I would like to begin by thanking the Association of American Chambers of Commerce in Latin America and the American-Peruvian Chamber of Commerce for their kind invitation to speak to you today.

At the same time, I would like to cordially welcome all of the delegates who have come to attend this conference in Lima and to remind you that this beautiful city is also the headquarters of the Andean Community.

As you well know, the Member States of the Andean Community --Bolivia, Colombia, Ecuador, Peru, and Venezuela-- have set the creation of a common market by the first decade of the new millennium as the next goal of their economic integration effort.

Our best-known accomplishment thus far is the establishment of a free trade area. Tariff and non-tariff barriers dismantled in the course of this decade touched of a veritable boom in trade. Today trade among the Andean countries is four and a half times greater than in 1990. Intra-Andean trade today exceeds 6 billion dollars and that figure would be even larger had not the Asian crisis impact our economic growth this year. A unique feature of the trade within the Andean Subregion is the heavy predominance of manufactured goods, which account for almost 90% of the total.

Trade expansion has been accompanied by a surge of foreign investment. Annual foreign investment flows to the Subregion multiplied more than twelvefold over the decade, surging to 14.1 billion dollars in 1997 from a level of 1.2 billion in 1990.

At the same time, important investment flows developed among the Member Countries and numerous strategic alliances were forged between private Andean enterprises to take advantage of the expanded market.

In addition to the Tariff Reduction Program, Bolivia, Colombia, Ecuador, and Venezuela adopted a Common External Tariff (CET) that reduced duties on goods imported from third countries. While their average tariff was 33% in 1989, by 1997 the CET averaged only 13.6%.

A sophisticated dispute settlement system is in place to ensure that Andean rules are properly enforced and that trading is not disrupted. The highest-level body of that system is the Andean Court of Justice, with headquarters in Quito, Ecuador. The Andean Community also has rules in effect today in the areas of intellectual property, investments, customs procedures, sanitary, phytosanitary and zoosanitary measures, technical standards, origin, competition, and transportation.

The new challenge ahead of us is to consolidate the Andean Common Market. To that end, we are advancing in liberalizing our trade in services, harmonizing macroeconomic policies, opening public sector procurement, and the progressive elimination of customs within the Subregion. Member Countries, at the same time, are working on the design of a Common External Policy.

In the meantime, Andean participation in the negotiations to create a Free Trade Area in the Americas (FTAA) bears witness to the effort of Community Member Countries to coordinate their international trading relations more closely. Thanks to their joint participation, the Andean countries were elected to important positions in the negotiating process, including three Chairmanships and two Vice-chairmanships of Negotiating Groups. Moreover, they now speak with a single voice in each Negotiating Group.

The FTAA enjoys the full backing of the Andean Community and our countries continue to participate actively in the negotiations.

Do not be surprised, however, if the Andean Community liberalizes its trade with the rest of the hemisphere before the 2005 target date set for ending FTAA negotiations. All of the Member Countries have already signed free trade agreements with Chile, as well as a variety of trade agreements with Mexico.

At present the Andean Community is engaged in intensive negotiations with the other trade blocs and countries in the hemisphere. As it moves ahead with the FTAA negotiations, it is also negotiating with Mercosur and making overtures to Panama, Central America, the Caribbean Community, and Canada.

In April of 1998 the Framework Agreement for Creating a Free Trade Zone between Mercosur and the Andean Community was signed. Under that agreement, trade will be liberalized in two phases. The first phase will come to an end with the signing of an agreement on tariff preferences, based on preferences already established among the countries that belong to each group and to which new products may be added.

Once this phase is completed, negotiations will then begin for establishing the free trade agreement. These will cover the entire tariff universe and are slated to end on December 31, 1999. The agreement will cover disciplines in different spheres of trade. The Free Trade Area will become effective on January 1, 2000, with the launching of the tariff reduction process.

Efforts have been started to establish a broader framework for trade with the Central American Common Market (CACM) and with the Caribbean Community (CARICOM).

Canada, for its part, is one of FTAA's main promoters today. In its initial technical and political contacts, the Andean Community is analyzing with Canada a trade and investment agreement.

Obviously, another of our important objectives is to strengthen our trade relations with the United States, our main trading partner. The Council on Trade and Investment between the Andean Community and the United States has been set up for that purpose. The signing of an agreement that establishes this new forum is recognition by the United States of the level of consolidation that our integration process has achieved. The truth is that as we make headway in our effort at integration, Community-wide policy issues occupy a growing portion of our bilateral agenda with the United States.

Figures published by the U.S. Department of Commerce reveal that total trade between the Member Countries of the Andean Community and the United States reached over 37.8 billion dollars in 1997.

As a block, the Andean Community is also one of the most important trading partners of the United States, a fact that is little known. In 1997 that country exported more than 15.6 billion dollars' worth of goods alone to the Andean Community. This does not include the value of services supplied by U.S. companies in the Andean Subregion.

The importance of the Andean Community to the United States is clearer if we compare the above figure with United States exports to other countries traditionally considered important markets. A few examples are enough to illustrate this point.

Within the region, Andean imports of United States products in 1997 were equivalent to that country's exports to Brazil, double the value of U.S. exports to the three other member countries of Mercosur, and were four times the amount exported to Chile. The Andean Community as a whole ranks twelfth among the United States' markets. Trade relations between the United States and the Andean Community, therefore, are important to both of us.

Andean exports to the United States, including oil, have also followed a favorable upward trend to reach a figure of over 22.2 billion dollars in 1997.

Some exports of four of the five Andean Countries enjoy U.S. tariff exemptions under the special program established by the Andean Trade Preferences Act (ATPA). Venezuela, which hopes to be included in ATPA, benefits from some tariff preferences deriving from the United States Generalized System of Preferences (GSP).

ATPA tariff preferences have boosted exports to the United States by the four Andean beneficiaries. In 1997, Andean exports under ATPA totaled over 1.35 billion dollars.

Our countries have requested an extension of ATPA beyond the 2001 expiration date established in the initial legislative authorization, because of its success in promoting their exports to the United States market. They also back Venezuelan hopes for joining the program. Another important measure for promoting more trade between the Andean Community and the United States would be to enlarge the ATPA to take in new products that are excluded from it today, such as textiles, apparel, and some leather goods, among others.

Support from the private sector for these initiatives is extremely important. That is why I would like to take this opportunity to thank the American Chambers of Commerce in the Andean countries and the Association of American Chambers of Commerce in Latin America for their efforts in this area.

It is our sincere hope that the establishment of the Council on Trade and Investment between the Andean Community and the United States will help to renew and to broaden the scope of the ATPA and to secure Venezuela's incorporation into that program. At the same time, we trust that it will also open the way to a forthright discussion of new initiatives for increasing trade and investment between the Andean Countries and the United States.

As you can see, the Andean Community is fully committed with economic integration in our hemisphere.