries to develop and implement tangible and real benefits for our people.

Today, after 34 years of Andean integration, achievements as well as frustrations are evident.

The achievements may include the following:

• The creation of a democratic heritage, from the declaration of the Andean Foreign Affairs Ministers in 1978 in support of democracy and non-intervention in Nicaragua, to the “Andean Commitment with Democracy” Additional Protocol of 1998.

• The quality of trade within the community, which produces added value and employment (out of the almost US$6 billion worth of trade, more than half is comprised of high added value products).

• The creation of a legal and institutional heritage in the Andean Community, which other regions of the world recognize.

Yet, the frustrations undoubtedly include:

• The Andean countries’ loss of relevance in international trade (from our 3% share of world trade 40 years ago, we have gone down to less than 1%).

• More than half of the people in our countries live below the poverty level and we share the great inequality in the distribution of income which affects all of Latin America.

• Not having learned to take advantage of all our strengths to be able to play a more prominent role in international affairs; and lacking enough solidarity in our response to common challenges.

Today, globalization is presenting to us a scenario and challenges which are radically different from those of 34 years ago.

I believe that the time has come to be aware of this change. We must think of ”Globalization through Integration”.

In this new phase bringing new challenges, in particular, we must:

• Gain access to markets that are more and more sophisticated, where one competes with know-how.

• Avoid exclusions and divisions, so that this new global insertion process does not end up making our societies less equal and more fragmented.

• Take advantage of the information opportunities made available by society.

• Be aware of our rights concerning global public property, such as air, water, the oceans and space.

Andean integration must help our countries to successfully face these great challenges. Having enriched our integration process through an agenda of multiple dimensions, and this was a great contribution made by my distinguished predecessor, former Foreign Affairs Minister Guillermo Fernández de Soto, there is now a need to focus all efforts on a new Strategic Design, to which effect I propose the following lines of action, on a priority basis:

Tariffs are less and less important for the trade policy of the countries; and in a free trade context, they will become absolutely irrelevant. We must prevent the Common External Tariff from being a totem after it has been an icon of integration. I propose that the application of the Common External Tariff is deferred for not only 60 days, but for six months, so that the Presidents may make a final decision next June with regard to this instrument, in view of the new Strategic Design for integration.

In today’s international trade relationships, there is more importance attached to policies applicable to competition, intellectual property, technical standards, origin rules and government purchases. Likewise, agricultural subsidies, non-tariff barriers, disguised protection of antidumping measures, the lack of a stable and foreseeable international trade system and the absence of trade and development triggering international cooperation, are all serious obstacles being faced by our countries. These are the challenges we have to face in order to gear ourselves towards free trade, overcoming as well - in the Andean ambit -, any safeguard measures and retaliation resulting from non-compliance, which attempt against the trade currents promoted by the integration process itself.

What is also required is an all out fight against smuggling, which now encompasses sorts of organized crime due to its dimension and the methods used. This is a crime which damages sub-regional production, affects employment and makes it impossible to take advantage of the benefits of trade integration. I propose the preparation of an Andean Anti-Smuggling Plan to be adopted in June, on the occasion of the next Andean Presidential Summit.

Transport continues to be the Achilles’ heel of Andean free trade. If not decisively addressed, it will become a serious obstacle for the international insertion of Andean economies. It is essential to have a “White Book” on transport policies to spell out the problem, fight its causes and define specific goals to achieve.

We must also concentrate on boosting the free movement of capital and deepen free trade of services in which Andean countries have significant potential, such as the case of financial, tourism and professional services. In all these aspects, the Andean countries can grant each other special advantages - unlike what will probably be the case in negotiations with third parties - in matters related to national treatment, mutual recognition and the hiring of Andean workers. Consequently, I propose an in-depth review of Andean legislation, so that, by 2005 at the latest, free trade of goods and services and free movement of capital and people between the member countries will become a reality.

In addition, it is discouraging that with 35 years of integration soon to be celebrated, our countries have yet to implement the standardization of academic degrees and professional licenses. It is essential for the Presidents to issue the measures required to make that a reality, within a term of no more than one year, as this is an old desire of the Andean people.

On our way to free trade, the main challenges we face include the upcoming FTA negotiation with the United States, the FTAA; and very possibly, an association and free trade agreement with the European Union. I plan on establishing, within the General Secretariat, a Special Project to Support the International Trade Negotiations of the Andean countries, funded through General Secretariat’s own funds and with funds obtained through international cooperation. On this, I have already secured the backing of the Chairman of the Inter-American Development Bank and of the Chairman of the Andean Development Corporation. This team will be comprised of specialists working full time for the General Secretariat, who have also been assisting the countries in their FTAA and MERCOSUR negotiations. The team will also be reinforced with international experts on the various negotiation areas.

In summary, the General Secretariat will make available its entire installed capacity and professional experience to the member countries, to assist them in these so very important negotiations, which will define the manner how our countries are inserted internationally, something which must be in line with a vision of development which is modern and inclusive of our societies.

I also plan on implementing an Andean Export Development Program, to create synergies, promote market knowledge and export techniques and support the generation of a high added value, job generating exports offering. Small and medium sized Andean businesses must play a predominant role in this task.

To effectively take advantage of the business and investment opportunities afforded by free trade, it is essential that our countries develop their competitive abilities; otherwise it would not be possible to set up a two-way road with our business partners. This is why competitiveness must become a major issue in the new Strategic Design, as has been recognized by the Andean Development Corporation for some years now, a pioneer effort which we want to associate ourselves with.

Based on competitiveness-oriented national strategies, we need to identify the areas in which the integration process can contribute with a joint work platform, particularly with regard to subjects such as the development of physical infrastructure, educational policies, labor training, clusters and production chains, industrial infrastructure and environmental policy.

Within this context, special importance must be attached to the development of competitiveness within our territories and in Andean macro-regions, especially in those associated with the major integration and development pillars of the Initiative for the Integration of Regional Infrastructure in South America (IIRSA).

Moreover, we are under the obligation to give top priority to the development of science and technology, in order to base our development process on a growing technological innovation capacity. We have lost a lot of ground in this area, and we must recover it. To this effect, I propose the reactivation of the Science and Technology Advisory Board, comprised of national authorities on the matter, but also with the inclusion of business, labor and academic representatives, to put together and present a specific action plan at the next Presidential Summit, which will make it possible to increase the levels of public and private investment in this area, which is crucial for our development.

To put greater emphasis on the work carried out towards real integration, more than to just keep on developing the complicated Andean legal system, there is a need to address new strategic action areas, based on the comparative advantages enjoyed by our countries, to strengthen our capacity to venture into the new scenarios brought about by globalization.

To begin with, I propose the following strategic areas:

As much as 52% of the total Andean exports to the world consist of energy generating products, such as petroleum, coal and gas. The Andean countries have four times the petroleum reserves of the United States and eight times those of MERCOSUR; they have 74% of the gas reserves in Latin America and 75% of the coal production of the Latin American region.

These are figures and a reality which reflect the strategic importance of the Andean countries, which should lead to a sub-regional energy alliance to foster our insertion into the international hydrocarbon markets, within a context of energy security; the promotion of the development of energy clusters; the international negotiation of energy related services with high added value; and the development of integrated energy markets (electricity and gas) through harmonized physical networks and regulatory frameworks. The successful agreement for electrical interconnection reached by Ecuador and Colombia is a clear demonstration that it is possible to move in that direction.

The Andean Community countries have 25% of the world’s biodiversity and 20% of the fresh water on the planet. The environment must also become a strategic subject of Andean integration, based on the progress made in recent years through the Regional Biodiversity Strategy and Environmental Management for Sustainable Development.

Special attention must be given to the effects of the climatic changes affecting our countries, particularly the accentuation of the “El Niño” phenomenon and the thawing off of glaciers of the Andes Mountain Range, which is threatening our mountain ecosystems. In this context, we must work together for the application in the shortest possible time of the clean development mechanism outlined in the Kyoto Protocol, through the so-called “carbon bonds”.

Due to the above reasons, Andean cooperation must also place special emphasis on matters related to water resources and to the international strategic management of this critical element, which abundance in the Andean region makes our Community an especially relevant international player.

The Andean countries must also have leadership, among similar mega-diverse countries, to negotiate a binding international system to regulate access to the genetic resources, to prevent biological piracy and to protect the traditional knowledge of the indigenous people.

I propose the creation of an Environmental and Sustainable Development Advisory Board, based on the current Committee of Environmental Authorities, which has been working so efficiently, so as to take this matter to the highest level of competent Andean authorities.

The new Strategic Design must also encompass the new political tasks required for integration.

Our Common Foreign Policy must give utmost priority to the progressive convergence of the Andean Community and MERCOSUR, for the creation of the great South American space; it must enrich the agendas for community relations with our two major partners: the United States and the European Union; and it must strengthen the projection of the Andean countries towards the Pacific Basin.

It is likewise essential to go deeper into actions aimed at fighting drug trafficking, terrorism and corruption, and to develop cooperative security schemes at the sub-regional, South American and hemispheric levels, to allow for the reduction of military expenditure and the use of those funds in development tasks.

To implement this new Strategic Design it will also be indispensable to reinforce Andean political cooperation in favor of democracy, a State of Law, human rights and governability.

On the other hand, there will not be democratic governability unless our countries take forward steps to solve the poverty problem, social exclusion and inequality. To this end, the Andean Social Agenda must play a major role in the community’s undertaking. The General Secretariat has been carrying out the necessary tasks to submit the Integrated Social Development Program to the next Andean Presidential Summit, in accordance with the mandate of the Quirama Summit.

Social development is not only an ethical must and a consubstantial factor of economic development sought by the integration process. It also is, at the same time, a factor for the legitimization of the sub-regional project before the Andean people, to whom we must report.

The Andean Presidents attending the Quirama Summit ratified the General Secretariat as the strategic and executive unit of integration. Listening to the guidelines issued by the governments, I plan on playing this role to the fullest extent and to assume the responsibility for proposing to the system’s bodies all the measures required to further drive our process based on the new Strategic Design.

This will also require an adaptation of the General Secretariat’s structure to the new reality, within a framework of austerity, creativity and efficient use of resources.

To new challenges, new paradigms.

Let us together build the new paradigm for “Globalization through Integration”.

Thank you very much