V Annual Andean Development Corporation Conference Trade and Investment in the Americas
By Ambassador Sebastián Alegrett
Secretary General of the Andean Community
September 6, 2001

Mr. César Gaviria, Secretary General of the Organization of American States, Ministers, Ambassadors, Ladies and Gentlemen,

It is an honor to be among such a distinguished audience. I would like to thank Mr. Enrique García, President of the Andean Development Corporation, and Mr. Peter Hakim, President of the Inter-American Dialogue, for inviting me to speak at this conference.

This has been a year of progress for the Andean Community. As we continue on the path of open regionalism and toward greater economic stability, we are witnessing significant macroeconomic improvement among all our member countries. Bolivia, Colombia and Peru all have achieved single-digit inflation, with Ecuador and Venezuela close behind. Moreover, at the meeting of the Advisory Council of Finance Ministers, Central Bank Governors, and Economic Planning Officers in June of this year, all member countries reiterated the common goal of reaching and maintaining single-digit inflation, and agreed on a second common, macroeconomic goal: achieving a fiscal deficit no greater than 3%, by December 2002.

Our trade figures similarly continue to climb as we improved and deepened our integration. Exports among Andean countries increased 31% in 2000, with Ecuador leading the region with an ambitious 49%. Furthermore, our trade with third-party countries has also experienced dramatic growth. For instance, Andean exports to the United States grew by 40% in 2000 vis a vis 1999. In 2001 intra Andean trade also continued to expand, albeit at a slower pace, in spite of the adverse conditions prevailing both internally and abroad.

This past June, we held our 13^th annual Presidential Summit. The Andean Presidents signed the Act of Carabobo, in which they pledged to deepen our economic integration and reaffirm our commitment to address the common political and social challenges facing our countries, particularly in the areas of education, poverty and sustainable development.

They also reiterated the importance of perfecting the Common External Tariff to send a clear message of their commitment to establish an Andean Common Market by 2005. The Andean Community realizes the importance of a Common External Tariff to increase export competitiveness and the Commission, with the support of the Andean Advisory Council of Finance Ministers, Central Bank Governors, and Economic Planning Officers, is actively working toward its implementation.

The Summit was also the stage for an important Decision by the Andean Council of Foreign Ministers who approved the Andean Plan for Cooperation against Illegal Drugs and Related Offenses. With this initiative member countries will work closer against a common threat and at the same time strengthen each country’s own anti-drug strategy.

One of the most significant Decisions adopted by the Council of Foreign Ministers was one that will alow Andean citizens to use their national identification documents when they travel to other member countries. This measure will be effective in four of the five member countries next January and will become applicable to all five by the end of 2004, at the latest. This will be a step closer to achieving the free movement of persons.

They also agreed to create the Andean Community regional passport. An Andean passport will foster a greater sense of identity among our citizens and will promote our region abroad.

With respect to relations with third-parties, we continue in our negotiations with Mercosur so as to establish a free trade area by January 2002. Furthermore, the Foreign Ministers of the Andean Community, Mercosur and Chile recently approved a mechanism to promote political dialogue. This will be an appropriate forum not only for political coordination but also to deal with common issues whether in the social or cultural domain or in the development of an integrated infrastructure in South America. With regard to this last issue, I wish to point out that closer links are being established between the Andean Community and Mercosur in the areas of transportation, energy and telecommunications that will provide ample opportunities for private investors with the financial support of IDB and CAF.

The Andean Community is also firmly committed to hemispheric integration and the creation of the Free Trade Area of the Americas. We are very proud of the fact that Ecuador currently chairs negotiations. Our countries are playing a proactive role in each negotiating group and will continue to participate as a bloc in these negotiations.

Furthermore, we are seeking the renewal and expansion of the Andean Trade Preferences Act, as well as Venezuela's inclusion in the program. ATPA has brought benefits to both the Andean and U.S. private sectors. Our Trade Ministers and Ambassadors have been working incessantly in favor of ATPA. They have received a lot of support from the U.S. private sector. Inter-American Dialogue and its members have been particularly supportive. I want to thank you for this support and encourage you to continue our work for renewal and expansion of these preferences.

Let me now spend a few moments addressing our current position on the Argentine crisis. Some analysts in the international community have expressed concern about the vulnerability of the Andean Community given the economic uncertainties surrounding Argentina and Mercosur as a whole. Let me reassure them that the Andean Community is nowadays better prepared to face such a situation than during the Brazilian and Russian financial crises.

The fact that we have continued negotiations with Mercosur in spite of its current situation demonstrates the growing solidarity between our two groups of countries.

We also believe that when the free trade area between both blocs is created at the beginning of next year, the Argentinian crisis hopefully will be over and therefore a negative impact on our trade flows will be less likely.

The General Secretariat recently completed a study on the impact of the Argentine crisis on the Andean Community, the conclusions of which indicate that the commercial impact of this crisis on our region is minimal due to the still incipient level of trade between the two blocs. Trade figures show that the amount of trade between the Andean Community and Mercosur totals only 4% of our exports and 8% of our imports.

We are therefore working hard to consolidate our integration process while we seek to engage more fully with our neighbors and with our partners beyond our hemisphere.

I would like to conclude by again thanking the sponsors of tonight’s event. I have enjoyed this opportunity to share with you our great strides in achieving still a stronger Andean Community.

Thank you.