Peru This Week: Peru and the Andean Community: Is it time to split?

"Peru and the Andean Community: Is it time to split?"
W. Alejandro Sanchez
Peru This Week
May 5, 2014
Originally published:http://www.peruthisweek.com/blogs-peru-and-the-andean-community-is-it-time-to-split-102877

W. Alejandro Sanchez responds to a recent El Comercio editorial and takes on the controversial question of whether or not Peru should leave the Andean Community.

On Sunday, April 20, Darwin Cruz Fiestas, a reporter for Peru’s renowned daily El Comercio, published a provocative op-ed entitled: Llegó el momento de la separación de la Comunidad Andina? (Has the time arrived to split up the Andean Community?”) As the title explains, Cruz argues that the members of the Andean Community, CAN in Spanish, should consider breaking up the bloc due to ongoing (and historical) problems regarding commercial disputes.

While I generally agree with Cruz’s thesis that the Andean Community is bordering on irrelevancy, as a personal supporter of supranational entities (like the Andean Community, the Organization of American States or the Pacific Alliance), I would like to see the Community continue to exist. Nevertheless, if there continues to be little interest among the governments of member states to promote greater integration and come up with new initiatives, then the Community will, indeed, be condemned to irrelevancy and obscurity.

Cruz’s Arguments
The CAN was created in 1969: its founding members were Bolivia, Chile, Colombia, Ecuador, and Peru, with Venezuela joining in 1973. As a sign of pride for Peru, the organization’s General Secretariat is based in Lima, in the posh district of San Isidro. Meanwhile, the bloc’s Justice Tribunal is based in Quito, Ecuador.

It is worth highlighting that a Peruvian citizen has been CAN’s Secretary General within the past decade. The renowned Peruvian diplomat Allan Wagner Tizón was elected to this post in 2004. However, even though he was supposed to be CAN’s leader until 2008, Wagner resigned in 2006 to become Peru’s Minister of Defense. (The current Secretary General is the Bolivian Pablo Guzmán Laugier).

As Cruz correctly explains in his analysis, commercial integration has been both a major objective as well as a major problem. Figuring out the perfect balance regarding what actions to take to foment commerce between CAN’s members, as well as how to deal with other non-member states, is a major reason why the bloc has lost members. For example, Chile left the bloc in 1976 becauseCAN was too focused on trade between its members. Moreover, as El Comercio states, Peru also temporarily left CAN in the 1990s. Nevertheless, Cruz is incorrect in his claim that Peru left the bloc “for a few months;” in reality, Lima left CAN from 1992 until 1994 as Peru was upgrading its economic model to a more liberal one, while CAN wanted Lima to maintain its protectionist policies.

Certainly, the political ideology of the leaders of the Community’s members has also influenced some decisions taken towards the bloc. The best example is that Venezuela left CAN in 2006 to protest negotiations by Colombia and Peru with the U.S. over a free trade agreement. At the time, Caracas was ruled by the late President Hugo Chávez, known for his tense relations with Washington, particularly after he survived a U.S.-sponsored coup in April 2002.

A major reason for Cruz’s overall argument of whether Peru should leave the Community is that nowadays its members are carrying out protectionist initiatives that hurt Lima’s commercial relations. For example, this past January Ecuador detained 14 containers of food products from the Peruvian company Ajinomoto. Quito argued that these goods, and other Peruvian products, did not abide by Ecuador’s 120 technical requirements that Ecuador’s government has imposed on imports.

A Response
I generally agree with Cruz’s analysis for El Comercio regarding the challenges that the Andean Community faces.

In the hypothetical case that Peru left CAN, it would be somewhat embarrassing, as the Community’s headquarters would then have to be moved from Lima to another member state. Moreover, at the bureaucratic level it would also be problematic to re-structure the Community’s entities, such as the Andean Parliament, which is the deliberating body of the CAN (each member state has five representatives)

Nevertheless, it is important to note that while Cruz focused on commercial tensions to highlight problems within the Community, he did not mention some positive initiatives. One example is the Andean Passport, created in 2001, which allows Community citizens to travel to other member states. It would be a shame to lose this tool which helps facilitate the free movement of people. Additionally, the Community also helped create the Universidad Andina Simón Bolivar, which has campuses in Bolivia and Ecuador.

Its few accomplishments aside, in 2014, the Andean Community is in dire need of a “reboot.” Sadly, this is unlikely to occur in the near future as the governments of CAN nations have focused their foreign policy elsewhere. Bolivia seems to be more interested in joining MERCOSUR, meanwhile Colombia and Peru are focused on the Pacific Alliance, and Ecuador’s foreign policy objectives are generally pro-ALBA.

Moreover, the Community’s historically protectionist economic ideology can no longer be applied to Peru, which is thriving thanks to a pro-investment trade model. Ultimately, while commercial integration is certainly one of the Community’s raison d’etre, like most other regional blocs across the world, CAN must find additional projects where it can be successful in order to not just thrive, but also to survive.

During the final two years of his presidency, Peruvian President Ollanta Humala could try giving the Andean Community a much-needed boost, but this is unlikely.

The Final Nail In The Coffin?
As a final point, I should stress that the Community’s fate may already be decided and it has little to do with Peru’s interest in the bloc. Namely, Bolivia will probably join MERCOSUR in the very near future. It is unclear if Bolivia would remain a member of the Community if it joined MERCOSUR, but it seems unlikely. In other words, it would be easier for the Andean Community to simply cease to exist, rather than to operate as a loose three-nation bloc.