Bulletin 105 on Latin American and Caribbean Integration June 2006 Contents SELA prepares study on asymmetries in Latin American and Caribbean integration (1) Main Agreements of the Special Meeting of the Andean Presidential Council (2) Presidential Agenda to reach customs union in Central America (2-3) CARICOM chairman satisfied with single market progress (3) Mexico lays bridge for trade with Central America (4) II Summit on the Mesoamerican Energy Initiative (4-5) Briefs (6-7) - Panama and Chile sign FTA - Negotiations for an FTA between Colombia and Central America - Cooperation and Integration in the Wider Caribbean - European Parliamentarians reaffirm their interest in strategic partnership with CAN - SICA participates in consultations on Hemispheric Agenda Calendar of meetings (7) The Bulletin on Integration in Latin American and the Caribbean is a regular publication of the Permanent Secretariat of SELA, established within the framework of the UNESCO-SELA Agreement Communication for Integration in Latin America and the Caribbean of UNESCO s International Programme for the Development of Communication (IPDC). Asymmetries in Latin American and Caribbean Integration Agreements is a new report prepared by the Permanent Secretariat of SELA as part of its Work Programme for the year 2006. Chapter I of the study presents a historical and conceptual framework on the subject of asymmetries among countries which, on a global scale, affect their positions of power and development potentials with respect to each other. It also analyses the various underlying philosophies underpinning the fight against such asymmetries followed by intergovernmental organizations in the various stages of the Post-War development process. Chapter II includes a classification of the subregional integration schemes in LAC, which serves to outline two different strategies that may be applied in dealing with such asymmetries. Chapter III defines two different types of asymmetries: one concerning power and dependency among party States and another related to their national social development level. It also suggests some modalities and sources for the empirical treatment of such asymmetries. Chapters IV and V provide a conceptual analysis of the asymmetries. Chapter VI makes a brief evaluation of the philosophy and the mechanisms contained in the two types of agreements currently in force for treating such asymmetries, as defined in the second chapter. Chapters VII and VIII examine asymmetries of crucial importance for the current operation of the four subregional integration schemes in LAC. The whole text of this document can be consulted in SELA s Internet portal: www.sela.org. SELA prepares study on asymmetries in Latin American and Caribbean integration Permanent Secretariat of SELA Legal Deposit: pp 199703CS183 ISSN: 1317-1844 Latin American and Caribbean Economic System (SELA) Permanent Secretariat, P.O. Box 17035, Caracas 1010-A, Venezuela. Visit SELA s Web site at http://www.sela.org Please, send your comments or suggestions to: difusion@sela.org
Main Agreements of the Special Meeting of the Andean Presidential Council Taken from CAN s Web Page At the Special Meeting of the Andean Presidential Council, held in Quito on 13 June 2006, the presidents of Bolivia, Colombia, Ecuador and Peru, reached the following agreements: 1. In order to develop the agreements reached in the Vienna Declaration of 12 May 2006, the Member States of the Andean Community will execute the Work Plan approved at the XX Meeting of the Andean Council of Foreign Affairs Ministers during an extended session with the Principal Representatives of the Commission, with a view to clarifying and defining, prior to 20 July, the bases for the negotiations of a Partnership Agreement with the European Union, which includes a political dialogue, cooperation programmes and a trade agreement. In the corresponding works, the Member States will be represented by their Alternate Representatives to the Commission y by the Vice-Ministers of Foreign Affairs, according to the matters to be dealt with. Bolivia will be represented by the delegates to be appointed for that purpose. The base negotiation proposals to be agreed to by the Member States will be submitted to the European Union by no later than the first fortnight of July 2006, according to the approved schedule. 2. The organization s Pro Tempore Presidency was taken over by the President of Bolivia, Evo Morales. 3. The Andean Council of Foreign Affairs Ministers, meeting in an extended session with the Commission, approved a Decision making the number of judges in the Andean Court of Justice equivalent to the number of CAN Member Countries, thus enabling that jurisdictional body to fulfil its normal functions. 4. In a joint effort, the four Andean leaders requested the President of the United States, George W. Bush, to extend the tariff preferences granted by the United States to the Andean countries (ATPDEA) to those countries that require it. Bolivia, Colombia and Ecuador consider the extension necessary until they can work out and implement their trade agreements with the U.S. The Peruvian Government explicitly stated that the request it supports for reasons of solidarity with its Andean neighbors in no way constitutes an impediment to the approval of the Free Trade Agreement recently signed by the Peruvian and U.S. Congresses. 2/ Presidential Agenda to reach customs union in Central America Taken from SIECA s Web Page At the European Union-Central America Summit, held on 13 May 2006 in Vienna, Austria, the Presidents of both regions decided to launch negotiations on a Partnership Agreement that includes the creation of a free trade area. Central America reiterated its commitment to apply the decisions adopted by the Heads of State and Government of the countries of the Central America Integration System on 9 March in the Panama Declaration. During the meeting of the Council of Ministers of Public Finance, they signed an Agreement for Mutual Assistance and Technical Cooperation among the Fiscal and Customs Administrations in Central America, thus establishing an exchange of information. Similarly, the Council of Ministers of Integration and Trade approved a Central American Uniform Customs Code for four countries, except for Costa Rica, which welcomed the Code. In order to comply with the other mandates, technical work continued with the following meetings: 1. The members of the Customs Committee, with the participation of Panama, gathered in Guatemala on 25 and 26 May to continue examining their agenda, which is based on the Presidential Agreements reached in the Panama Summit. The Directors instructed SIECA and the technical commissions in charge of Customs Legislation and Procedures to prepare the Regulations of the Central American Uniform Customs Code, recently approved by the Council of Ministers of Economic Integration, which should be concluded by no later than 31 October 2006. A deadline of 60 days as of the date of the meeting was set for customs services to start requiring enterprises to be duly registered in the national and regional database. After that date, unregistered transportation units will not be allowed to make international operations in the Central American region. The definitive approval of the reforms to the Traffic Regulations was left subject to the communication of the Honduran customs authorities, while the other Directors expressed their support to the approved text. In addition, other reports were presented by the Customs Committee Commissions, after approving other matters in the area of fiscal and risk management, as well as the continuation of a series of works that they will be conducting in their upcoming meetings. With respect to the subject of merchandise valuation, the Customs Directors approved the agreements of the XVII Meeting of the Technical Commission, and agreed that the criteria issued and approved by the Committee will be published on the Web pages of the Customs Services and SIECA.
The Directors also requested the Commission to analyze and adapt the valuation regulations currently in force in order to include them in the corresponding chapter of the Regulations of the Central American Uniform Customs Code (RECAUCA). Finally, they approved the technical criteria on the interpretation and application of paragraph 1, Article 5, of the Agreement on Valuation, except for Costa Rica. 2. The Internal Revenue Directors met in San José Costa Rica, on 26 May, to be informed of the progress in the work for the Compatibility Convention of Fiscal Systems among Party States of the Central American Customs Union, which should be signed by the Finance Ministers by no later than 30 June 2006. The Directors received the report of the Internal Revenue Technical Group, which gathered prior to the meeting (from 23 to 25 May). Since the work for a consensus on the Convention was not concluded, the Directors decided to schedule a second meeting for 13 to 16 June in order to conclude the Project which was renamed as Compatibility Convention of Fiscal Contributions Applicable to Trade among Party States of the Central American Customs Union and submit it for consideration of the Council of Finance Ministers for their remarks and eventual signing. 3. The Central American Ministers of Transport gathered on 2 June at the headquarters of SIECA, in order to reactivate the working group that will continue with the work in the infrastructure area to facilitate vehicle traffic in border posts. The Ministers were informed about the work conducted by the Central American Corporation for Air Navigation Services (COCESNA) as regards Civil Aviation rules and regulations. They were also informed about the progress of the projects promoted by the Central American Commission of Maritime Transport (COCATRAM), in particular the Hydrographic Project, the Sailors School and the Short- Distance Maritime Transport project, which were approved through resolutions adopted by the Council of Ministers of Transport. They were also informed about the progress of the study on road concessions conducted by the Secretariat, contained in the document Financing for Road Works under the scheme of Public-Private partnerships (submitted at the First Training Workshop held in May, in Mexico). Georgetown, Guyana Chairman of the Caribbean Community (CARICOM) the Honourable Patrick Manning, Prime Minister of Trinidad and Tobago referred to the completion of the CARICOM Single Market process and the imminent finalisation of arrangements for the regional Development Fund as two issues of which he felt most proud of his tenure as Chairman. Speaking in Paramaribo, Suriname on Wednesday 14 June at a press conference in the Presidential Palace following a meeting with the President of Suriname, His Excellency Runaldo Venetiaan, Prime Minister Manning said he was satisfied that the integration movement was strong and would intensify with completion of the Single Economy phase of the CARICOM Single Market and Economy (CSME). He was earlier accorded a military guard of honour during a red carpet welcome ceremony at Johan Adolph Pengel International Airport, Zanderij, Suriname when he arrived accompanied by CARICOM Secretary- General His Excellency Edwin Carrington on the second stop of his mission to four Member States. The Prime Minister had earlier that day visited Guyana, where he met with the President, His Excellency Bharrat Jagdeo, and had also met with the staff of the CARICOM Secretariat at the Secretariat s Headquarters at Turkeyen, on the outskirts of Georgetown, at which venue he held a press conference. The Mission continues on Friday 15 June with visits to Belize and Jamaica as the Chairman, who demits office on 30 June to be replaced by the Prime Minister of St. Kitts and Nevis, the Honourable Dr Denzil Douglas, seeks to bring his colleague Heads of Government up to date on the initiatives he pursued during his term. At the meeting with President Venetiaan, the two leaders discussed the agenda for the upcoming 27th Meeting of the Conference of Heads of Government of CARICOM, the CSME and the key role of the private sector in that process, energy issues, security and crime in the region and the incidence of flooding in Suriname. Describing Suriname as a valued member of the Community, the Chairman said he looked forward to the President s presentation on CARIFESTA IX, which is one of the items on the agenda for the Heads of Government Meeting. The President of Suriname is the Head of Government with lead responsibility for Community Development and Cultural Cooperation (including Culture, Gender, Youth and Sport). CARIFESTA IX is scheduled for 22 September-1 October 2006 in Trinidad and Tobago. Mr Manning took the opportunity on both legs of his mission to emphasise that the Community was entering a phase that required deeper integration which was the only way to ensure that the benefits of the CSME would be equitably distributed. CARICOM chairman satisfied with single market progress Taken from CARICOM Website 3/
Mexico lays bridge for trade with Central America Taken from SICA s Web page With a view to strengthening strategic partnerships, mutual investment and the development of agricultural and livestock markets, the Ministers of Agriculture of Mexico, Central America and Panama held the First Ministerial Meeting on Agricultural Trade and Business in Meso-America The event, held in Guatemala, was attended by 120 entrepreneurs working in the agricultural and food area from eight countries, and was aimed at laying the foundations to start business in the region. Mexico s Secretary for Agriculture, Francisco Mayorga, said that the meeting was an effort to link together Mexico and Central America in the area of agricultural business. The idea is to establish alliances, not to be enemies or hurt each other by trying to enter the U.S. market through the same door, Mayorga said. For more than one year now we have been laying bridges for trade with entrepreneurs and authorities in Central America. We firmly believe that it is necessary to look South, he added. The Dominican Republic-Central American Free Trade Agreement with the U.S. (DR-CAFTA) also provides an opportunity for the Central American region to promote a greater and more convenient presence of Mexican products within the framework of the North American Free Trade Area, Mayorga said. The Minister of Agriculture and Livestock of Honduras, Héctor Hernández, explained to investors of Southern Mexico the national agricultural plan to be developed by his government in the next four years. He said that Honduras expects to produce at least 250,000 litres of milk per day this year and will start breeding new races for beef production. Hernández said that the meeting provided an opportunity to take advantage of the new economic conditions offered by the new trade order vis-à-vis the challenges of the DR-CAFTA, as it will allow for increasing trade flows among countries. Our vision is that, together, by adding up the potentials of our agricultural and food sectors, we will be able to improve our competitiveness in other commercial blocks such as the U.S. and Europe, he said. For his part, the Minister of Agriculture of Guatemala, Álvaro Aguilar, pointed out that Mexican agricultural producers have learnt much during the 10 years in which the North American Free Trade Agreement (NAFTA) has been in force. In his opinion, that is a crucial experience for Central American industrialists, since the DR-CAFTA turns the countries of the regions into serious competitors as regards products such as fruit, vegetables, coffee, sugar, cocoa, rubber, palms and livestock. II Summit on the MesoAmerican Energy Initiative Taken from SIECA s Web page The Heads of State and Government of Belize, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama and Dominican Republic, gathered in La Romana, Dominican Republic, on 3 June 2006, renewed their commitment to make progress in the development of the Mesoamerican Energy Integration Program (PIEM, by its Spanish acronym). The Initiative is aimed at promoting sustainable human development on the basis of solidarity, sustainable economic growth and regional integration, as agreed to in the summit meeting that took place in Cancún on 13 December 2005. The meeting issued the La Romana Declaration, which focused on the following aspects: 1. They endorsed their commitment of working with PIEM strategies and projects for developing regional oil, electricity and natural gas markets, and promoting the use of renewable energy, while seeking efficiency and the rational use of energy, by harmonizing the regulations of the regional energy sector. The initiative also recognizes the need to redouble efforts in order to Improve competitiveness of the regional economies Through sustainable access to reliable and safe energy sources at competitive prices, thus allowing for developing new industries for an improved offer of energy and encouraging the formation of regional productive chains for the benefit of our populations. With the purpose of developing a regional oil market, the authorities decided: - To move forward with the project for building a heavy crude oil refinery to process 360 thousand barrels per day and a thermoelectric plant linked to the above undertaking - To establish an integrating enterprise to coordinate biddings and manage supply quotas at preferential prices, prior to 31 August 2006. To accept Mexico s commitment to supply 230 thousand barrels per day of extra heavy crude oil. The investor should complete the missing amount of crude, assigning priority to crude oil coming from Mesoamerican countries to the extent in which they are available amid competitive commercial conditions. 4/
- The study conducted by the consulting firm recommends to establish the refinery plant in Guatemala or Panama, since they provide the most suitable conditions for its construction. Nevertheless, it is up to the investor to make the final decision about its location, in accordance with the bases provided by PIEM member states. With the purpose of developing a regional natural gas market, the authorities decided: - To reaffirm the commitment to promote a market for natural gas in Central America. The Working Group on Hydrocarbons will have the responsibility to prepare the terms of reference for a Pre-Feasibility Study for a Gas Project in Central America. The Summit accepted the offer of the Inter-American Development Bank (IDB) to fund a study to define the Strategy for Introducing Natural Gas into Central America. - To underscore the need to define natural gas sources, either in a specific country or in the whole region, or through imports of liquefied natural gas. To provide the necessary facilities to the office appointed to conduct the aforementioned study. To accept IDB and ECLAC as the organizations responsible for the Technical Secretariat in charge of the study. To develop mechanisms for cooperation in the area of hydrocarbons exploration. With the purpose of developing a regional electricity market, the authorities decided: - To finish building the Mexico-Guatemala interconnection line by 2007. - To instruct the Foreign Affairs Ministries and Ministers of Energy to complete the negotiations of the Second Protocol to the Framework Treaty for a Central American Electric Power Market. To harmonize and update, as soon as possible, the national legal and regulatory frameworks with the Framework Treaty for a Central American Electric Power Market in order to ensure the efficient operation of the Mesoamerican power market. With the purpose of promoting the development of renewable sources of energy as well as the efficient and rational use of energy, the authorities decided: - To dynamically promote the implementation of the projects of the Action Matrix aimed at Integration and Sustainable Energy Development in Central America. To instruct the ministers of energy to order the bio-fuel group of the Matrix to start activities by integrating Colombia, Mexico and Dominican Republic. - The authorities welcomed the progress made with the Action Matrix and instructed the ministers to create a coordination unit for the energy sector in the General Secretariat of SICA. - To promote the process of normalization and technical regulation to improve the efficiency and rational use of energy in order to establish harmonized regional norms. - To promote the contributions to the Cooperation Fund for Development in Mesoamerica, in addition to those made by Mexico. This promotional effort will include financial or in-kind contributions from other countries outside the region, as well as multilateral organizations, which will be administered by the IDB and SEGIB. - To reaffirm the importance of promoting mechanisms to facilitate the utilization of funds related to the San José Agreement and to apply procedures that allows for establishing a direct credit for imports related to the increase in oil and oil derivatives prices. With the purpose of harmonizing regional regulations in the energy area, the authorities decided: To make progress in the efforts to harmonize the regulations and norms related to the implementation of the PIEM initiatives. To instruct the Ministerial Commission to continue working on the development of a regional energy market. 5/
Briefs... Panama and Chile sign FTA Santiago, Chile The Foreign Ministers of Panama and Chile, Samuel Lewis Navarro and Alejandro Foxley, respectively, signed an FTA by which both countries will eliminate tariffs on 98% of their trade exchanges within a period of 10 years. The two ministers committed themselves to unlock the WTO negotiations, which were resumed in Geneva, Switzerland. The Agreement has a broad coverage as the majority of products will be tarifffree in both markets in a maximum period of 15 years in the case of Panama and 10 years in the case of Chile. The agreement also considered matters such as investment, market access, trade defence, border post services and dispute settlement. In addition, the ministers signed protocols on labour cooperation and environmental protection. Lewis Navarro said that Panama wants to actively incorporate itself into a globalized world, and at the political level both countries have reaffirmed their common efforts to fight terrorism and money laundering. He said that the agreement is the result of a prolonged but fruitful coordination process dominated by the vision that a balance in international trade can encourage competitiveness of the regional economies by transforming and modernizing their least developed sectors. Foxley pointed out that the agreement ratifies our political will to deepen Chile s relations with Latin America, particularly our economic links with Panama will be benefited. He added that this was a first step towards strengthening relations at the trade, financial and political levels for both nations. Negotiations for an FTA between Colombia and Central America Bogotá Colombia and the countries of the socalled Northern Triangle of Central America El Salvador, Guatemala and Honduras have started negotiations to sign a Free Trade Agreement. The first round of the negotiations took place in Bogota from 5 to 9 June. Important strides were made as regards the various issues of the negotiations, which include: access to industrial goods markets, agriculture, rules of origin, trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, institutional provisions, dispute settlement, trade defence, public contracts, services and investment. The second round will be held in Guatemala City, Guatemala. Integration and cooperation in the Wider Caribbean Port of Spain, Cooperation and integration among the countries of the Wider Caribbean were the most relevant issues debated at a meeting between the Secretary General of the Association of Caribbean States (ACS), Rubén Silié, accompanied by the ACS Political Advisor, Dr. Watson Denis, and the President of the Republic of Haiti. The meeting was held on 7 June 2006 in Port au Prince. Another relevant issue was that of natural disasters and their impact on the region. The ACS has been working on a series of programmes aimed at improving the countries preparedness in handling natural disasters, and has scheduled a High Level Conference on Risk Reduction, Mitigation and Recovery in case of Natural Disasters in the Wider Caribbean for 2007. Haiti has expressed great interest in organizing the same conference for 2008. Haiti is a party of the ACS Agreement on Regional Cooperation in the area of Natural Disasters, the Agreement on Aerial Transport among ACS Member States and Associate Members, and the Convention to Establish a Sustainable Tourism Zone in the Caribbean, among others. These agreements are currently under consideration for their future ratification. At present, Haiti is the Deputy Chair of the Special Committees on Natural Disasters, Transport and the Council of National Representatives of the Special Fund, as well as the Rapporteur country of the Special Committee on Sustain able Tourism. European Parliamentarians reaffirm their interest in strategic partnership with CAN Lima The mission of the European Parliament that observed the development of the second r ound of the presidential elections in Peru held a working meeting with the Secretary General of the Andean Community and other CAN authorities at its Lima headquarters. The meeting was regarded as a reaffirmation of the interest of the European Union in strengthening its links with the Andean Community and its prospects to establish a strategic partnership between CAN and the EU. The objective of the mission was to share the experiences gained as regards Andean integration after the Vienna Summit, which reached a conclusion as regards the steps that should be taken to reach the Partnership Agreement between CAN and the EU. 6/
SICA participates in consultations on Hemispheric Agenda Tegucigalpa On the occasion of the XXXVI Annual Meeting of the Organization of American States (OAS) held in Santo Domingo, Dominican Republic, from 4 to 6 June 2006 the Secretary General of the Central American Integration System (SICA), Ambassador Aníbal Quiñónez, had the opportunity to participate, prior to the opening session of the event, in a dialogue on the main challenges faced by the region on the economic, political and social spheres, along with the OAS General Secretary. The OAS General Secretary summarized the vision of the organization on the main issues being discussed in the region, including the issue of consolidation of democracy, electoral monitoring, migrations, security issues, the various asymmetries among the countries of the region, technological investment and the digital gap which were the main topic of discussion at this annual meeting. Ambassador Quiñónez focused on the need to boost social cohesion schemes, in order to strengthen democracy and integration processes. He also referred to the need of broadening dialogue and cooperation between the OAS and the regional integration groupings, including SICA, which, in his opinion is moving ahead fast in the various sectors where it operates and is ready to deepen relations for mutual benefit with the OAS. Calendar... Caracas, Venezuela, 4 Meeting of Heads of State of MERCOSUR Government of Venezuela Mexico City, Mexico, 11 to 14 Seminar Improvement of Procedures and Information Exchange among Central Banks in the area of Money Remittances MIF (IDB) / CEMLA Madrid, Spain, 18 and 19 Ibero-American meeting on Migrations SEGIB Cordoba, Argentina, 21 Summit of Heads of State of MERCOSUR and Associate States MERCOSUR Caracas, Venezuela, 27 VIII Ibero-American Seminar Export to Win Business Opportunities in MERCOSUR SELA-IBERPYME/ Venezuela Competitiva / Bancoex Santa Cruz de la Sierra, Bolivia, 31 July and 1 August Training workshop on internationalization strategies for SMEs SELA-IBERPYME / ICEX / AECI/ Chamber of Industry and Commerce of Santa Cruz (CAINCO). of meetings July 7/