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Peru, Colombia push for bilateral trade deals with EU

BRIDGES Weekly Trade News Digest | 24 September 2008


Both Peru and Colombia want to work quickly to conclude bilateral trade deals with the EU, as negotiations toward a regional-level pact have largely stalled.

The two countries have been working since 2006 to negotiate a bi-regional trade agreement between the EU and the four-country Community of Andean Nations (CAN), but resistance from Bolivia and Ecuador has ground that process to a halt.

Frustrated with the lack of progress, the presidents of Peru and Colombia recently sent separate but identical letters to European Commission President José Manuel Barroso urging him to accelerate bilateral trade negotiations with the two countries.

Brussels should aim "to advance simultaneously with the negotiation of bilateral trade agreements between each of the Andean countries and the European Union," Colombian President Alvaro Uribe and Peruvian President Alan Garcia reportedly said in their letters, dated 9 September. They also expressed their desire to conclude the negotiations "as quickly as possible, preferably during the first half of 2009," Reuters reported.

The presidents further stressed that regional negotiations between the EU and the Andean Community had failed due to differing visions within the bloc. For that reason, they proposed that Brussels should instead pursue bilateral trade agreements, which they described as "a proven success," alluding to two-way trade deals each country has already negotiated with the US.

But the go-it-alone stance of the Colombian and Peruvian leaders runs counter to the views of fellow CAN member Bolivia. Instead of proceeding on an individual basis, Bolivian President Evo Morales has called for the Andean countries to resolve their "internal differences" and to pursue "bloc-to-bloc" negotiations with the EU. Such an approach would be in keeping with a CAN-EU decision taken in 2006 to negotiate an Association Agreement - that would include a trade deal - at the regional level.

"Bolivia regrets that, once again, these countries have unilaterally prioritised the [free trade agreement] negotiations, thus damaging the integration process" within the Andean region, Bolivia’s Minister of Foreign Affairs, David Choquehuanca, said in response to the news of the two letters.

But Peru’s Minister of Foreign Trade and Tourism, Mercedes Araoz, held that the separation of negotiations would ultimately serve all countries’ interests, as it would allow each to proceed at its own pace in the talks.

In response to the letters, Brussels said it was willing to negotiate with whatever countries were able and willing.

"The EU is keen to pursue FTA negotiations with the Andean countries," Peter Power, a spokesman for EU Trade Commissioner Peter Mandelson, said on Monday, Reuters reported.

"However if any Andean country is not, at this stage, willing to agree the level of integration required of free trade agreements under World Trade Organisation rules, we would be prepared to continue talks with those countries which are," Power said.

Andean Community struggling with ideological divisions on trade

Based in Lima, CAN is a regional trade bloc that seeks to encourage greater cooperation and integration among the group’s four member states, Bolivia, Colombia, Ecuador and Peru. Chile pulled out of the bloc in 1976; Venezuela followed suit two decades later.

But the group has recently been forced to grapple with significant internal political divisions. While Colombia and Peru are eager to forge ahead in various trade agreements - both have already initialed free trade deals with the US - the leftist governments of Ecuador and Bolivia have expressed greater wariness.

A dispute surrounding the recently negotiated US-Peru FTA has brought the bloc’s internal divisions into sharp focus in recent months. In order for Peru to meet an implementation deadline of January 2009, it must modify CAN’s decision number 486, a set of common Andean norms on intellectual property, so that it can write its own intellectual property legislation. Peru, with the backing of Colombia and Ecuador, won the bloc’s approval to make the necessary modifications in a CAN vote held in August.

But Bolivia dissented. Following the vote, Bolivian President Evo Morales called on the Secretary-General of the regional bloc, Freddy Ehlers of Ecuador, to step down, claiming that by allowing the vote he had violated the laws of the regional body. Bolivia also vowed to ask the Andean Court of Justice to declare the vote invalid, Pablo Guzman, a Bolivian foreign affairs official, said in August, Bolpress reported.

According to Guzman, the modifications that Peru wants to make to Decision 486 would ultimately allow multinational drug companies to patent biological resources and even the traditional knowledge of indigenous peoples.

Moreover, Bolivia says that Peru, like Colombia, violated the rules of the Andean Community by offering bilateral concessions to the US, then trying to impose those rules on other Andean countries.

For its part, Peru claims that Bolivia is trying to force its own particular development model on other Andean countries, thus violating those nations’ sovereign power to choose development models for themselves.

More ideological disputes within the Andean Community could be on the horizon, as García has hinted that he has ambitious plans to further deepen Peru’s integration into global markets. The leader of South America’s fastest-growing economy recently told Brazilian President Luiz Inácio Lula da Silva that he intended to sign "a lot of FTAs" outside of CAN. García said that the regional trade bloc should not be seen as an end in itself, but rather as an instrument to be aligned with "new trends." One such option reportedly being discussed is a potential bilateral deal between Brazil and Peru. According to Peruvian authorities, a high-level mission from Brazil will visit Peru in the coming weeks to evaluate the possibility of reducing Brazilian tariffs on Peruvian products.

Colombian President Uribe is equally ambitious. "We have signed an agreement with Chile, with Peru, to go much more deeper than the framework of the Andean community," he said in address at the Brookings Institution in Washington, DC on Friday. "With three Central American countries now we have co-negotiations with Canada. We are in negotiations with the European Union. We are negotiating agreements for bilateral protection of investments with China and with India, and we are hopeful that we can at any moment have the approval in the United States Congress of our free-trade agreement."

Harmonising the differing trade views of its members will be a challenge for the bloc, but one that it seems that the President of Ecuador and Chairman of the Andean Council of Presidents, Rafael Correa, aims to address. Correa announced earlier this month that he will convene a summit of CAN leaders in Guayaquil, Ecuador in early October to make adjustments necessary "given the changing situations created by the twenty-first century."

ICTSD reporting. "EXCLUSIVE-Colombia, Peru presidents urge quick EU trade deals," REUTERS, 22 September 2008; "Colombia y Perú deciden negociar TLC con la UE al margen de la CAN," AGENCIA BOLIVIANA DE INFORMACION, 12 September 2008; "Bolivian president urges Peruvian counterpart to respect Andean Community rules," XINHUA, 4 June 2008; "Blow to the intellectual property rules of the Andean Community," BOLPRESS, 14 August 2008.

 source: ICTSD