"Renewal of the Community Commitment"
Address by the Andean Community Secretary General, Guillermo Fernández de Soto, on the celebration of the Thirty-fourth anniversary of the Cartagena Agreement.
Lima, May 26, 2003

It is worth recalling that the two presidents who fostered this agreement were democratic presidents heading their countries’ governments at that time -Colombia’s Carlos Lleras Restrepo and Chile’s Eduardo Frei Montalva.

The two were battle-scarred political warriors of long standing, for whom democracy was their political standard. They had found over the years that it was impossible to resolve their countries’ problems within narrow national confines.

It was their dream that a common market would add to their countries’ stature, rendering them less vulnerable to international economic cycles and would equip them to provide their people with stable jobs.

They had witnessed what the Marshall Plan, first, and then a little later, the French and German coal and steel agreements, had been able to do for Europe: a continent that they had seen reduced to ruins was once again arising from its ashes as a major power.

Although visionaries, they were also familiar with their countries’ past and, as such, were aware that Andean integration rested, more than on any treaty, on an undeniable reality. From time immemorial, the men who inhabit these lands have traded their ceramics and textiles and shared their rites and songs. There is a differential “Andeanness,” just as there is the differential fact of being land-locked, or of being Caribbean.

The economic models of 34 years ago obviously no longer hold true for us. Many of the cherished theories of the economists at that time are not in fashion today. It was their belief, for example, that the growth of national markets depended on their protection, rather than their opening to a world in competition. Many of their instruments cannot be used in today’s global economy.

Although those instruments no longer have a place in our world, we share the ideals of those men who dreamed of a better world for the people that inhabit it. They wanted a Latin America possessing a weight of its own in the concert of nations. They believed that we would be stronger together than separately.

As you entered this building -whose very austere concrete volume brings to mind the sixties-- you were met the by the figure of the Libertador Simón Bolívar, the man who saw his dream of a united continent shatter with the fragmenting of the individual republics. Our statesmen 34 years ago wanted to return to the forging of that integration. Today, we also, --although guided by other economic theories, open to the world and aware that the trade between them is what drives the countries’ growth-- we also want to move ahead along the road to integration.

Integration is no longer what it once was. Twenty years after the signing of the Cartagena Agreement, in 1989, the Andean Presidents opened the way to Community trade, putting an end to a prolonged period of protectionism. Trade multiplied prodigiously. In the span of only one decade, it increased 50-fold, rising from 111 million dollars to almost 6 billion.

At times we lose sight of the fact that intra-Community trade is responsible for more than 600 thousand jobs. To this, we should add that most of the trade among the Andean countries is in manufactured goods, meaning that it has a high value added.

A report put out very recently by the International Trade Center predicts a possible growth in Andean trade over the next few years to 9 billion dollars. This would mean a 50% growth in trade and the creation of 300 thousand new jobs in the region.

This trade is equivalent to 12% of our total exports. While that figure is obviously inferior to the percentage of trade among the European countries, with their more sophisticated and wealthy economies, it is the same as the Mercosur countries have attained.

A strategic reflection comes to mind here. The Andean Community together with a reengineered Mercosur represent a gross product of one trillion dollars. A market of over 400 million people. Almost one-third of the planet’s biodiversity. Nearly one-quarter of the world’s fresh water. We are one of the major continental platforms in a world that today appears to be surprisingly unipolar, but that perhaps in 30 years’ time, when the European Union demonstrates its united strength and when China and India emerge decisively, will once again become a multipolar world.

What is at stake is our countries’ place on the world stage in this new century and not merely some tariff percentages.

In a very short time, tariffs will cease to be a key reference in world trade.

The crux of the matter is something far deeper, more complex and decisive: the international role our countries should play in the economic and political architecture that has just started being designed.

What we do, or fail to do, over the next 2 years, will have decisive consequences for the following fifty years.

When I assumed the position of Secretary General, I stated that we must be “sincere” about our integration. We just tell the truth about it.

Undoubtedly, there are some problems to be resolved. The legacy of the past decade for Latin America, although good in some respects, is extremely troubling in others. While we put a stop to inflation, Latin America’s very modest growth was incapable of absorbing the unemployed and truly reducing poverty. In fact, the number of poor rose. Job protection declined. Nor did education, the key to competitiveness, show any substantial improvement. All of these facts must be given a place in our reflection.

Differences in government policy are noticeable on occasion.

The most controversial issue is our relationship with the major economic blocs and particularly with the United States, the Andean countries’ main trading partner.

The Free Trade Area of the Americas (FTAA), which is not as simple and clear-cut a matter as some believe, lies at the heart of these differences.

Will the FTAA truly be in place by the originally scheduled dates? If it turns into a long, drawn-out process, accomplished by stages, as everything would tend to indicate, should we seek a free trade agreement with the United States at any price?

These are all key questions that we must examine in depth, without the presence of ideological filters of any kind that only serve to cloud our understanding of the true situation.

For that reason, considering the possibility that the FTAA could fail to materialize before the expiration of the ATPDEA -an agreement, which, I would like to add here, was attained only because the Andean countries negotiated jointly--, I proposed last November that a framework agreement with the United States be adopted to serve as an intermediate instrument between the ending of the ATPDEA and the start-up of the FTAA.

That framework agreement would allow the countries to each “disengage” at its own pace and would keep the slowest from “holding back” those wishing to proceed more rapidly. At the same time, we would negotiate the major agreements with third parties.

The great task ahead of us today is to address what we call the “second generation of policies,” aimed at giving the Andean countries more weight and a larger measure of competitiveness in the world economy. That agenda, multidimensional in scope, calls for policies of alignment.

What the General Secretariat wishes to promote is the advancement of the Andean market and the implementation of those policies of alignment in areas that would bring the countries together within a common band in all sectors.

The new social agenda with its indissoluble links to governance; agreement on macroeconomic aspects, particularly the exchange rates that are so troubling to us; policies on educational matters and on science and technology, together with changes in production, are what we truly need to be prepared for the advent of the great Free Trade Agreement of the Americas.

This harmonization has already produced impressive results. In December, the Andean countries were linked up in an electric system. Although this interconnection will benefit the entire region, Colombia and Ecuador are already enjoying the immediate results. The former has been receiving 316 thousand dollars a day since March of this year, while Ecuador will save 74 million. Everyone is a winner here: the State through its earnings, the participating electric enterprises, and the users who will pay increasingly less for their electricity --all as a result of the adoption of an Andean Community provision.

It is the wish of the General Secretariat to be something be more than the mere recipient of the instructions of its member governments. It cannot aspire to a role as broad as that of the European Commission, which has accomplished so much in regard to a matter that should be of key importance to us also, which is regional cohesion, because we just don’t have the necessary resources for it.

If we join the FTAA, it will be without the assistance of cohesion funds -what I colloquially call “anesthesia--” like those accorded to the poorest countries that become members of the European Union.

For that reason, it is our intention to defend what the Community has already been able to obtain and to serve as an active center, a generator of ideas and initiatives.

A final thought. This organization remains important today because the new problems that arise are ones that cannot be resolved by the countries on an individual basis. They are situations that “perforate” national borders and that “migrate,” thus requiring a common institutional platform.

The defense of democracy and human rights, the control of drug trafficking and terrorism, the protection of Andean biodiversity, the defense and promotion of the Amazon, disarmament policies and the construction of a regional safety zone, the creation of a flexible and unified labor market, the unimpeded circulation of all citizens-all of these are Community problems. Therein lies the challenge confronting our common foreign policy.

The defense of this Andean platform within this new strategic dimension in no way hinders a country from seeking and making use of other platforms, both bilateral and multilateral. Everything adds to our global world today, nothing subtracts from it. But because it is fragmented, operating in a “convoy” helps.

The postwar world that emerged in the mid-nineteenth century was more efficient because it possessed a multilateral architecture resting on supranational organizations. For both political and economic reasons, we must safeguard this world by incorporating the necessary improvements.

Andean integration has been, and will continue to be, only what its governments and societies wish it to be. If a will to associate exists, there is much that we can do. But it is necessary for all of us to be convinced of the importance of supranational organizations like ours.