Andean Community - General Secretariat Common Foreing Policy

CAN - Mercosur


The Andean Community and the Mercosur are moving with increasing rapidity toward their target of forming a free trade area that will benefit the 300 million inhabitants of their nine member countries.

The first concrete step in that direction was the signing, on April 16, 1998, of a Framework Agreement for the creation of a Free Trade Area between the Andean Community and the Mercosur, which established the bases for this enlarged market.

The Agreement stipulated that the negotiations would be conducted in two stages. In the first, a Fixed Tariff Preferences Agreement would be negotiated based on already existing accords and in the second, a Free Trade Agreement would be worked out.

In regard to Bolivia, the Agreement stated that, without prejudice to Complementarity Agreement No. 36 previously signed by that country, it would participate in the negotiations between the Andean Community and the Mercosur in order to bring that agreement into line, in all pertinent matters, with those that the parties sign.

Negotiation of the Tariff Preferences Agreement

The Andean Community and the Mercosur launched the negotiation of a Tariff Preferences Agreement in June 1998, based on the guidelines set out in the Framework Agreement.

The negotiating arrangement initially used (4 + 4 system) was changed at Brazil’s suggestion to one in which the Andean countries as a whole negotiated with each of the Mercosur countries separately (4 + 1), but always with the final objective in mind.

As a result of these negotiations, on August 12, 1999, Colombia, Ecuador, Peru, and Venezuela signed a Partial Scope Economic Complementarity Agreement with Brazil that entered into effect four days later, on August 16.

Under that agreement, the two parties established fixed margins of preference as an initial step toward creating a Free Trade Area between the CAN and the Mercosur.

With the same aim in mind, Argentina and the CAN negotiated a Tariff Preferences Agreement that was signed on June 29, 2000 and became effective on August 1 of that same year.

Negotiation of the Free Trade Agreement

The second stage of negotiations, leading to the final objective of signing a Free Trade Agreement, is now underway. The first two meetings between the five Andean and four Mercosur countries were held on April 27 and August 24, 2001.

At both meetings, the two parties negotiated specific aspects of the Free Trade Agreement and expressed their intention to conclude negotiations before December 31, 2001, in keeping with the mandate handed down by the South American Presidents and the Andean Presidential Council.

Political boost

The negotiations between the Andean Community and the Mercosur for the formation of a free trade area have received special attention from the Presidents of the member countries of both groups.

At the South American Summit in Brasilia, the Heads of State of the CAN and the Mercosur decided to "start negotiations for the establishment, as soon as possible and before January 2002, of a free trade area between the MERCOSUR and the CAN" and recognized that the agreements signed by the CAN with Brazil and with Argentina "will represent a decisive boost toward the shared goal of forming an enlarged economic and commercial space in South America."

They went on to reaffirm "the understanding that the process of creating an enlarged economic area in the region will be the result of principles of open regionalism and will strengthen the positions of the South American countries in important negotiations that the region wishes to carry out successfully, such as those of a free trade area of the Americas, the negotiations involving the development of closer relations with the European Union, or those within the sphere of the World Trade Organization, among others."

At the Thirteenth Andean Presidential Council, held in Valencia, Venezuela, in June 2001, the leaders committed themselves to "do their utmost" to conclude those negotiations before December 31 of this year.

The Presidents attending the Twentieth Meeting of the Common Market Council and Summit of Heads of State of the Mercosur, held in June 2001 in Asuncion, Paraguay, for their part, underscored "the importance of continuing negotiations for the signing of an Agreement between the Mercosur and the Andean Community of Nations that will make it possible to establish strategic and progressive relations between the two subregional integration movements shortly."

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