Venezuela's President says the Andean Pact does not live up to expectations

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 12, 2003 By: Jose Gregorio Pineda & Jose Gabriel Angarita

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: Venezuela's chief executive made a statement, as reported by the El Nacional newspaper of June 12, reflecting a perhaps exaggerated position on the benefits of belonging to the Community of Andean Nations (CAN). These were his words: "The Andean Community is also stuck in gridlock. It is good for nothing; Andean integration is a lie, every country takes its own path."

This whole situation has been building since Colombia and Peru (member countries of the CAN) expressed interest in speeding up bilateral talks with the United States, inspired by Chile's experience with that country but especially motivated by the fact that the negotiations for the creation of the Free Trade Area of the Americas (FTAA) are subject to divergent perceptions that could slow down their progress.

Venezuela's Oresident said he was worried about the CAN's proposal, because it could lead to the loss of the strong negotiating power all the southern countries would have if they were united.

But this is happening just when the bloc of Western Hemisphere countries is on the verge of multiple international trade negotiations, the most visible of which are those for the FTAA. At the same time, a South American bloc is coming together, which will play a key role in the hemispheric trade negotiations.

The CAN and the Southern Common Market (MERCOSUR) will create a single free-trade area the negotiations for which are expected to conclude prior to December 31, 2003.

This is a new signal of the posture that our authorities take toward trade with other countries, alongside their refusal to spur the talks on entering the FTAA and their strong criticism of movement toward an CAN-United States bilateral trade treaty.

The most prudent thing to do would be to unify positions in the framework of the negotiations under way, with a view to taking advantage of the benefits that a potential CAN-MERCOSUR integration could bring.

• It needs to be recalled that this is a game that several can play; there is no one solution that will be entirely beneficial to all the participants.

The task is to make use of the economic benefits to compensate the sectors that will be hurt, and it is up to the negotiators to identify those sectors and obtain the best possible terms for their countries, while establishment internal compensation and adjustment arrangements to ensure the political viability of the agreements' implementation.