CELEX: 51980PC0082
Language: en
Date: 1980-02-27 00:00:00
Title: RECOMMENDATION FOR A COUNCIL DECISION AUTHORIZING THE OPENING OF NEGOTIATIONS WITH THE ANDEAN GROUP (BOLIVIA, COLOMBIA, ECUADOR, PERU AND VENEZUELA) (presented by the Commission to the Council)

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DOCUMENTS "COM"
COM (80) 82
Vol. 1980/0028
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                               COM(80)82 final
                                                                               Brussels - 27th February 1980
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                      RECOMMENDATION FOR A COUNCIL DECISION
       AUTHORIZING THE OPENING OF NEGOTIATIONS WITH THE ANDEAN GROUP
              ( BOLIVIA / COLOMBIA - ECUADOR , PERU AND VENEZUELA )
                  ( presented by the Commission to the Council )
C0M(80 ) 82 final
 ---pagebreak---                                 EXPLANATORY MEMORANDUM
I•   BackTrourid *
In July 1979 , on the occasion of his visit to the Commission ,- the President
of Colombia , Mr Julio Cesar Turbay Ayala proposed , on behalf of all the
member countries of the Andean Group (Bolivia, Colombia, Ecuador , Peru and
Venezuela), the conclusion of a cooperation agreement between the Andean
Group and the European Community . Subsequently , in November 1 9T9 »
Mr Sebastian Alegrett , President of the Commission of the Cartagena      *
Agreement-^ , again on the occasion of a visit to the Commission, stated that
the Andean Group wished to conclude a non–preferential cooperation agreement ,
on a basis of equality and reciprocity , which would take account of the
different levels of development of the two groups -of countries , be sufficiently
broad to embrace all areas of cooperation , yet at the same time substantive ,
and permit further development .
It is on the basis of the exploratory discussions which then started between
                                       „  .       .       .2
a delegation from the Junta of the Cartagena Agreement and a delegation
from the Commission of the European Communities to study the possible form
and content of such an agreement that the Commission presents to' the Council
the recommendation which follows .
1
  The Commission , made up of a plenipotentiary representative of the Government
  of each member country , is the political and decision–making body .
2_,                 ...          '
  The Junta , * consisting of three members , is the technical body ; it has to
  ensure that the Agreement ifs implemented and that the Commission 's decisions
  are carried out :    it makes proposals to the Commission.
 ---pagebreak--- II .   The Cartarrena "Agreement and the economic integration of the Andean
       Sub-re ,r: ion                               ,
 1.  The . machinery of integration and a new stimulus
                                                                            £      • "
The process of Andean economic integration began in 1969 with the signin " of
                            1
the Cartagena Agreement       and moved a stage further in May 1 979, when the five
Heads of State , meeting again in Cartagena on the tenth anniversary of the
Agreement , adopted the Cartagena Mandate , which defined broad political and
economic guidelines fof future Andean integration .
Last year , too , the institutional framework of the Andean Pa-'t was expanded
with the setting-up of,, the Andean Court of Justice and the signing of "the
Treaty establishing the Andean Parliament ;        furthermore , it was in 1979 that
the meetings of Foreign Affairs Ministers of the five member countries were
institutionalized through the formation of the Andean Council , the aim of
which is to formulate joint foreign policy for the member countries .
The Cartagena Agreement aims to achieve balanced and harmonious development
of the member countries , faster economic growth and constant improvement of
the standard of living.       The ' machinery by which such objectives are to be
                                                                                2
fulfilled includes the liberalization of trade , a common external tariff ,
industrial programming overall and sectoral ( metal products , petrochemicals
and motor vehicles )^ the treatment of foreign capital , agricultural planning,
                                (
1 „.     .  .   ,     . . .
  The original signatories to the Agreement were Bolivia , ' Chile , Colombia ,
 Ecuador and Peru ; Venezuela acceded in 1973 and Chile withdrew in 1976 .
  The integration of the Andean sub–region extends also to finance ar.d , for
  this purpose , the Andean Development Corporation (ADC ) was set up in 1968
  and the Andean Reserve Fund in 1976 .
2
  The dismantling of tariff barriers is due to be completed by 31 December 1983
  and a common external tariff will enter into force for Colombia , Peru and
  Venezuela ; the date fixed for Bolivia and Ecuador -is 31 December 1988 .
 ---pagebreak---   harmonization of economic and. social policies , and so forth . -One of the
  striking features of Andean integration has been the preferential treatment ,
  specified in the Agreement , for Bolivia and Ecuador , the two countries
  least economically developed in relative terms , and in particular the
  special support programme for Bolivia , which comprises a series of measures
  to promote the country* s development .
  By their solemn endorsement of these objectives in the Cartagena Mandate , the
  five Heads of State have sought to give fresh impetus to the integration
  process which , in recent years , has encountered various difficulties . The
  Mandate also gives high priority to the Andean Group 's external relations .
  (notably the development of relations with other organizations grouping' .
  countries pursuing integration) and states the need for increasing political
  cooperation within the* Group .
                                                                           s
  It is within this context that the Andean Group is currently activating its
  external relations and seeking to establish closer ties with the Community .
  2.  Basic data
  The combined land area of the member countries of the Andean Group
  is 4*7 million . sq . km , ( more than three times the area of the Community), and ,
  the population of over 70 million , whose life expectancy is 61 years , is
  growing at the rate of 2>% per year ; 10% of the population , i.e. 50 million
  persons , are below 30 years of age ; 65% are town-dwellers ; infant mortality
  is 71 f°o. 23 million persons make up the economically active population .
  Per capita income in 1977 was ^1 100 (but income in Venezuela is four
• times that in Bolivia).
 ---pagebreak--- The Andean Group is the developing world 's seventh largest producer
( after India , Saudi Arabia , Iran , Brazil , the ASEAN countries and Mexico ).
In trade , as an importer and exporter , the Group ranks fourth among
developing countries ( after Saudi Arabia , the ASEAN countries and Iran),
                                               1
It is a major supplier of raw materials •          The five Andean countries -
produce petroleum and one of them ranks among the -world 's leading
producers and exporters of petroleum#
In 1977 "the Andean Group 's external trade amounted to $31 000 million ,
with a trade surplus of $63 million; in 1978 the figure for external
trade was $32 800 million , and there was a slight trade deficit of
$53 million. Trade with the EEC – the Group 's second largest trading
partner after the USA – was $5 600 million in 1977 and $6 100 million
in 1978 ; in 1977 "the Andean Group 's deficit was $1 J00 million and in
1978 $1 600 million.                     "
                                             ι
The Group also had a trade deficit with the USA in 1977 ( $324 million )
and a large deficit with Japan ( $1 400 million), due principally to the
fact that imports from Japan accounted for 11.5$ of all the Andean Group 's
imports whereas Japan took barely 2,5% of the Group 's exports .
Net private foreign investment in the member countries of the Andean Group
by DAC countries in 1977 was of the order of $400 million ( one fifth of
total investments in Latin America), of whioh $354 million oame from the
USA2.                                      -                '
                             t                                          - '
  The Andean Group possesses particularly large mineral resources :         copper ,
  iron , zinc , tin , gold , silver , molybdenum , tungsten and antimony.
2.      ..    .  ..   _  .      -
  According to the Junta , as of 1977 total foreign investment in the
  Andean Group added up to $8 000 million distributed as follows :
 Venezuala $3 600 million; Perù $2 000 million; Colombia $1 400 million,
  Ecuador $380 million; Bolivia $120 million; $1 800 million of the total
  investment went to the industrial sector .                    *
 ---pagebreak--- Ill *    Relations with the EEC
The EEC is therefore the Andean Group 's second largest customer and
supplier ( even if trade with the sub-region accounts for barely 1.4$
of the Community * s external trade ) 1 , and the second largest source
of investment (despite the fact that, Community investment in the
sub–region has never exceeded 8$ of all foreign investment in "
Latin America) 2 • -
           y            r
With regard to the structure of EEC imports from the Andean Group , the
largest item ( approximately 50$) consists of agricultural products ? '
next in order is petroleum and petroleum by-product s^followed by mineral
products .     Certain items imported from the sub-region represent a
significant proportion 6f the Community 's imports of that item from all •
sources , notably : bananas ( 20$), coffee ( 12%), copper matte ( 20$),
lead ore ( 14$), zinc ore and concentrates ( 1?$)» "tin ore and concentrates
(45$) * tungsten ore and concentrates (8$), ores and concentrates of
non-ferrous metals ( 6$).
  The . EEC has traditionally had a trade deficit with the Andean Group
  ( except for a slight surplus in 1973 and 1975 ) » since 1977 » however ,
  the deficit has been replaced by a significant ^surplus due to the
  sharply increased deficit recorded by Venezuala , which , apart from
  Ecuador , is the only member of the Group traditionally to run a trade
 deficit with the Community.                                /■      '
 With Latin America as a whole , the EEC has continued to have a deficit
  trade balance except in 1974 and 1975 *
  Prom 1970 to 1977 , in SlEC trade with Latin America , the Andean Group 's
  share of EEC imports fell from 39*2$ to 18.7$ -and of EEC exports rose *
  from 30.7$ to 36.7$.                           .
2
  Net private direct investment by the EEC in the Andean Group amounted
  to S&6 million in 1977 *
 ---pagebreak--- Two member countries of tjje Andean Group, Colombia and Peru, have concluded
voluntary restraint agreements with the Community on trade in textile
products ;    negotiations are soon to be opened with Bolivia for the
conclusion of a similar agreement .             _
With regard to generalized preferences , the Andean countries seem a long
way from making full use of the opportunities offered by the system .
The de facto     cooperation links between the Community and the Andean Group ,
for instance between the Commission and the Junta , have certainly shown
good results over the years in the areas in which cooperation has been
possible - such ass                     -     .
( a) trade promotion;
( b ) training and technical assistance aimed at promoting regional
      integration, especially schemes - undertaken in conjunction with the
                         ^                                           Â .    ■
      Junta ;
                                            1
( c ) financial and technical assistance .          '
It is felt , nevertheless , that an institutional framework is needed and
that more precise objectives should be fixed commiting the two parties .
The conclusion of a framework economic and trade cooperation agreement
would meet this need.                             ,
1
  Aid channelled to the Andean countries ( either individually, or through
  the Junta, or through bodies operating on a continental scale) amounts
  to over 20 million EUA, which represents approximately        of aid for
  the whole of Latin America .            ' '
 ---pagebreak---                                           - 7 -
 IV.       Proposal for a cooperation agreement
 In the light of the foregoing, the Commission affirms that it is in the
 general interest of the Community to open negotiations with the
 Andean Group with a view to the conclusion of a framework cooperation
                                                                          *
 agreement which :
     ( i ) would "be non–preferential ,
                                                   ' *
   ( ii ) would be of an evolutive nature and not exclude in advance any-
            field of Community competence,
 ( iii ) would take account of the level of development of the member countries
          ; of the Andean Group,.
   ( iv) would include application of the most-favoured-nation clause ( while
            taking account of the faot that only Peru, and Colombia provisionally,
            are currently members of . the GATT ),
                        " .                                     .      .    .
     ( v) would aim to consolidate, intensify and diversify trade relations
            between the two regions ,
   ( vi) would, lay the foundations for economio cooperation in all fields
                                             1
            deemed desirable by the Parties .
 The Andean Group has indicated the need for financial cooperation to
 enable the objectives of economio cooperation to be achieved. In the view
of the Commission the Community could take these wishes into consideration in
the context of the financial resources, avai lable for Non-Associate developing
countries .
 For the Andean Group the conclusion of such an' agreement would meet with
 its repeatedly expressed wishes to establish closer links with the
 European Community with the<aim of improving the balance of its external
 relations, and -Wius constitutes a political as well as an economic
 priority.
   A separate protocol extending the provisions of the agreement to fields
    covered by the ECSC would be annexed to the agreement .
 ---pagebreak---                                   - 8 -
On the pari: of the Community , the agreement would demonstrate - particularly
following the conclusion of the Cooperation Agreement with the ASEAN countries -
that the Community is willing to diversify 1 its cooperation with the Third World
countries and that it considers the Andean Group a natural partner , particu lariy
in view of the similarities in their integration processes .
  During the exploratory talks , the representatives of the Andean Croup
  made it known that they wished the Group to participate as such in the *
  conclusion of the agreement .   Given that in international law the capacity
  of an international organization to conclude agreements is determined "by
  the relevant rules of that organization , and by its own practice , and
  taking into account the fact that the Andean Group recently concluded
  with the United States a trade agreement which was signed by the
  President of the Commission of the Cartagena Agreement and "by the        N
  representatives of the five member countries , the Commission considers
_ that there are no grounds for excluding the possibility of an agreement
  which , on the Andean Group side , would be a "mixed-type" agreement in
  the Community sense of the' term .
  The Commission believes that it is in the interests of the Community
  to encourage the process of integration already begun within the
  Andean Group . This solution would therefore combine two advantages :
  first , recognition that the Andean Group as such is entitled to conclude
  agreements , and second , the legal certainty provided by the participation
  of the member countries of the Group that undertakings will be honoured .
  The Commission therefore recommends that the Council :
          authorize the opening of negotiations with the Andean Group
          with a view to the conclusion of a cooperation agreement ,
          adopt the negotiating directives annexed hereto .
 ---pagebreak---            Recommendation for a' Council Decision authorizing the
         opening of negotiations with the Andean Group (Bolivia ,
                  Colombia , Ecuador , Peru and Venezuela)
  THE COUNCIL OP THE EUROPEAN COMMUNITIES ,      -
- Having regard to the Treaty establishing the European Economic Community ,
  Having regard to the Commission Recommendation ,                               .
  Whereas negotiations should be opened with the Andean Group (Bolivia ,
  Colombia , Ecuador , Peru and Venezuela) with a view to the conclusion
  of a cooperation agreement ,      '        ■ '
      V
• HAS DECIDED AS FOLLOWS :   '
                              t   Article 1
  The Commission is hereby authorized to open negotiations with the Andean Group
  (Bolivia , Colombia , Ecuador , Peru and Venezuela ) with a view to concluding
  a cooperation agreement between the Community and the Andean Group .
                                  Article 2
  The Commission shall conduct these negotiations in accordance with the
  negotiating directives annexed to this Decision and in consultation with
  the representatives of the Member States .                     v               „
  Done at Brussels ,         *
                  -             '          "        \       '■     '      . "
                                               For the Council
                                                          S    L
 ---pagebreak---                                                                   ATOÏEX I
                         FSGOTIATIKG DIRECTIVES
A.  NATURE OF THE AGREERENT
                                                   /  '                   . -
1.  Scope              .
The object of the negotiations is the conclusion of a framework
cooperation agreement between the European Economic Community and the
Andean Group . The agreement will be non-preferential ,
2.  Evolutive nature
                                                    >           '
The agreement should be of an evolutive nature and flexible in order to
allow for adjustment to changes in the political and economic development
of the contracting parties .    No potential field of economic cooperation
within the sphere of Community competence should be excluded in advance ,
the parties to the agreement intending to explore jointly , within the
Joint Committee , ai?y specific opportunities for cooperation .
                           i
Durât ion
The agreement will run initially for five years ; it will then be renewable
tacitly for periods of two years , unless terminated "by one of the parties .
B.  CONTENT OF THE AGREEMENT
1.  Preamble
It will be recorded in the preamble that the agreement is concluded between
equal partners , account being taken of the different levels of development
of the contracting parties and of the nature of the Andean Group as an
economic integration entity .
 ---pagebreak---                                     - 2 -
                                                                    AÎJÎ7EX I
2.    Most–favoured-nation clause        .                             - *
The most-favoured-nation clause should be inserted in the agreement ,
account being taken of the fact that the majority of the Andean Group
member countries are not yet members' of the GATT .                             ,
3.    Commercial cooperation                      _          .
The parties undertake to promote the development and diversification of trade
between them to the extent that their respective economic situations permit .
The parties undertake also to :
   ( i ) study ways and means of overcoming trade barriers ( in particular
        _ existing non-tariff and quasi tariff barriers ) taking into account
          the work of international organizations ;   -
  (ii) seek means of bilaterdl and multilateral cooperation in order to resolve
                                           ei-               ~
          common trade problems , including those related to commodities ;
( iii ) use their best endeavours to grant each otfter the widest, facilities for
          commercial transactions ;
  (iv) take fully into account their respective requirements and interests "
          arising from the need for improved access to their markets for raw
          materials SLnd semi-manufactured and manufactured products as well as
          from the processing of mineral- resources :
 ---pagebreak---                                     - 3 -                             AÎ7ÎÏEX T
    ( v ) bring together economic operators in the two regions with the . ■
           aim of creating new trade flows ;
                                     4.                                   /
  (vi )    study and recommend trade promotion measures likely to encourage
           the expansion of imports and- exports ;       (
(vii )     seek in so far as possible the other contracting party 's views
           on measures which could have an adverse effect on trade between
                                                                        »
           the two regions . , '                                        *
4«     Economic cooperation                        ' , •
                                                    ■Τ
The Parties , taking account of their mutual interests and in accordance
with the long-term objective^ of their economies , will undertake to set up
economic cooperation which , within the limits of their responsibilities ,
should not exclude any fieic1 in advance .
Such cooperation would , in particular , cover the following fields :
    (i )   industrial development ;
  ( ii )   development of agriculture and the agricultural processing industry
( iii )    scientific and technological development ;
  ( iv )   infrastructure ;
It must aim inter alia to :
(i )     promote the development of industry in Europe     and the Andean
         subregion :
 ---pagebreak---   ( ii ) encourage technological and scieritific progress ;
( iii )  open up new sources of supply and new markets ;
  ( iv ) create new employment opportunities ;
    (v ) help generally to develop the economies of the countries .
         concerned and raise the standard of living ;
                              t
  (vi )  encourage regional development ; ,
(vii )   protect and improve the environment .
As means to such ends , the contracting parties will as appropriate seek
to encourage and facilitate in particular :
    (i ) the exchange of information relevant to economic cooperation as
         well as the development of contacts    and promotion activities
         between firms and organizations in both regions ;
           s.
  ( ii ) closer links "between their respective industries , including
         mining , notably in the form of joint projects ;              -  '
( iii ) cooperation in the fields of science and technology ," environment ,
                                s ■               •
         transport and communications ,, agriculture , fisheries and forestry ;
  ( iv ) cooperation in the field of energy , including the development of
         new energy sources , taking into account work of the same nature by
         international organizations ;
    (v ) mutual recognition of the need to maintain and improve further the
         favourable investment climate , in particular through agreements
         aimed at investment promotion and protection ;
 ---pagebreak---    ( vi ) cooperation with and in non-member countries ;
   Cvii ) financial cooperation to enable the Community 's contribution to the
          development of the Andean group to be intensified in the context of,
                   ft
          the programmes which the Community is applying to Non-Associate developing
          countries ;
 ( viii ) cooperation between sources of finance in the two regions
                /
C. INSTITUTIONS'
A Joint Cooperation Committee will be set up to facilitate the implementation
of the Agreement ; its task will be in particular to promote and keep under review
                                              1
the various cooperation activities envisaged .
D. TERRITORIAL CLAUSE
E. AUTHENTIC LANGUAGES 1
                              ι
F. OTHER AGREEMENTS
 It was not considered necessary to specify in the negotiating directives that
 the Joint Committee may, if necessary, set up subcommittees, since in the
 event the customary procedures will apply .
 ---pagebreak---                                                                      AMEX TT
               Protocol to "be concluded between the European Coal
               and Steel Community and the Member States thereof
               and the Andean Group (Bolivia , Colombia , Ecuador ,
                                Peru and Venezuela )
"The provisions of the Cooperation Agreement between the European Economic
Community and the Andean Group (Bolivia , Colombia , Eduador , Peru and
Venezuela ) shall also apply in the field covered by the Treaty establishing
the European Coal and Steel Community ."
                    %                       .   ^
                                                *