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The Andean Community is struggling to maintain at least a semblance of unity in the face of fundamental differences regarding foreign trade.
The rift deepened further in September when Colombia and Peru formally requested the European Commission to negotiate bilateral free trade agreements with them. Last June, The EU suspended talks on region-to-region Association Agreement launched in September 2007 due to growing internal dissention within the Andean Community of Nations (CAN), which consists of Bolivia, Ecuador, Colombia and Peru.
Wary of trade liberalisation in general, Bolivia and Ecuador object in particular to the EU’s insistence that the trade ‘pillar’ of the agreement cover intellectual property, investment and public procurement. They also maintain that the EU must take into account CAN members’ different levels of development in market access negotiations, i.e. give the two poorer members of the bloc more flexibility in terms of the scope, depth and timeframe of tariff cuts.
Frustrated by the deadlock, Colombia and Peru argued that the EU should abandon the ‘bloc-to-bloc’ approach it had hitherto insisted on the grounds that it would reinforce Andean integration. The two countries noted that the bilateral avenue had already been ‘successfully tested’ in the separate free trade pacts they had concluded with the US, which also originally tried negotiate an agreement with the CAN as a whole.
Bolivia blasted Colombia and Peru for putting external free trade ahead of Andean integration, charging that their negotiating teams had never really believed in the regional approach, and had provoked its fall in order to force the EU to negotiate bilaterally.
Summit Reaches Thin Compromise
At an emergency summit held in Guayaquil on 14 October, CAN members papered over the widening cracks in the Andean edifice. The meeting adjourned after just three hours with a decision that the four countries would try to persuade the European Union to negotiate with all four countries as a bloc on the political and development assistance pillars of the future Association Agreement, while only Colombia and Peru would participate in talks on the trade liberalisation component of the pact.
CAN heads of state hope to put the two-track solution, which preserves at least an appearance of Andean unity, to European Commission president José Manuel Barroso in late October. While it is not yet known whether the EU is willing to include Bolivia and Ecuador in the talks without addressing the trade pillar, the commission has already indicated its readiness to resume negotiations with Colombia and Peru with a view to concluding ‘ambitious, comprehensive, WTO-compatible’ agreements in the first half of 2009. The negotiations would remain open to all Andean countries that share this goal, Mr Barroso said.
Community Remains Shaky
Despite the show of common purpose in Guayaquil, a source from the region told Bridges that with respect to trade the Andean Community was already ‘virtually inexistent’. Chile withdrew from the bloc in 1976 and Venezuela followed suit in 2006. Ecuador severed diplomatic relations with Colombia in March, and Colombian president Alvaro Uribe boycotted the October summit held on Ecuadorian soil (the country was represented by a delegation headed by the vice minister of foreign trade).
Although the Andean Community is a customs union on paper, the application of common external tariff (CET) has been postponed countless times since the decision to adopt one was made in 2002. In a communiqué to the Guayaquil summit, industry associations from the four countries noted that after nearly 40 years of integration, a true customs union seemed ‘unworkable’, and recommended replacing the policy with more flexible tariff mechanisms that permit safeguards in ‘exceptional cases’.
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