From: David Sangurima <sangu@igc.org>
Newsgroups: soc.culture.latin-america
Date: 19 Jul 92 12:10 PDT
Subject: IPS: Andean Pact Crisis
Nf-ID: #N:cdp:1473800075:000:6799
Nf-From: cdp.UUCP!sangu    Jul 19 12:10:00 1992


From: David Sangurima <sangu>
Subject: IPS: Andean Pact Crisis

/* Written 10:03 am  Jul 18, 1992 by hrcoord in cdp:reg.latinameri */
/* ---------- "ANDES PACT: CRISIS THREATENS TO TEA" ---------- */
From: Human Rights Coordinator <hrcoord>
Subject: ANDES PACT: CRISIS THREATENS TO TEA

/* Written 12:07 am  Jul 18, 1992 by newsdesk in cdp:ips.englibrary */
Copyright Inter Press Service 1992, all rights reserved.  Permission to re-
print within 7 days of original date only with permission from 'newsdesk'.

Title: ANDES PACT: CRISIS THREATENS TO TEAR REGIONAL PACT APART


san jose, 15 jul (ips/latin american desk) -- competition among
unequal trading partners and a political rift between two of its
members are threatening to tear apart the 23-year old andes pact,
which links bolivia, colombia, ecuador, peru and venezuela.

the pact is in the throes of a crisis, with peru -- engaged in
a diplomatic row with venezuela -- hinting at pulling out of it
and bolivia looking with increasing attention towards another
sub-regional integration movement in the making, the southern
cone common market (mercosur).

it also suffers from an absence of practical conceptions and
alternatives in fundamental areas such as customs tariffs and
integration policies which go beyond mere trade exchanges. only
colombia and venezuela have been moving in this direction.

''the andes pact is going through its most severe crisis in
its 23 years of existence and there is a real danger that the
project might collapse,'' warned the president of venezuela's
institute of foreign trade, miguel rodriguez, in late june.

the five andes pact countries have a potential market of 94
million people. their combined exports and imports totalled 30
billion dollars and 22.66 billion dollars respectively in 1991.

however, trade between the five amounted to a mere 1.74
billion dollars last year, according to statistics from the
pact's secretariat in lima.

moreover, intra-pact commerce is unevenly distributed, with
the trading twins of colombia and venezuela rapidly strengthening
their relations, while the other three, relatively less
developed, partners lag far behind.

trade between bogota and caracas amounted to 600 million
dollars in 1991 and is projected at one billion dollars this
year.

while the dynamism in the trade relations between the two was
originally promoted by their governments, their respective
business sectors are the main actors and advocates of closer
economic ties, a significant recent development being
cross-border investment in banking and insurance.

the reticence of businessmen in the two countries towards
bilateral and andean trade underwent a turnaround after the five
presidents brought the sub-region's entrepreneurs into the andean
process in late 1990.

colombian and venezuelan officials are quick to point out that
their moves towards closer trade and economic relations fall
within the ambit of an agreement between andean presidents at
their fifth summit, on jul. 18, 1991, to create a sub-regional
free trade zone. peru and ecuador are yet to implement the
agreement. (more)
----


peru has also rejected a common external tariff ranging from
five to 20 percent for imports from third countries, which the
five presidents agreed on in december 1991 in colombia.

peru's influential minister of economy and finance, carlos
bolona parpadeo, has described the staggered tariff as
protectionist, proposing instead a flat rate of 15 percent.

in 1989 the five andean presidents had rescued what is still
the most advanced regional integration system in latin america
from the comatose state into which it had sunk when they decided
to take it into their own hands and take steps to open up
internal trade and form a common market.

but, the diplomatic row between venezuela and peru, sparked by
caracas' decision in april to suspend diplomatic relations with
lima following president alberto fujimori's self-imposed coup,
has cast a shadow on the pact.

since then, bolona has been putting increasingly more distance
between peru and the andes pact.

''speaking of integration when there are members who have
suspended diplomatic relations is not integration,'' the peruvian
economy minister warned in mid-june.

a staunch advocate of far-reaching liberal economic reforms,
which he has been implementing implacably since he took office in
february 1991, bolona feels the andes pact has a protectionist
integration system and is therefore obsolete.

he has often pointed to the example of chile, which pulled out
of the pact in the 1970s, to show that peru can go it alone.

''when it left the andean group chile did not become isolated.
on the contrary, it opened up comercially to the rest of the
world using an economic policy which favoured the most efficient
productive sectors and liquidated those sectors which were
surviving under the artificial umbrella of protectionism,'' the
peruvian minister said recently.

''either the andean group changes or we will have to leave
it,'' declared bolona who, however, does not have the support of
all political sectors represented in peru's government nor of the
country's industrialists.

as the andes pact totters, bolivia has been looking with
increasing interest towards another sub-regional economic
grouping, mercosur, comprising argentina, brazil, paraguay and
uruguay.

bolivia is expected to earn some 76 million dollars this year
on gas sales to brazil and argentina alone, whereas its total
sales to its andes pact partners amount to just about 87 million
dollars per annum. (more)
----


while expressing a commitment to the andes pact, the bolivian
government makes no secret of its interest in mercosur and
president jaime paz zamora's position is that bolivia cannot be
forced to choose between the two because it has close
geographical and trade ties with both.

bolivia is linked to the four mercosur countries by the 1969
river platte basin treaty, and the paraguay-parana canal project
which entails the construction of a waterway that would run
through the five countries.

the canal project is a centrepiece of mercosur and bolivia's
involvement in the project makes the country a de facto member of
the grouping, which is to be launched on jan. 1, 1995, according
to foreign minister ronald maclean.

another parallel initiative to the andes pact is the group of
three, linking colombia, mexico and venezuela. created in 1989,
the group has set the end of this year as the target date for a
free trade zone which chile has also decided to join.

meanwhile, the venezuelan government, which triggered the
crisis within the andes pact with its diplomatic sanctions
against peru, announced on jul.8 that it would make a ''firm
effort'' to overcome the crisis.
(end/ips/trd/so/al/eg/jcr-oh/kb/92)
----



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