April 18, Venezuelan President Hugo Chavez said Venezuela would exit from the Andean Community of Nations (CAN), and that he would consider dropping import tariffs for select agricultural goods for some neighboring countries.
Announcing Venezuela’s withdrawal from the CAN, Chavez said, “For years I’ve been saying that the Andean Community is dead. Right now, I’m president of the Andean Community. And what am I president of? Of a big lie. Above all now that Colombia and Peru have signed a free trade agreement with the United States, in this it’s true that they finished killing it.”
According to a statement the president made to the press today, Venezuela’s withdrawal from the Andean Community will be taken in steps.
The goals of the Andean Community, which includes Bolivia, Colombia, Ecuador and Peru, are to work toward “a single market, an Andean territorial development strategy, and an Andean strategy for social cohesion.” According to the group’s website, in 1989 the group “[set] aside [its] development agenda, [and] centered [its] efforts on trade liberalization,” which resulted in a free trade agreement in the region in 1993.
The era of economic liberalization proved an economic disaster in Latin America. Between 1980 and 2000 growth was one eighth what it was in the previous twenty years, according to a study of the Washington based Center for Economic and Policy Research.
Venezuela was not always so skeptical about CAN. In December 2003, CAN and MERCOSUR, a trade bloc which consists of members Paraguay, Uruguay, Argentina and Brazil signed a trade agreement between the two groups. Venezuelan Commerce Vice-Minister José Manuel Soto called the agreement “a first generation agreement, a first step, but a fundamental step for that which we conceive as strategic for the integration of South America, which goes much beyond the commercial component. We are talking about the physical, political, cultural, social, and economic integration.”
However, as Venezuela has moved closer to joining MERCOSUR, Chavez has increased his anti-CAN rhetoric, saying last November, “Venezuela has nothing to gain from the current Andean Community, nothing.” In December, Venezuela was put on track to become a full voting member of MERCOSUR, a process which can take years. A key focus of Chavez’s presidency has been to work for the creation of an economic and financial stronghold in Latin America independent of Washington.
The latest rejection of MERCOSUR comes after Peru’s December announcement of a free trade agreement with the United States and a similar Colombia announcement in February. Negotiations between the countries had been going on since May 2004.
Reaction to Chavez’s announcement has been mixed, and seems to have come as a surprise to the group. “We still don’t have any official communication with respect to the decision; neither do we know the practical scope of these comments. The Venezuelan Delegation that is coming to these meetings with the European Commision doesn’t have precise information either, and so we’re in a stage in which I think we should be calm,” Allan Wagner, the Secretary General of CAN told a Columbian Radio Station. Colombian President Alvero Uribe said that all countries involved need to analyze the situation before moving forward. “We’re looking for an open Andean Community, that can overcome the levels of poverty we now have, and it’s because of that that we want to deal with this topic with arguments and very calmly, in analytical debates with the conviction of finding roads so that it goes well for everyone,” he said.
The relationship between Uribe and Chavez has been remarkably strong considering their widely disparate politics, especially over trade issues. Uribe is a close ally of the United States, the country which Chavez largely blames for Latin America’s economic problems. Despite this, the two countries have signed several agreements, including one for a gas pipeline from Venezuela to the Pacific Ocean, and Colombia remains reliant on Venezuela’s good will not to crack down on the large number of undocumented Colombian immigrants in the country. Also, during public appearances, the two are very friendly, often joking with each other.
Peruvian President Alejandro Toledo asked Chavez to reconsider his decision. “I hope that Chavez can reconsider what he’s said. It’s hard for me to believe that he was to disintegrate, to dismember the Andean Community,” he said.
Ollanta Humala, the presidential candidate who Chavez has said is the person to bring the second independence to Peru, said he was sorry for Venezuela’s decision, but that each country needs to make sovereign decisions about what is best for its national interest. Flores Lourdes, another presidential contender whom Chavez has called the “candidate of the oligarchy,” said, “I deplore [the statements] of the president of the CAN, now the president of Venezuela, saying that [the CAN] doesn’t work.” Bolivia reacted positively to Chavez’s decision. “I’m sorry that we have some disintegrationist governments. The treaty that Colombia and the United States signed has taken away the Bolivian soy trade,” said Bolivian President Evo Morales.
Uribe appeared to defend the treaty. “If a brother country is doing well because of the price of oil, of iron, or of steel, this also helps the economies of its brother countries. If it goes well for brother Bolivia because it’s an associate observer of MERCOSUR, since the 90s and it buys products in this market that Colombia can’t buy, then let it go well for Bolivia because this way it goes well for the all the Andean Nations,” he said.
Chavez also said yesterday that Venezuela was considering dropping tariffs on some Bolivian, Paraguayan, and Uruguayan goods. “In the commercial realm, we’re disposed to take up a model in which Venezuela eliminates import tariffs for Paraguayan soy or Bolivian coca. We need a reserve of food, which we don’t have, this way we would be able to create an extraordinary importation scheme.” Venezuelan government officials say they are trying to expand food production in the country, and have promised to protect domestic agriculture, a pledge that is viewed with skepticism among some in industry.