ISSUE: "Andean Community looking forward to the year 1999 and beyond"

The institutional frame work of the Andean integration process Changed significantly with reforms that created the Andean Community, ratified by our legislatures in June 1997. Today, the Andean integration process has a wider scope. Beyond trade, it encompasses other economic topics as well as social, cultural and political matters, thereby seeking an ever closer union between Andean countries.

Last years reforms created the Andean Integration System allowing a more fluid coordination among the bodies, institutions and agreements that make up the Andean Community. The Andean Presidential council and the Andean Council of Ministers of Foreign Affairs were formally instituted and given the responsibility for political guidance and policy-making. The Commission of Andean Ministers of Foreign Trade have responsibilities over matters pertaining to economic integration. Both the Andean Council of Ministers of Foreign Affairs and the Andean Commission are legislative bodies and their decisions automatically become law in the Member Coun- tries. The General Secretariat was established as the executive body of the Andean Community. The Andean Community also has a sophisticated and effective dispute settlement system that includes a Court of Justice, while the Andean Parliament is its deliberative body, whose members will soon be chosen through direct elections. Now, the Andean Community has the necessary political and institutional tools to undertake its new tasks.

Soon as I was appointed Secretary General last year, the Andean integration process had already achieved much success with trade. Intra-Andean trade had grown exponentially during the decade, despite persisting flaws and imperfections.

The guidelines adopted this year by the Andean Presidential Council provide a new orientation to the Andean Community requiring us to consolidate a Common Market by the year 2005.

I am pleased to announce that we have made steady progress toward this goal during this current year. In June, the Andean Commission approved a decision that establishes a general framework of principles and rules for the liberalization of the trade in services within the sub-region. According to this decision, all services must be completely liberalized by the year 2005. The discussion of the decisions for the liberalization of the telecommunications and financial sectors has begun and we expect negotiations in these two sectors to conclude before the end of this year.

We are also moving ahead with discussions related to investment, double-taxation, and coordination of economic and macroeconomic policies. The first meeting of the Advisory Council of Ministers of Finance, Central Banks and officials responsible for economic planning took place in March, marking the start of harmonization of economic and macroeconomic policies.

With the recent growth in intra-Andean trade, there is a growing interest in this field. When intra-Andean trade was low, none of the countries worried about sudden changes in their neighboring economies. Today its is evident that the relationship between some countries is so important that change in one country´s basic economic indicators, can result in a percentage change in the GPD of other Andean countries. Intra-Andean trade currently represents approximately 12% of the total trade of Andean countries. This share, which was only about 4% at the beginning of the decade, is even higher for certain countries. For instance, Colombia and Bolivia export to the Andean Community an equivalent of 20% of their total exports. The harmonization of economic policies will promote an even greater integration of our financial and capital markets. The next meeting of the Advisory Council of Ministers of Finance will take place in October.

The Andean Ministers of Agriculture met in June to begin the discussions related to the adoption of a Common Agricultural Policy.

We have continued pressing ahead decisively in the process of eliminating non-tariff barriers to intra-Andean trade. At the same time, we are conducting studies and strategies to promote the consolidation of our Common External Tariff and its implementation by all of our Member Countries.

Progress has also been achieved in facilitating cross-border transportation within the Andean sub-region. Additionally, discussions have begun with respect to labor issues and the free movement of persons.

In terms of foreign economic relations, our efforts have concentrated on opening new markets, thus making the Andean region more attractive for trade and investment. The Andean Community has been negotiating intensively with Mercosur. Both economic blocks signed a framework agreement that sets fixed deadlines for two-stage negotiations. The first stage seeks to extend the tariff preferences granted bilaterally by each country to the other members of each block, a process that must conclude at the end of this month. The next stage would involve the negotiation of a Free Trade Agreement. This negotiation must conclude at the end of 1999. The agreement would enter in force by January 1, 2000. Furthermore, all five Andean Countries have now signed free trade agreements with Chile. Similarly, progress has been made in the process of linking Panama to the Andean Community, in developing stronger ties with Canada, Central America, and the Caribbean, as well as in strengthening dialogue with the United States, for which the establishment of an Andean Community- The United States Council on Trade and Investment has been considered useful to this task.

Regarding the European Community there is a tied cooperation relationship and a preferential treatment towards the Andean exports. In May, 1998 the Economic Euro-Andean Forum took place in London, within was created the Euro-Andean Business Council to support the coming meetings between both regions to promote trade between them.

With respect to our broader foreign policy, the Andean Council of Ministers of Foreign Affairs has begun to discuss adopting a Common Foreign Policy that goes beyond mere coincidences between the positions of each member country. As general Secretariat, we have developed a proposal in this regard and have organized several seminars on international relations, with the aim of developing a common agenda in these matters.

Participation of civil society in the integration process is yet another area that has attained a growing political importance. With this purpose in mind, the Advisory Business and Labor Councils were recently reactivated.

We are also carrying out other projects that seek to attain a broader participation by civil society and its representative organizations in the integration process.

Another important milestone was reached last August, when the Andean Presidential Council issued a joint declaration reaffirming its commitment to democracy and instructed the Andean Council of Ministers of Foreign Affairs to prepare before the end of October a draft of an additional protocol to the Agreement of Cartagena, that established measure to be adopted in the event of an unfortunate disruption of the democratic process in a Member Country.

Therefore, in the end, the integration process is a project with vast political dimensions.