The Andean Community

The headquarters of the Andean Community of Nations is in Lima and the Indian Embassy in Lima liases with it. A brief write-up about the organisation is given below:

The Andean Community of Nations (CAN as per its initials in Spanish) was formed in May 1969 with the signing of the Cartagena Agreement (then also known as the Andean Pact). As the name suggests, the initial group consisted of the five countries of the Andes viz. Peru, Chile, Ecuador, Colombia and Bolivia. In those days of socialist economic models, the main objective of the group was to reach greater integration through import substitution by establishing a customs union (viz. no internal tariff with a common external tariff) within 10 years.

However, subsequent regional developments and changes in economic structures of these countries led to the embracing of open regionalism and an expansion of the objectives to include a much larger type of regional integration. This was also influenced by the success of the European Union (EU).

Venezuela joined CAN in 1973 while Chile, following the 1973 coup, opted out of CAN in 1976. The members of the group have remained the same since then viz. Peru, Bolivia, Ecuador, Colombia and Venezuela. While Venezuela is not technically an Andean country, the common thread among the current five is the fact that the “Liberator” of each of these countries was Simon Bolivar. Overall, CAN accounts for 120 million people, an area of 4.7 million sq km, and a 2002 GDP of US$ 260 billion.

CAN has gradually expanded its linkages to create various other institutions (known as the Andean Integration System) like the Andean Presidential Council (comprising the Presidents), the Andean Council of Foreign Ministers, the Court of Justice, the Andean Parliament, the Andean Commission, the Andean Development Corporation, the Latin American Reserve Fund, the Business Advisory Council, the Labour Advisory Council and the Simon Bolivar University. In 1997, a permanent Secretariat was created in Lima with a 5-year term for the Secretary General. The current Secretary General is the former Peruvian Foreign Minister, Allan Wagner. CAN also has an annual rotating Presidency.

However, internal differences and regional developments have ensured that progress towards integration remained slow and erratic, particularly during the 1980s. Even now, many of the above institutions are not fully functional since all member countries have not ratified them.

In 1993, a partial Free Trade Area (FTA) finally came into force with Bolivia, Ecuador, Colombia and Venezuela eliminating their mutual tariffs. However, due to the 1992 internal crisis, Peru joined the FTA only in July 1997, and a full CAN FTA is expected only in 2004 due to the gradual entry regime granted to Peru.

During the late 1990s, CAN decide to deepen its integration and declared an ambitious objective of forming a common market by 2005. This would involve not only free movement of goods, but also of services, capital and people. As of now, only limited progress has been made in these other areas. A recent CAN decision allows CAN citizen visa free tourist travel to other CAN countries (Venezuela has not fully implemented this as yet). Subsequently, CAN also decided to broaden the scope of integration and to work for integrated cooperation in areas like common foreign policy, common macroeconomic policies, a social agenda, sustainable development, frontier region development, harmonization of laws, etc. The current objective is to reach a common integrated Andean region in future.

Unfortunately, internal divisions within CAN remain strong. While a common external tariff (CET - to move from an FTA to a customs union) was introduced for 62% of tariff lines in late 2002, some countries like Peru have called for renegotiating some of the tariff lines since Peru’s current tariffs are lower than the proposed CET. Differences also remain over issues like agricultural policies, leading to slowdown in implementation of a common market. Moreover, many decisions of the Andean Council in areas of tariffs, etc continue to be violated by most countries due to domestic lobbies. Intra-CAN trade also remains limited.

Meanwhile, CAN countries have been reaching out to other countries and groups. CAN – Brazil and CAN – Argentina PTAs were signed in 1999 and 2000 respectively, and an FTA between CAN and MERCOSUR is expected by end-2003 (Peru and Bolivia are already Associate Members of MERCOSUR). As regards the proposed Free Trade of the Americas (FTAA, ALCA in Spanish), some CAN countries like Venezuela are interested in first forming a group with MERCOSUR before negotiating ALCA, while countries like Colombia would like CAN to independently negotiate with ALCA.

In terms of other countries or groupings, CAN has established dialogue mechanisms with Russia, China and Japan. CAN is also working towards similar agreements with the US, the EU (towards a FTA), Canada, South Korea, Cuba and the European Free Trade Association (EFTA - Iceland, Liechtenstein, Norway, and Switzerland). With the US, Canada and the EU, some agreements in trade and investment already exist. The US and the EU also accord unilateral trade preferences to some CAN countries under the ATPDEA and EU GSP respectively. CAN is in contact with CARICOM, Panama and the Central American Common Market (CACM - Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica) for a PTA / FTA at a future date. CAN also has limited contact with APEC (Peru is the only CAN country that is an APEC member) and ASEAN.

An agreement to establish a mechanism of political consultation and cooperation between India and CAN was signed during the visit of EAM to Lima in June 2003. EAM also met with the CAN Secretary General during his visit. A draft PTA / FTA agreement has been forwarded to the CAN Secretary General, but action on this may be delayed due to the various regional free trade agreements that are being negotiated by CAN countries.

CAN maintains a detailed website in English, which can be accessed for further details.