Forty two years ago, the first President of the Inter-American Development Bank, doctor Felipe Herrera, spoke of the following at a meeting for the contracting parties of ALALC:

“Regional integration implies breaking down established schemes upon which a constellation of mental interests and attitudes opposed to change is based. In the same way that each of our country´s possibilities for transformation and progress depends on the mobilization of popular energies and the management of each national process by the forces that favor change and progress, this is indispensable, within the Latin American context, in order to achieve the political and economic understandings necessary to strengthen the integration process.”

Today, the globalization process and the profound social gap that still subsists in our countries have made the challenges inherent to integration even greater. Concrete actions such as the agreements that we have just signed between the Inter-American Development Bank and the General Secretariat of the Andean Community revive both the desire for and the conviction that integration, as an axis that must articulate the agendas facing our countries, will generate the strength needed to successfully commit said agendas both domestically and internationally.

For both the Andean Community and the General Secretariat, it is a great honor, Mr. Enrique Iglesias, President of the Inter-American Development Bank and dear friend, that you have accepted to make an official visit to our communitary seat upon your recent arrival to Peru.

Your visit is highly opportune given that we are living in times of change and renovation. Since its foundation in 1959, the Inter-American Development Bank has been and continues to be one of the most prestigious regional development institutions in the world. The IDB was the first regional organization to possess policies and self-generated support instruments for economic and social development and has transformed itself, in this manner, into a model for the creation of regional development banks in other parts of the world.

In our more than forty years of existence, the Inter-American Development Bank has decisively contributed to Latin American and Caribbean progress. The IDB has been a pioneer in supporting social programs in the region for the development of economic, social, educational and health institutions. It has also vigorously supported regional integration efforts and offered direct support to the private sector, and in particular for micro businesses.

Upon formally assuming my functions as General Secretary of the Andean Community on January 15th 2003, I proposed, before our member countries, a new strategic design for an integration process that updates the communitary agenda according to the most significant challenges for our countries. Through the visits that I made to each and every one of the five member countries, where I had the wonderful opportunity to meet with Heads of State, Chancellors, Trade Ministers and a large number of State Ministers, gremial representatives, members of civil society and the academic sector as well as the press, we have enriched the initial proposal of strategic design and hope that, following its consideration under Andean Instances, said proposal will be approved by the Andean Presidents in the Summit to be held next July in Cuenca, Ecuador.

In effect, the current international context is very different from that of thirty four years ago, when the Cartagena Agreement was signed, or fifty years ago, where the Rome Treaty gave rise to an integration process in the European Union, consecrating as such an advanced model for economic integration.

As time goes on, we as Andean countries have advanced in our integration process. Today, we can point out a duty free zone that has been significantly improved. We are advancing towards a common financial service market, which we are hoping will materialize by the next Andean Presidential Summit in the month of July, and for which the Advisory Council of Housing Ministers and the Presidents of Central Banks have been called together for a meeting on March 31st 2004 in Lima. We have a regimen for the free transit of individuals that we hope will eventually become an area for the free circulation of individuals exercising professional services and the right to residence. We have definitely moved forward in the trade integration process, investment and the circulation of individuals and services, which brings us towards an integration model that is increasingly extensive.

Notwithstanding, as I indicated earlier, our countries are facing two significant challenges today: In the first place, the internal agenda, meaning the development agenda for overcoming poverty and establishing social cohesion- an area where our countries continue to be divided. At the same time, we Andean countries are facing a very demanding external agenda known specifically as the “globalization” agenda. At this point, this agenda is represented by international trade negotiations taking place in different ambits such as the World Trade Organization, the Free Trade Area of the Americas and the Free Trade Agreements, soon to be materialized with the United States and we hope, later on, with Europe and other countries; additionally, we have a convergence process between CAN and MERCOSUR for the creation of an integrated space for South America.

As such, our Andean integration process should become the axis that articulates these two agendas, meaning the internal development agenda for overcoming poverty by achieving social cohesion and the external agenda related to globalization and international trade negotiations, which at the same time allows for the generation of a synergy between these two agendas and facilitates a marked advance in efforts to close the historical social gap while achieving competitive international insertion for our countries in an increasingly globalized world.

In this sense, your presence this morning, dear President, and the agreement that we have just signed, constitutes a particularly propitious framework from which to announce the launching of a Special Support Project for International Trade Negotiations for Andean countries.

The Special Project seeks to establish alliances between different organisms for their development, in particular the Andean Secretariat of the Andean Community, the Inter-American Development Bank and the Andean Development Corporation, for the following purpose:

• To propitiate an integral vision of negotiation agendas for Andean countries in different scenarios. This is particularly important because a tendency exists for negotiators to believe that the negotiations that they are currently conducting constitute the realm of all possible and feasible negotiations. It is indispensable to generate a strategically-oriented integrated vision for negotiations that take place within the OAM and ALCA frameworks, the Free Trade Agreements with the United States (and soon with the European Union) and with MERCOSUR in the creation of a South American space, given that this integrated strategic vision will allow for the identification of negotiation objectives in each of these instances and subsequently aid in determining the level and depth of commitment that must be assumed within each. An opportunity will always exist within our immediate surroundings, meaning the South American and Andean surroundings, that these treatments will be much deeper and more important to continually strengthening Andean and regional integration.
   

• Secondly, this project attempts to strengthen the countries’ capacity to formulate proposals and analyze scenarios during the negotiation process, stimulating synergy creation in an Andean context. This is very important given that the project will allow each country to find the best way to define its objectives and transform them into negotiation proposals. At the same time, countries will be able to carry out sensitivity studies and a set of elements that are indispensable to a successful negotiation process.
   

• Thirdly, to extend and systematize the support given by the General Secretariat of the Andean Community and the cooperating organisms, in particular the Inter-American Development Bank and the Andean Development Corporation, to Andean countries currently negotiating international agreements with third parties, and as such complementing their national institutional capacities.

Based upon the necessities indicated by the countries and utilizing the pilot experience with the Free Trade Agreement to be negotiated with the United States, three large work areas have been identified. Firstly, specialized technical consultancy and training; secondly, coordination and an integrated Andean vision and thirdly, logistical support for negotiations.

The Agreement signed by IDB aims to carry out impact studies and comparative normative studies to measure the effects of the ALCA and TLC negotiations with the United Stated with respect to both the countries and the Andean integration process for the purpose of providing orientation in the negotiation process and contributing to concertation and a search for common positions.

The operational plan of the agreement includes training on the use of the basic model of general computerized equilibrium and the acquisition of country licenses for software use. It also includes carrying out studies in areas of special importance for Andean countries such as: market access, investments, services, anti-dumping and subsidiary measures, intellectual property rights, conflict resolution and the effects of negotiations on Andean Communitary norms.

The results of these studies will be debated by the principal actors of each of the Andean countries and will be later published for disclosure to civil society in general.

Regarding other issues, we had the opportunity to speak in Washington recently and, last week, in Caracas with the President of the Andean Development Corporation concerning the fact that negotiating well it is not enough to obtain the results expected from these international negotiations. We believe that with this special project, and thanks to the joint support of the IDB, the CAF and the General Secretariat of the CAN, the countries will be able to complement their national activities to successfully engage in these international negotiations. It is not sufficient to negotiate well in order to obtain the fruits desired; it is also indispensable here to generate the capacity to take advantage of opportunities arising from these negotiations, which obligatorily leads us to an agenda on competitiveness.

As such, it is indispensable that our countries engage in, on both national and Andean integration levels, an agenda for competitiveness that generates vast competitive capacities such as physical integration, industrial infrastructure, technological innovation, education and training; however, it is also important to consider localized competitive capacities in two social groups and two geographic areas of our countries. One social group is undoubtedly the rural sector. It would be impossible to achieve free trade without achieving rural development and agricultural competitiveness that will permit the inhabitants of rural areas, currently more than 30% of the Andean population, to competitively insert themselves in the globalized world.

The second social group is comprised of small and medium sized businesses. We can not have balanced and beneficial international insertion if the majority of the labor force in our countries, represented by the small and medium sized businesses, fails to participate. As such, the PYMEs will be aided in their development of competitive capacities considered fundamental to achieving balanced and beneficial international insertion for our countries.

The two geographical areas are the so called regional cities or active regions. These conglomerates have been generated in our countries and constitute what can be seen as the “cutting edge” of this economic internationalization process. A study carried out by the General Secretariat indicates that there are 14 active regions identified that could act as a conduit for the transformation of this integration and internationalization cutting edge into something effective for our countries. At the same time, it is indispensable to work on the border zones. Border development not only consists of relegated territories that the State has never reached, but instead also involves depressed areas where the building project for South American regional infrastructure –IIRSA- offers a new opportunity for development. This project offers another opportunity for joint effort, similar to our agreements with IDB and CAF and the Andean Community to contribute normative capacities and generate CAN´s synergies in this area.

There are many projects in which we can work together, and in this sense, I would like to point out the highly gratifying and important visits I have made with the General Directors to you, Mr. President, at IDB in Washington, as well as to the President of the Andean Development Corporation in Caracas. I trust that this cooperation will continue to strengthen us in order to take on this “other agenda,” meaning the development agenda, which due to different circumstances has been forgotten in the integration process. Unfortunately, our integration process, particularly over the last ten years, has been excessively commercialized perhaps due to the ideas of the moment, which indicated that the markets were the solution to everything. As such, we put aside the agenda for development and competitiveness. We would like to propose an effort to recover this agenda, recovering as such the development agenda for integration. I hope that this agenda can also be jointly worked upon with the Inter-American Development and the Andean Development Corporation.

These constitute consolidation activities and joint efforts between institutions that are fundamental to the Andean region such as IDB, CAF and CAN. For all this, Mr. President, your visit has been particularly gratifying, significant and important and we are deeply grateful for the opportunity to cordially welcome you to this entity for Andean integration

Thank you.