Quirama, Colombia, June 27, 2003

In his book Viaje a pié, or Travel by Foot, Antioquian master story teller Fernando González relates how, on the road from Medellín to la Ceja, he came across two older women passing on pieces of news and lovers’ messages throughout these coastal lands and asked them how much further it was to his destination.

With the well-known wisdom of the region, one of the women answered him, “It all depends upon your spirit.”

It is precisely this phrase, so filled with meaning, that leads me to point out that today, more than ever, the future of the subregion’s integration depends upon the spirit of those who are in positions of leadership.

The people who inspired this great project were staunch defenders of democracy who sensed that it would be impossible to resolve their countries’ problems within the narrow confines of their national borders. It was their dream that a common market would enhance the stature of their countries and make them less vulnerable to international cycles.

They believed that together, we could do far more that separately.

Curiously enough, the world experienced a radical change on the two hundredth anniversary of the French revolution, in 1989. We can all still remember how the Berlin Wall was brought tumbling down and the global economy began to make its supremacy felt.

This was also the year when the term “Washington Consensus” was coined in reference to Latin America and when the Andean Presidents emerged from a lengthy period of protectionism to open their borders to trade within the Community. The economic models changed.

Globalization has done away with old economic precepts, but has left our nations with unsatisfied needs. The legitimate and growing demands of the people are placing an enormous burden on our countries’ democratic governments and governance.

While the past decade yielded some positive results, in the specific case of Latin America, it was not free from troubling developments, as well. Inflation was brought to a halt, but growth was very modest and proved unable to do away with unemployment and to reduce poverty to any extent. Nor did education --the key to competitiveness-- show much improvement. These are all facts that we must take into account in our Andean thinking.

Recent difficulties are quite likely to cloud our perception of the true significance of the results we have already attained. The Andean Community is home to 120 million people with a 300 billion dollar GDP, making it a sizeable enlarged market.

The cooperation of the Andean countries in defense of democratic values has been a guiding principle of our integration, together with the protection of human rights and the war against terrorism and drug trafficking. These principles have become the indelible mark of our alliance.

The existence of Andean institutions is a visible fact of our integration, as we have seen at this meeting.

Trade between the Andean countries, which mushroomed fifty-fold between 1970 and 2002, become a learning experience for our entrepreneurs in their preparation to move toward more sophisticated markets.

The benefits we have obtained as a result of the joint efforts of our countries to deal with the United States, through the ATPA - today the ATPDEA -, and the European Union, through the signing of the Andean GSP, can be seen as fair concessions for our cooperation in fighting the worldwide problem of drug trafficking.

The nearly 600 thousand jobs that have been created as a result of that trade stand as a clear example of the benefits for our countries’ production activities, particularly among the small and medium enterprises.

Andean trade continues to hold a major potential. The International Trade Center has told us that intra-Community trade could grow by almost 50% over the coming years, to a figure of 9 billion dollars, if we move toward making our Common Market a reality. This would mean creating nearly 300,000 new direct jobs in the region. This impact could be even greater, if we consider the broad potential offered by productive alliances among our countries with a view to gaining a stronger position in world markets.

We cannot blind ourselves to the fact that the subregion’s integration is in a very difficult position today, however. We are now at a crossroads of history.

What we do, or fail to do, over the next two years, will have a decisive impact on our countries’ performance over the next half century. That is the responsibility and the historical challenge we face today.

It is essential that we start to share formulas for developing integration based on the achievement of a series of consensuses on fundamental issues.

Andean integration must be viewed as a political project that transcends the sphere of trade. This means that we have the obligation to move beyond the stage of a common tariff --which has been set at the level chosen by our countries-- to incorporate other areas in response to the new challenges that have arisen.

We must adopt a flexible structure to resolve apparent dilemmas over the stumbling blocs that impede us at times from advancing toward our objectives. For that reason, we have endorsed the principle of variable geometry, whereby we can move ahead at different rates, but always in the same direction, without renouncing the defense of our common heritage.

We are not a closed project. For many years now, we have practiced open regionalism and define ourselves as a platform for competitive positioning in the world economy. For that reason, it is necessary for us to bring our integration undertaking into line with the will of the countries to advance in their negotiations with third countries and blocs.

Trade negotiations, whether bilateral, regional or multilateral, contribute to our aim of going beyond a Free Trade Area. Our commitment is to a community and that means building a differentiated space that will reaffirm our Andean identity.

The freedoms that underpin a Common Market, the new areas for integration, the common foreign policy or political cooperation, go far beyond what free trade areas tend to encompass.

Today we are faced by several different platforms for international insertion that are not mutually exclusive by any means: the FTAA, the United States, the MERCOSUR, the European Union, and Canada. These are, without a doubt, legitimate and complementary options.

The aim of strengthening Andean integration is not incompatible in any way with the efforts of our countries today to give their products more access to world markets. On the contrary, the size and strength of our common undertaking will be largely put to the test in the different negotiating fronts that lie ahead.

At stake is the definition of what type of international insertion is most appropriate for our countries and what our capacities are for working together, so that we may successfully progress in these scenarios.

I am convinced, for example, that the Free Trade Area of the Americas, which has apparently been converted into a process by stages, will require a strategy for joint action in order to reduce to a minimum the foreseeable cost of having less protection in the future and the possible loss of our policy-making autonomy.

Are we clear in our minds about which sectors will win out and which will lose? Will the trade gap widen, rather than lessen? Will the agreement allow for balanced development, or will it lock the region into acting as a permanent supplier of raw materials in a regressive specialization of the international division of labor?

In order to answer these and other questions, the General Secretariat has just concluded a series of studies with the involvement of qualified external consultants. We are making the findings available to our countries’ governments and businessmen.

Relations with the United States, the top market for Andean exports, have taken on strategic importance for our countries. For that reason, I understand that some of these countries, faced with the possibility that the FTAA will not be attained before the ATPDEA expires, have announced their interest in moving toward signing bilateral free trade treaties with the United States.

This is an illustrative example of the principle of variable geometry that I have proposed to the Governments. Under this principle, bilateral initiatives should become an opportunity to seek joint approaches to these initiatives.

One of the decisive platforms for international insertion is “the South American space.” I would like to make a few comments on this, given the presence of the Brazilian President with us today.

Viewed from above -perhaps the only way that Heads of State should approach it--, South America is one of the world’s major landmasses. The Andean Community, together with the MERCOSUR, have a total GDP of 1 trillion dollars; a market of over 400 million people; one-third of the planet’s biodiversity and almost one-quarter of the world’s fresh water. We can certainly become world players in the new “era of water and oxygen” which, according to some, we have already entered.

We are engaged in negotiations with the MERCOSUR that we intend to complete by the end of this year. I should remind you that Bolivia has already signed an agreement with that bloc and that Peru should do so shortly. It is now up to Colombia, Ecuador and Venezuela to move as a Community in the same direction. The differences are not insurmountable. We do not expect to have a closed and complete agreement in place. It is possible, using a pragmatic approach, to reach an agreement that would contain an evolving clause and a permanent mechanism to enable us, within a reasonable period of time, to come to an agreement on issues that may have remained unresolved. At the same time, it is important to restart and to reinforce the political dialogue that is aimed at consolidating the South American space.

In the case of the European Union, huge advances have been made toward reaching an agreement on cooperation and policy dialogue. I have no doubt that we will conclude the negotiations at the forthcoming Quito meeting and be able to sign that agreement in 2004 during the Latin American - European Union Summit in Cancún. It is my firm conviction, in fact, that we can launch the negotiation if an Association Agreement that would include a Free Trade Area, as of this moment.

Integration is a sine qua non in the search for a better quality of life for our peoples. “Putting our house in order” and moving toward a second generation of policies within the framework of a multidimensional agenda is the challenge to be met today.

It is the duty of this Andean Presidential Council, then, to affix their signatures to the new strategy lines for guiding the integration process through five subject areas, as the Foreign Ministers pointed out at their Meeting last March: the social agenda, the deepening of the common foreign policy, the construction of the Common Market, sustainable development and South American physical integration and border development.

I believe that it is important to draw attention to the salient aspects of each of these areas.

Like the Presidents, I consider it urgently important to give the social agenda maximum priority. The situation so demands it: roughly 54% of the Andean population -over sixty million people-- live below the poverty line; almost one-quarter of the people are indigent; and the rates of income concentration in the Andean countries are among the highest in Latin America.

It is necessary to align social policies in order to work out specific and coordinated strategies for social cohesion, for the struggle against poverty and exclusion, that will reinforce governance and consolidate the rule of democracy. The approval by the Foreign Ministers last Wednesday of the guidelines for the Andean Social Plan that seeks to develop more mechanisms for social cohesion in our countries is a step in that direction.

The major task ahead of us today is to avoid at all costs the appearance of a scenario that I have termed, colloquially, “an FTAA without anesthesia,” or spaces for negotiation from which we could emerge as net losers.

We should jointly undertake the search for specific mechanisms, such as those agreed upon in Cusco, that would open the way to implementing the proposal put forward by the Heads of State at the Quebec Summit, to establish funds for cohesion that would make it possible to deal with any imbalances that could emerge in the course of the hemispheric negotiations.

Tied in with this concern is the need for more participation by civil society in the integration process. We already have the Labor and Business Advisory Councils, one Working Committee on Indigenous Peoples’ Rights and another for the defense of consumers and the users of public utilities, thus showing that in this new phase greater importance is given to democratization and even more so to the subject areas and actors in the integration process.

Political cooperation offers plentiful opportunities for addressing, as a Community, such issues as democracy; security and confidence building; the war on terrorism; the defense and protection of human rights; the promotion of action against illegal drug trafficking and related offenses; and the all-out war on corruption. All of these are part of our common aim of ensuring democratic stability and guaranteeing the security of the Andean Community countries.

It is vitally important that the Presidents at this Summit endorse the commitment to establish the Common Market, in order to guarantee the unhampered movement of goods, services, capital and people and to advance our integration.

The adoption of basic policy decisions on the critical issues of the Common Market would be a clear demonstration that we are moving in the proper direction. To accomplish this objective, the Heads of State must express the will to remove barriers and distortions, do away with failures of compliance, and, in any case, defend the common wealth we have built up over 34 years of painstaking efforts.

I should like to underscore the significant advances made by the Foreign Ministers and the Ministers of Foreign Trade during the preparatory meetings for this Summit, with their approval of 16 vitally important Decisions, some of them in the socio-labor field, as well as the provision on International Passenger Transport by Road.

Messrs. Presidents:

Perhaps we haven’t examined the issue together in great depth, but the fact is that the Community has put forward in the FTAA offers to deregulate nearly 90% of the subregion’s trade over a period of ten or more years as of the signing of the Agreement. Obviously, then, our countries will have a long transition period in which to reinforce their strategy to advance the Common Market and boost their development and competitive insertion while spaces for negotiation are being consolidated.

We have an excellent opportunity to increase our global significance if we take advantage of the subregion’s energy potential as a crucial element in the forthcoming hemispheric negotiations. It should be recalled in this context, following the war in Iraq, that the oil reserves of the Andean countries are four times as large as those of the United States and eight times the size of the reserves of the MERCOSUR countries.

In December 2002, without fanfare, we provided for the interconnection of the electric systems of the Andean countries. This decision will benefit all of us, starting with Colombia and Ecuador. This year alone, Colombia will earn in the neighborhood of 240 million dollars, while Ecuador will enjoy a saving of 45 million. The new profits and savings so produced amount to 40 years of the General Secretariat’s budget and all of this is the result of a single provision adopted by the Andean Community Commission.

The Presidents’ support for the “Andean Biodiversity Strategy” is decisive if our multidimensional agenda is to be comprehensive, and will enable us to reassert and exercise our rights over our biological resources.

Only a few short days ago, we signed a significant agreement with Conservation International -one of the most important cooperating NGOs in the world-- in order to boost alternatives for sustainable utilization and promote the defense of Andean biodiversity in the forthcoming international negotiations.

In our effort to build up a regional space, we must continue to support the work of the South American Regional Infrastructure Integration Initiative (IIRSA), with a view to facilitating the coordination of plans and investments and reconciling and harmonizing associated national and institutional regulations.

I should also like to draw attention to the importance of contributing to border development. We are well aware that our borders are areas of relatively less economic development and consequently require special attention. Under the present circumstances, not only do we need sectoral development policies, but also a comprehensive plan that will take in security issues. Consideration should be given to calling for international financing to execute this Andean border development and security plan.

I would like to conclude by making two comments of a strategic nature.

The first is that the Andean Community is still important, not only because of what we have achieved -which should not be underestimated--, but because each one of our countries will be unable to deal with the major problems of the future on its own. These are realities that “bore through” national borders, that “migrate” and, as a result, that require a common institutional platform.

The second is that today’s world, like the Internet, is a densely woven and complex political and commercial network where one agreement affects the next.

It would appear that the multipolar nature of the world will become evident within a few short decades, when emerging powers like China or India become consolidated.

It is quite likely that in this scenario individual countries should not choose to belong to one bloc or another, to one or another commercial or economic platform, but to a combination of these. We should bear this in mind when discussing the future role of the Andean Community.

Messrs. Presidents,

I would now like to return to that evocative Travel by Foot through this terrain, which today has become the scenario for building a renewed Andean integration project.

Nothing is truer in the shaping and life of a Community dream than the “animus societates”. It is the presence of this spirit that will determine the strength and viability of that dream, while its absence will mean decline and discouragement along the way. .

Political decisions are always difficult wagers. But Statesmen must make those decisions with their eyes to the world of tomorrow.

The economic models that led to the Cartagena Agreement have changed. Even so, the end purpose of giving our countries a strong voice in the concert of nations continues to be applicable:

Together, we can do far more than we can separately.

Thank-you very much.