OVERVIEW
KEY ISSUES
        EXPORTERS
        SERVICES
        MANUFACTURING/PRODUCTION
HISTORY
GOVERNANCE

OVERVIEW

KEY ISSUES

EXPORTERS

MANUFACTURING/PRODUCTION

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The Agreement of Cartagena, signed in 1969, established the Andean Group with the objectives of creating a Free Trade Area among Andean countries and a future Customs Union. Initially, the Andean Group was made up of Colombia, Peru, Ecuador, Bolivia, and Chile. Venezuela joined later and Chile withdrew in 1974. In September 1995, Panama applied for admission to the Andean Group and presently has an observer status.

The Andean Group was initially conceived to implement, on regional basis, the import substitution model of development. It included joint investment programs; preferential access for certain products (although the liberalization was rather weak); industrialization programs; and planning and regulation of foreign investment.

Subsequently, the protectionist model and import substitution program were abandoned in favor of a market "opening" process adopted by the countries in the region beginning in the early 90's. The change in economic strategies led to a change in the approach to integration. Consequently, the Andean Group was modified and became an open model compatible with the new policies of trade internationalization and to global standards.

In 1987, the member States of the Andean Group decided to give the Treaty a new direction. They signed the Quito Protocol, an amending instrument with which the Member States sought new horizons for the sub-regional integration process, including further strengthening of economic and commercial relations between them. Also, they reiterated the autonomous nature of the Andean integration process and re-affirmed the institutional structure established by the Treaty, which created different organs such as the Tribunal of Justice.

The Heads of State of the five member States next issued the Galapagos Declaration in December, 1989, that provided a new strategy for the Andean Group. They designed a series of mechanisms, among them, the creation of a Common External Tariff, the harmonization of economic policies, and the signature of bilateral agreements that strengthen trade between the countries of the region.

Beginning in 1991, the Colombia, Venzuela, Ecuador, and Bolivia began reducing the barriers to regional trade and in 1992 the Free Trade Area entered into force. The Free Trade Area between the four countries entered into force in February 1993 when all regional tariffs were eliminated.

For its part, Peru suspended its participation in the Andean Group in 1992, but established a Free Trade Area with Bolivia and provisional agreements with Colombia, Ecuador, and Venezuela. Still, it has yet to fully rejoin the Andean Group and has been permitted to keep its own tariff system while expanding its trade with the region through bilateral agreements.

Colombia, Ecuador, and Venezuela established a Common External Tariff on February 1, 1995, with different tariff levels, namely 0%, 5%, 10%, 15%, and 20%. Ecuador exempted 400 products from the CET, while Colombia and Venezuela received exempted 270. Bolivia kept its tariff structure with rates of 5% and 10%.

With respect to trade, in addition to the market "opening" mechanisms and the Common External Tariff, rules were agreed upon to prevent and correct distortions in competition; artificial means of penetration into the Andean market such as subsidies to regional exports were eliminated; trade costs were reduced; a common tariff schedule was adopted in accordance with the rules of the Customs Cooperation Council and the GATT; mechanisms to modernize and update industrial property rules were adopted and laws were enacted regarding protection of certain plant varieties and of copyrights. Also, the member States signed international agreements that provide guarantees to international investment.

Moreover, significant progress was made in terms of land, marine and air transportation; regulations were issued based on decisions concerning international transportation of passengers and cargo; progress was made in the regulation of Multi-modal Transportation Operators; and guidelines were set for the interpretation of open skies policies on a sub-regional level and with respect to international carriers.

Finally, an Andean decision about liberalization of trade in services is being elaborated in order to increase commercial links and promote technological development.

The Trujillo Amending Protocol, signed by the Andean Presidents in March 1996, established a series of institutional reforms that promote political and economic cooperation, add dynamism to the economic integration, and facilitate integration with other trade blocks.

The Andean Presidents approved new guidelines for the creation of the Andean Community (new name for the Andean Group) made up of the sovereign States that are presently members and by the institutions of the Andean System of Integration composed of the Andean Presidential Council, the Council of Ministers of Foreign Affairs, the Andean Community Commission, the General Secretariat of the Andean Community, the Tribunal of Justice, the Andean Parliament, the Advisory Business Council, the Advisory Labor Council, the Andean Promotion Fund, the Latin American Reserves Fund, the Simon Rodriguez Agreement, the Simon Bolivar Andean University, and the Advisory Councils established by the Commission.

In furtherance of the process of integration, the Cartagena Agreement Commission issued Decisions in four different areas: i) protection of intellectual property, ii) consolidation of the Customs Union, Andean relations with third countries, and iii) measures aimed at improving commercial exchange.

First, common rules were issued with respect to industrial property, copyrights, and protections related to certain plant varieties. These rules advance the process of homogenization of the sub-region's regulations and brings the Andean countries with international standards of protection in these areas.

Secondly, to strengthen the Customs Union, Decisions were issued that modify the deadlines that had been set for the entry into force of the Common External Tariff, and a gradual process for Peru's reinsertion was agreed upon.

Regarding the relations between Andean States and third countries, the Decisions issued call for member States to coordinate their positions at the multilateral level, specifically in the Uruguay Round, and to support Ecuador's accession to the WTO and the request to the European Union to extend the Special Cooperation Program to Venezuela.

With respect to measures that facilitate commercial exchange, it is worth noting that the Commission issued Decisions about, among others, transportation, the entry of used clothing to the sub-region, and tariff nomenclature.

The main Decisions in the different areas are (Spanish):

Market Access

• Aug 1992: Decision 324: Common External Tariff, Liberalization Program and Sub-regional Export Incentives

• Oct 1992: Decision 330: Subsidies Elimination and Harmonization of Sub-regional Export Incentives

• Aug 1993: Decision 337: Importation of Used Clothing

• March 1995: Application of Reference Prices

• July 1996: Decision 388: Harmonization of Indirect Taxes as Export Incentives

• July 1996: Decision 389: Regulation for the application of safeguard Measures (Article 78 of the Cartagena Agreement)

Common External Tariff

• March 1993: Decision 335: Common External Tariff

• Dec 1993: Decision 350: Modification of Decision 335

• May 1994: Decision 357: Modification of Decision 350

• July 1994: Decision 365: Modification of Decision 357

• Dec 1994: Decision 370: Common External Tariff

Price Band System for Agricultural Products

• Dec 1994: Decision 371: Andean System of Price Bands

• Dec 1995: Decision 383: Changes in the Dairy Products Price Band

• Dec 1995: Decision 384: Changes in the Rice Price Band

Customs

• Oct 1992: Decision 326: Customs Valuation

• July 1994: Decision 364: Modification of Decision 326

• June 1995: Decision 378: Customs Valuation

• June 1995: Decision 379: Andean Declaration of Value

• Oct 1992: Decision 327: International In-bond Transit

Technical Standards and Sanitary Measures

• Oct 1992: Decision 328: Andean Agricultural Sanitation

• April 1995: Andean System of Normalization, Acreditation, Tests, Certification, Technical Standards and Metrology

Intellectual Property Rights

• Feb 1992: Decision 313: Common Regime on Industrial Property Rights

• Oct 1993: Decision 344: Common Regime on Industrial Property Rights

• Oct 1993: Decision 345: Common Regime of Protection of Plant Varieties Discover-Inventors Rights

• Dec 1993: Decision 351: Common Regime of Copyrights and Related Rights

• July 1994: Decision 391: Common Regime of Access to the Genetical Resources

Transportation

• Feb 1992: Decision 314: Free Access to Maritime cargo

• July 1994: Decision 390: Modification of the Decision 314

• June 1992: Decision 320: Multiple Designation of the Andean Region Air Carriers

• June 1994: Decision 361: Modification of Decision 320

• June 1994: Decision 360: Modification of Decision 297 "Air Transportation Integration in the Andean Region"

• June 1994: Decision 358: Regulation of Decision 257 "International Transportation of Merchandises by land"

• Decision 359: Regulation of Decision 289 "International Transportation of Passengers by land"

• March 1993: Decision 331: Multi-Modal Transportation

• July 1994: Decision 393: Modification of Decision 331

General Integration Issues

• Aug 1992: Decision 322: Commercial Relations with ALADI countries, Central America and the Caribbean

• Nov 1994: Decision 367: Adjustment of the Cartagena Agreement to the Latin American and Hemispheric Integration Process

• Dec 1995: Improvement of the Andean Integration Process Peruvian Membership

• Aug 1992: Decision 321: Temporal Suspension of Peru

• Aug 1993: Decision 347: Modification of the Decision 321

• April 1994: Decision 353: Peruvian Participation in the Andean Group

• June 1995: Decision 377: Peruvian Participation in the Andean Group (amended by Decision 387)

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GOVERNANCE

The Andean Community’s governing structure is the Andean Integration System (SAI). The SAI is designed to promote the effective coordination among SAI bodies and institutions that are responsible for strengthening sub-regional integration, promoting outward expansion, and consolidating actions relating to the integration process.

 

The SAI is made up of the following bodies and institutions:

Andean Presidential Council

The highest authority of the Andean Community, the Andean Presidential Council, issues directives relating to the sub-regional integration process to lesser administrative bodies, and delegates tasks according to those bodies’ respective functions.

The Council is made up of the presidents of the member countries - Bolivia, Colombia, Ecuador, Peru, and Venezuela. The President of the Council exercises the greatest authority as representative of the Andean Community. The President serves for one year, after which he is succeeded by another Council member in the alphabetical order of the member countries.

The Council President is responsible for convoking and presiding over all ordinary and special meetings of the Council; representing the Council and the Andean Community, overseeing the implementation of Council directives on the part of the various administrative bodies; and carrying out actions entrusted to him by the Council. The Council’s responsibilities include defining sub-regional integration policy; taking action on matters of interest to the sub-region, evaluating development and the results of the process of integration; examining all matters relating to the development of the process and its external impact, deliberating on and issuing pronouncements with regard to information, initiatives, and recommendations presented by SAI bodies and organizations.

The Andean Presidential Council meets regularly once a year, but can call special meetings if deemed necessary. Meetings involve discussions of the actions by SAI bodies and organizations, such as their plans, programs, and suggestions.

Andean Council of Foreign Ministers

The Andean Council of Foreign Ministers is the body of the Andean Community responsible for policy implementation, and is charged with assuring the attainment of the objectives of the sub-regional integration process.

The Council is made up of the Foreign Ministers of the Andean Community’s member countries. As regular members, Council members enjoy full permanent to commit the states and deal with Extended meetings are held with representatives of the Andean Community Commission, with the purpose of addressing matters of interest to both bodies.

The Council President serves for a term of one year, and the presidency of the Council is occupied by the Minister from the same member country that occupies the presidency of the Presidential Council. The Council President is charged with acting as representative of the Council and the Andean Community; acting as Secretary Pro-Tempore of the Andean Presidential Council; convoking and presiding over full regular and special meetings of the Council and of the representatives of the SAI.

The Andean Council of Foreign Ministers:

• assures the attainment of the objectives of the sub-regional integration process

• formulates and implements the Andean Community’s foreign policy.

• forms pacts and agreements with third countries or blocs or with international bodies, relating to global foreign policy and cooperation

The Council meets regularly twice a year, generally in the country currently occupying the presidency. Special meetings are called when deemed necessary. Likewise, it is authorized to hold meetings at least once a year with titular representatives of the Andean Community Commission. Special meetings are held when deemed necessary.

In meetings, the Council prepares meetings of the Andean Presidents, chooses, and when appropriate, removes the Secretary General, evaluates the Secretary General’s performance, and considers initiatives and proposals submitted by member countries or by the Secretary General, among other things.

The Council issues its decisions via Declarations and Rulings. Declarations are non-binding. Rulings are juridical standards as governed by the Treaty of Creation of the Justice Tribunal under the Cartagena Agreement.

Andean Community Commission

The Andean Council of Foreign Ministers shares legislative authority, expressed through the issuance of Rulings, with the Andean Community Commission.  The Commission is made up of a representative from each one of the governments of the Andean Community member countries. Each government provides a regular representative and one alternate. The Commission’s President serves a term of one year. This office is occupied by the representative of the country that occupies the presidency of the Andean Presidential Council.

The Commission:

• formulates, implements, and evaluates the policies of Andean sub-regional integration relating to commerce and investment

• adopts necessary measures for fulfilling the objectives of the Cartagena Agreement, such as measures for achieving the Directives of the Andean Presidential Council

• coordinates the joint position of the member countries in international forums and negotiating sessions.

• approves, rejects, or amends proposals that member countries or the Secretary General submit for consideration

• represents the Andean Community in areas of its domain.

The Commission holds regular meetings three times a year. Special meetings are called by the Commission President, at the request any of the member countries or the Secretary General.

At the request of one or more of the member countries or the Secretary General, the President of the Commission may call an extended meeting to discuss sectoral issues, consider ways to make possible the coordination of development plans and the harmonization of the member countries’ economic policies, and determine how to resolve all matters of common interest. These meetings are presided by the Commission President and attended jointly by the regular representatives and the ministers or secretaries of state from the respective area. Each country exercises one vote in approving decisions.

Before the Trujillo Protocol went into effect, the Commission adopted decisions by a two-thirds vote by the member countries. Currently, an absolute majority is necessary to adopt decisions, a change which has facilitated approval of Community proposals.

The adoption of decisions relating to certain specific issues requires a qualified majority, or no negative vote.

The Secretary General of the Andean Community

The Office of the Secretary General is an executive body that since August 1, 1997 has replaced the Board of the Cartagena Agreement. A permanent body, it has its seat in Lima, Peru, although it is empowered to establish offices, with authorization of the Commission, as deemed necessary.

The Secretary General of the Andean Community is a person of recognized prestige, elected by consensus in an extended meeting by the Andean Council of Foreign Ministers.

The Secretary General:

• administers the Andean sub-regional integration process

• resolves issues submitted for its consideration

• oversees the fulfillment of Community commitments

• presents initiatives and proposals

• maintains permanent links with member countries

• maintains links with the executive bodies of other regional organizations of integration and cooperation

• enforces the decisions of the extended meetings of the Andean Council of Foreign Ministers and of the Commission

• administers the Secretariat of the Representative Assembly, which is made up of representatives of the institutions that make up the SAI.

Justice Tribunal of the Andean Community

The Justice Tribunal of the Andean Community is the jurisdictional executive body of the Community, exercising authority in the five member countries. Its permanent seat is located in Quito, Ecuador.

The Justice Tribunal:

• reviews the legality of Community decisions

• interprets, via judicial review, the decisions that constitute the Juridical Order of the Andean Community, to ensure uniform application in the territories of the member countries

• resolves disputes relating to the attainment of objectives on the part of the member countries

• settles the use of resources that by omission or inactivity fall to the Andean Council of Foreign Ministers, the Commission, or the Secretary General.

• acts as arbiter in disputes that arise between bodies and institutions of the SAI

• is responsible for overseeing labor disputes that arise among the bodies or institutions of the SAI

The Tribunal has five Magistrates who should be nationals of the member countries. Each Magistrate has two alternates to replace him or her in case of long- or short-term absence, or in case of incapacitation of dismissal.

The Andean Parliament

The Andean Parliament is the SAI’s deliberative body, and represents the people of the Andean Community. It has its seat in Santaf� de Bogot�, Colombia.

Currently, the Andean Parliament is made up of representatives of the National Congresses, conforming to internal rules as well as to general parliamentary rules.

The Parliament is constituted by representatives elected by a universal, direct vote for five-year terms.

The Andean Parliament:

• participates in the promotion of the integration process

• participates in the creation of regulations, by making suggestions to the bodies of the System Project of Rules of Common Interest.

• promotes the legislative harmony of member countries

• promotes cooperative relations and coordination with the parliaments of member countries and of third countries, and with the bodies and institutions of the System.

The Andean Parliament is made up of the following bodies:

• The Assembly: constituted by five regular representatives and ten alternates for each member country

• The Directive Board: the executive body of the Andean Parliament

• Commissions: deliberates on diverse matters of interest to the Parliament

Other bodies and institutions of the Andean Community SAI

• Andean Business and Labor Advisory Councils

• Andean Development Corporation

• Latin American Reserve Fund

• The Sim�n Rodriguez Group

• Sim�n Bol�var Andean University

• The Directorate of the Andean Integration System

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