The EU and the CAN

30 November 2007

With the next round of negotiations between the European Union (EU) and the Andean Community (CAN) scheduled to take place in Brussels on December 10th-14th, the Andean countries are under pressure to define a common negotiating position. The Andean countries face two key challenges:

1. Defining a common Andean position
The negotiations are supposed to strengthen regional integration, requiring member countries to act as a bloc. However the CAN has been weakened by the different integration and trade strategies favoured by the countries involved. Whilst Peru and Colombia are following liberal economic models based on trade liberalisation (as illustrated by the Free Trade Agreements (FTAs) they have negotiated with the United States), Bolivia and Ecuador have stated that their reluctance to sign up to this type of agreement. There is also uncertainty whether Venezuela will return to the fold. Defining an Andean consensus is therefore proving difficult.

2. Going beyond the FTA approach
The second challenge is not to negotiate an FTA as such - which is what Peruvian negotiators are accustomed to thinking about - but rather an Association Agreement. This sort of agreement places the emphasis on strengthening bi-regional relations in such a way as to promote Andean integration, but going well beyond the narrow trade focus. Association agreements are based on three complementary pillars: trade, political dialogue and cooperation, in ways designed to foster social cohesion.

Andean negotiators need to be careful, however. Beyond issues of democracy and human rights, the EU is looking to create markets for its products in Peru and other countries. It is also looking for firmer guarantees than currently exist with respect to the treatment of foreign investment in the Andean region.

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