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Andean integration: Myths or realities?

While three of the five Andean countries—Colombia, Ecuador and Peru—are participating actively in the free trade agreement negotiations to promote commerce and investment between the United States and the Andean Community, the recent celebration of the Ninth Annual Corporación Andina de Fomento (CAF) Conference served to reflect on the differences within the subregion and the positions held by the two other Andean countries, which abstained from taking part in the negotiations. Bolivia plays only the role of an observer, while Venezuela is skeptical of the proposed model.

Experts in commerce and investment in the Americas analyzed the political and economic situation in the hemisphere and its trade relationship with the United States at the conference held in Washington, D.C. Conflicting perspectives on opening trade in the subregion weaken efforts to attain stability in the hemisphere. The first step towards regional consensus is dialogue on the pros and cons of free trade agreements and opening trade.

The president of the CAF, Enrique García, pointed out that there is some frustration at the failure of the region to take reality, rather than perceptions, into account in the analysis. For example, the strong protests in response to the selling of natural gas in Bolivia demonstrate discontent of the Bolivian population, mostly those who are rural and indigenous and have scarce resources, who perceive that such sales will not improve their nation's economy and their quality of life. Also, the opposition to the free trade agreement makes it difficult for the Bolivian government to participate in the negotiations concerning the agreement. García underlined that many do not understand the real benefits of the agreement.

IDB chief economist Guillermo Calvo and his counterpart at the World Bank, Guillermo Perry, indicated that such perspectives do not reflect the beneficial realities of the free trade agreement. Latin American exports have increased greatly since the early 90s and have managed to double in the last 30 years. Nevertheless, Latin America's share in world trade has declined while those of the emerging Asian economies have tripled and even quadrupled. Opening trade and access to new markets, the experts indicated, is key to attaining economic growth, which in turn is crucial for poverty reduction.

The question that everybody asks is: How can social inclusion and the quality of life be improved with the free trade agreement? Those who are opposed to any type of agreement argue that the free trade agreement does not bring any benefit for the poorest; rather, it increases the gap between rich and poor and therefore creates more inequality. The first challenge for the Andean Community is to acknowledge the variety of positions on the subject. Still, the region has a great deal of work to do to catch up with other emerging markets like India and China. The experts at the conference pointed out that the hemisphere is about 30 years behind in development.

Former Minister of Finance of Mexico José Ángel Gurría pointed out that dedication is needed for progress to occur. It is impossible to fulfill every need immediately, but he suggested a long-term education plan. Also, he proposed investing efforts toward the accomplishment of future goals that improve the conditions of the region by embracing a savings culture and improving tax collections and social programs, among others things, in order to reduce poverty.

The General Secretary of the Andean Community, Allan Wagner, proposed a new agenda for the subregion focused on three essential areas: democracy and social development, education, and cooperation on matters related to security and the industry of energy.

The conference brought together ministers, professors, directors of international organizations and experts from the region. Representatives from the United States were also present.

The 9 th anniversary of CAF indicates that the organization has been successful in strengthening links between the region and the United States, García said. "It is an opportunity to build a strong relationship with the United States and to open doors for new opportunities."

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