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The Andean Community of Nations (CAN)
The Andean Community of Nations (CAN): Overview of the Situation
1. Background
Stemming from the Andean Pact of 1969 and established in 1997, the Andean Community of Nations (CAN) grouped together Bolivia, Colombia, Ecuador, Peru and Venezuela until recently. Since Venezuela’s stunning departure in April 2006, the CAN now brings together only 17% of the total population of Latin America, i.e. 97 million inhabitants, covering a territory of 3.7 million km² and for GDP of $232.5b.
Consistent with an eventual merger of the CAN and MERCOSUR within the South American Community of Nations (SACN, which in the meantime has become UNASUR), Brazil, Argentina, Paraguay and Uruguay became associate members of the CAN on 7 July 2005.
Following a 20-year absence, Chile returned to the CAN as an associate member on 20 September 2006. Mexico and Panama, observer members, show similar intentions.
The institutional framework of the CAN is composed of the Andean Presidential Council, responsible for defining the Community’s political objectives, the Andean Parliament, consultative body, which is newly elected by universal suffrage, the General Secretariat, executive body, and the Court of Justice.
2. An entity in crisis
The slow progress of regional integration in the CAN is related to the inadequate commitment of the Andean countries. These latter are unequally prepared to pay the price of true integration and are subject to the strong attraction of other regional centres: the United States to the north (signing of an FTA with Peru and Colombia), and MERCOSUR to the south and the east (Venezuela defected to join it). Most recent example to date: Bolivia, currently an associate member of MERCOSUR, is showing inclinations to become a full-fledged member, without leaving the CAN. This request raises new legal problems that have not been resolved yet (creation of an ad hoc committee).
The CAN is the second-biggest economic bloc of the subcontinent, after MERCOSUR (37% of the population of MERCOSUR and 20% of its GDP [1]). In 2004, trade between the five countries reached a record level of $7.7b. But Venezuela was mainly responsible for it, with a 127% increase in sales to its partners (to $2.5b).
This is why the departure of Venezuela, which accounted for a third of the bloc’s economic strength, was a harsh blow to the CAN and triggered a crisis.
This crisis revealed a real ideological divide and profound differences in views on the future of the region.
Following the example of President Chavez, who left the CAN because Peru and Colombia had signed FTAs with the United States, Bolivia, under President Morales, and Ecuador, under President Correa, share the same disapproval of the traditional free trade policy. But unlike the Venezuelan government, they want to remain in the CAN in order to change it from within and re-establish Andean integration on new values, with protection of the environment, as well as protection of social and cultural rights, prevailing over commercial considerations.
In contrast to this “anti-globalization” view, Alan Garcia’s Peru and Alvaro Uribe’s Colombia remain determined advocates of “open regionalism” and free trade, concerned first and foremost with economic development and productivity, interested in the Asian markets, and unwilling to get trapped in an overly exclusive regional framework.
In these conditions, the task of the Secretary General, Ecuador’s Freddy Ehlers, isn’t easy. A close aide to President Correa and staunch proponent of a fundamental revision of South America’s development models, he has nevertheless acknowledged that it is up to him to find the “middle ground”.
3. Negotiations with the EU look difficult
From the outset, the result of this polarization of the CAN into two subgroups, Bolivia and Ecuador on one side, Peru and Colombia on the other, has been to complicate the negotiation of an association agreement with the European Union, while the negotiating directive had been adopted by the EU Council on 23 April 2007. La Paz and Quito have insisted on the necessary taking into consideration of “internal asymmetries”, with Bolivia wanting, moreover, to be excluded from the negotiating perimeter on four trade liberalization categories (services, investments, intellectual propriety and government procurement).
Effectively, the inflexible maintenance of this attitude caused the failure of the 9th EU/CAN joint committee (La Paz, 29/30 May 2007). While Peru and Colombia threatened to leave the CAN, an internal compromise was reached on 8 June (decision 667). The Andean decision responds to Bolivia’s request that developmental “differences” within the CAN be taken into account in the context of negotiations, resulting in “special and differential treatment for Bolivia and Ecuador”. In return, La Paz will abandon the idea a priori of exclusion from the four categories mentioned, once the agreements negotiated by its partners in these areas will not be used against it as Andean norms. As this compromise was ratified by the Andean Summit in Tarija (Bolivia) on 14 June, negotiations for an association agreement with the EU were really able to start in Bogota in September 2007.
Since then, Bolivia’s recurrent reservations have increased the impatience of Peru and Colombia, which are openly calling for “two-speed” negotiations with the EU. The absence of a common Andean position on the eve of the 4th session scheduled for July 2008 led the Committee to postpone the meeting until September. These difficulties, plus a backdrop of strong political tensions between Andean countries (break of diplomatic relations between Colombia and Ecuador since 3 March 2008, recent tension between Peru and Bolivia) suggest long, complex negotiations, that can threaten the European approach of a global agreement, on a “block to block” basis and without exclusive, challenged by Lima and Bogota).
Updated on the 18.07.08
Stemming from the Andean Pact of 1969 and established in 1997, the Andean Community of Nations (CAN) grouped together Bolivia, Colombia, Ecuador, Peru and Venezuela until recently. Since Venezuela’s stunning departure in April 2006, the CAN now brings together only 17% of the total population of Latin America, i.e. 97 million inhabitants, covering a territory of 3.7 million km² and for GDP of $232.5b.
Consistent with an eventual merger of the CAN and MERCOSUR within the South American Community of Nations (SACN, which in the meantime has become UNASUR), Brazil, Argentina, Paraguay and Uruguay became associate members of the CAN on 7 July 2005.
Following a 20-year absence, Chile returned to the CAN as an associate member on 20 September 2006. Mexico and Panama, observer members, show similar intentions.
The institutional framework of the CAN is composed of the Andean Presidential Council, responsible for defining the Community’s political objectives, the Andean Parliament, consultative body, which is newly elected by universal suffrage, the General Secretariat, executive body, and the Court of Justice.
2. An entity in crisis
The slow progress of regional integration in the CAN is related to the inadequate commitment of the Andean countries. These latter are unequally prepared to pay the price of true integration and are subject to the strong attraction of other regional centres: the United States to the north (signing of an FTA with Peru and Colombia), and MERCOSUR to the south and the east (Venezuela defected to join it). Most recent example to date: Bolivia, currently an associate member of MERCOSUR, is showing inclinations to become a full-fledged member, without leaving the CAN. This request raises new legal problems that have not been resolved yet (creation of an ad hoc committee).
The CAN is the second-biggest economic bloc of the subcontinent, after MERCOSUR (37% of the population of MERCOSUR and 20% of its GDP [1]). In 2004, trade between the five countries reached a record level of $7.7b. But Venezuela was mainly responsible for it, with a 127% increase in sales to its partners (to $2.5b).
This is why the departure of Venezuela, which accounted for a third of the bloc’s economic strength, was a harsh blow to the CAN and triggered a crisis.
This crisis revealed a real ideological divide and profound differences in views on the future of the region.
Following the example of President Chavez, who left the CAN because Peru and Colombia had signed FTAs with the United States, Bolivia, under President Morales, and Ecuador, under President Correa, share the same disapproval of the traditional free trade policy. But unlike the Venezuelan government, they want to remain in the CAN in order to change it from within and re-establish Andean integration on new values, with protection of the environment, as well as protection of social and cultural rights, prevailing over commercial considerations.
In contrast to this “anti-globalization” view, Alan Garcia’s Peru and Alvaro Uribe’s Colombia remain determined advocates of “open regionalism” and free trade, concerned first and foremost with economic development and productivity, interested in the Asian markets, and unwilling to get trapped in an overly exclusive regional framework.
In these conditions, the task of the Secretary General, Ecuador’s Freddy Ehlers, isn’t easy. A close aide to President Correa and staunch proponent of a fundamental revision of South America’s development models, he has nevertheless acknowledged that it is up to him to find the “middle ground”.
3. Negotiations with the EU look difficult
From the outset, the result of this polarization of the CAN into two subgroups, Bolivia and Ecuador on one side, Peru and Colombia on the other, has been to complicate the negotiation of an association agreement with the European Union, while the negotiating directive had been adopted by the EU Council on 23 April 2007. La Paz and Quito have insisted on the necessary taking into consideration of “internal asymmetries”, with Bolivia wanting, moreover, to be excluded from the negotiating perimeter on four trade liberalization categories (services, investments, intellectual propriety and government procurement).
Effectively, the inflexible maintenance of this attitude caused the failure of the 9th EU/CAN joint committee (La Paz, 29/30 May 2007). While Peru and Colombia threatened to leave the CAN, an internal compromise was reached on 8 June (decision 667). The Andean decision responds to Bolivia’s request that developmental “differences” within the CAN be taken into account in the context of negotiations, resulting in “special and differential treatment for Bolivia and Ecuador”. In return, La Paz will abandon the idea a priori of exclusion from the four categories mentioned, once the agreements negotiated by its partners in these areas will not be used against it as Andean norms. As this compromise was ratified by the Andean Summit in Tarija (Bolivia) on 14 June, negotiations for an association agreement with the EU were really able to start in Bogota in September 2007.
Since then, Bolivia’s recurrent reservations have increased the impatience of Peru and Colombia, which are openly calling for “two-speed” negotiations with the EU. The absence of a common Andean position on the eve of the 4th session scheduled for July 2008 led the Committee to postpone the meeting until September. These difficulties, plus a backdrop of strong political tensions between Andean countries (break of diplomatic relations between Colombia and Ecuador since 3 March 2008, recent tension between Peru and Bolivia) suggest long, complex negotiations, that can threaten the European approach of a global agreement, on a “block to block” basis and without exclusive, challenged by Lima and Bogota).
Updated on the 18.07.08
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