Speech of the Secretary General of the Andean Community, Ambassador Allan Wagner Tizón, during the opening of the Seminar on "European Union and Andean Community. Cooperation for SMEs Territorial Competitiveness

Lima, March 27, 2004

I would like to start by welcoming all of you to this Andean integration venue, under circumstances which are also very special, since within the framework of the Meeting of Governors of the Inter-American Development Bank, which is being held in Lima, we have had the great – and I am sure, very fruitful as well - opportunity to be able to organize jointly with the Government of Lombardia and the Italian Cooperation Agency, this seminar on Cooperation for Territorial Competitiveness of Small and Medium size enterprises.

This event provides us with the highly important opportunity to be able to spread one of the main elements of the new strategic design of Andean integration on which we have been working together with the five Member Countries in order to provide for a turning point in our integration process, to permit the countries to more successfully take on the two great challenges they face. On the one hand, there is the external agenda, which is the globalization agenda, the international trade negotiations agenda, whether within the scope of the World Trade Organization, Americas Free Trade Area, the Free Trade Agreement soon to be negotiated between the four Andean countries and the United States, plus the agreement we are hoping to sign with the European Union within the framework of an agreement of association, and other agreements to follow, but also, with our sister MERCOSUR nations, with whom we are concurring through a combined Andean Community-Mercosur free trade area and other important initiatives, such as the IIRSA program for building Infrastructure for South American Integration.

Accordingly, this is a broad negotiations agenda which the Andean countries have finally decided to tackle to insert themselves in a dynamic and competitive manner in today’s globalized world. However, at the same time, there is the other agenda, the agenda dealing with development, with poverty, with inclusion and with unfairness; that is to say, the historical social gap existing in our countries, which we have unfortunately been unable to get rid of, as we, the Andean countries, report undesirable indices on this subject.

The purpose of this new strategic design is to turn integration into an axis which will coordinate the two agendas together: the modernity and globalization agenda, and the agenda involving the fight for development and for overcoming poverty, generating synergies between them; in such manner that they will reinforce each other, while at the same time they turn integration into a space whereby our countries can produce the abilities and strengths necessary to successfully and simultaneously deal with both agendas. Since that is the other characteristic of the world in which we happen to live; and we need to simultaneously solve the agenda of modernity together with the historical gap agenda. We cannot start with one of them; we have to deal with both at the same time. If we only pay attention to the external globalization agenda, we would be digging deeper into the fragmentation of our society and the social gap which divides us; and if we only concentrate on the internal agenda, we would be wasting the opportunity to benefit from having access to dynamic world markets; while at the same time we would be aggravating our underdevelopment.

Within this context, small and medium size enterprises represent an absolutely fundamental factor, since the idea is not only for the Andean countries to be able to properly deal with this international negotiation process through, as I said, the WTO, the AFTA, the Free Trade Agreements, and the like, but we also need to develop the necessary competitive capacity to enable our countries to make use and take advantage of the opportunities deriving from the international negotiations.

A clearly defined social sector, which could contribute to make this international insertion a well-balanced insertion that is beneficial for our countries, is undoubtedly, the small and medium size enterprises. Otherwise, this vast urban conglomerate existing in our countries, which at the Andean level represents 60% of employment in the five countries, and which in Colombia and Peru, represents 35% and 42% of the domestic product, respectively, would be excluded from the globalization process; and consequently, fragmentation and the historical social gap would be accentuated in our countries.

Another social sector which is included in the strategic design is the rural sector, the farmer sector where 30% of the Andean population is and lives engaged in subsistence agriculture, where the land is not only a mean for production, but rather, part of a culture. Additionally, to that effect, rural development and agricultural competitiveness must form part of a very important in-depth study; in such a way that international insertion will actually be a well-balanced insertion for the benefit of our countries, an inclusive type of insertion rather than isolating, as has been the case in several experiences regarding globalization.

As the Chairman of SEBRAE from Brazil said – during a recent conversation in Brasilia -, we need to get rid of certain notions created with respect to small and medium size enterprises, referring to financial limitations, weak links in the SME production chains, or certain perpetual “definitions” of the SMEs as part of the domestic market in our countries, as small enterprises created to always be small enterprises limited to our territorial space in the domestic market. Actually, we have to make progress on central issues related to the competitiveness of small and medium size enterprises, such as: top production process management, because small and medium size enterprises must be very efficient companies and have all the ingredients to be able to do it in their own dimension; at the same time, the ability to associate, which is something very important to be able to get to the large markets, the nature of the international demand of such large markets makes it necessary to agglutinate the supply, quality supply; therefore, the ability to associate is fundamental for small and medium size enterprises, as is also the case with the exchange of territorial-based successful experiences.

This seminar, as a matter of fact, offers us that possibility, the exchange of successful experiences. Thanks to the fact that, as we all know, Italy is perhaps the best example of an economy which is based precisely on small and medium size enterprises, a network of hundreds of thousands small and medium size enterprises which make Italy rich, allowing for such impressive growth in that country. So, if we are to learn from any experience, undoubtedly, it will be from the Italian experience. To that effect, I would like to thank the President of the Region of Lombardia, Roberto Formigoni, for his enthusiasm and dedication to organize this event and also to say special thanks to Senator Bonalumi, who has also been prominent in promoting and working to materialize this seminar, as well as Ms. Isabel Recabarren, who, together with officials from the Secretary’s Office, worked hand in hand for this event to take place.

As part of the decisions already made on this matter, I would like to take the opportunity to announce that a meeting of the Subregional Coordination System of the Small and Medium Size Enterprises will be held soon. This is an old Decision of the Cartagena Agreement; that is, Decision 209, which created the Small and Medium Size Enterprises Committee, but which, with the winds of commercialism battering our countries in the last decade especially, development issues were being left out of the integration agenda. Our aim is to reactivate development issues via competitiveness; and to this effect, we are asking the Small and Medium Size Enterprises Committee to activate the Andean Small and Medium Size Enterprises System. I sincerely believe that this meeting will be fundamental. During visits I have made to each country, when I first took over this office, I made contact with representatives of small and medium size enterprises and I found them to be eager to work jointly with the Secretary General’s Office within the scope of the Andean integration process, to try to materialize something which is of essence: the incorporation of small and medium size enterprises in the production processes within the context of in-depth Andean integration; and at the same time, into the international globalization and competitiveness process.

I would like to end by once again thanking all of you for being here, very particularly Mr. Silva Ruete, a dear friend, who no doubt is making a special effort to be able to be here this morning in spite of his many commitments and activities, being the Governor for Peru at the IMF and at the World Bank, as well as to Ambassador Luis Solari, Deputy Minister of Foreign Affairs, and to IILA Secretary General, Paolo Faiola, who have been key figures in this event.

I am sure that as a result of this seminar, we at the Andean Community Secretary General’s Office will be in a better position to identify key and fundamental aspects which, from the perspective of Andean integration, will be properly dealt with to contribute to the national programs for competitiveness and promotion of small enterprises in each of the countries. Integration surfaces as a fundamental space for working together to develop a competitive capacity in this sector, all the above aiming at a beneficial and competitive international insertion of our countries.

Thank you very much