DOCUMENT RESUME ED 125 443 HE 008 C11 AUTHOR Carlscn, Reynold E. TITLE The Andean Common Market: An Experimentin Regional Cooperation. INSTITUTION Institute of International Education, New York, N.Y. REPORT NO 11E-2 PUB DATE 75 NCTE 15p. EDRS PRICE mF-$0.83 HC-$1.67 Plus Postage. DESCRIPTORS Business; Developing Nations; *Economic Development; *Educational Development; Foreign Countries; *High Education; Industry; *International Organizations; Program Descriptions; *Regional Cooperation; Regional Programs IDENTIFIERS *Andean Countries; Grupo Andino; Latin American Free Trade Association ABSTRACT The Grupo Andino (GRAN) was formed in 1969 as an effort at economic integration by six LatinAmerican countries (Bolivia, Chile, Columbia, Ecuador, Peru,'and Venezuela). It'was an outgrowth of its predecessor, the Latin American FreeTrade Association (LAFIA), which had been formed in 1960 witheleven member countries. The Andean Group (GRAN) from the beginningaddressed itself to the key factors that had weakened the LAPTA group.Thus (1) it put great stress on strong political support fromeach of its countries,(2) the sectorial program of industrialdevelopment was specifically aimed to increase 'the industrial capacity of thesix member), countries while, at the same time,(3) a scheme of automatic tariff reductions with relatively. few exceptions wasadopted, thereby avoiding the paralyzing effect of bilateral countrynegotiations on hundreds or thousands of individual items. Itsambitious blueprint includes the development of regional programs in suchbasic sectors as metalworking, automotive, paperand pulp, fertilizers, and steel. The-Andres Bello program is the educational arm of GRAN. Itsprojects have been a regional network of educationaltelevision-Programs transmitted by satellite and the establishment of aregional school for training in public sector administration. 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I E Institute of international Education 2 S 144 Issues in International Education The publication of this series of papers reflects the Institute's continuing concern with the critical issues in international education In recent years this concern has beer, expressed particularly through the Ind tute's sponsorship of the International Councils on Higher Ediicati tech bring together chief executives of uni%ersirres in the S. and other regions of the world for examination of topics of shared intetest. Essays prepared as subjects for discussion at these conferences will form a portion of the series, which will draw upon other resources as well. The past two decades have been a period of enOrmousgrowthin education throughout the world. As the role of education has Increased in dimension, the choices involved in educational decision-making have increased in complexity and in social impact It is hoped that this series will contribute to the ongoing debate on the issues of international education Stough examination of alternative viewpoints and through the publication of news. information As international education in our era has broadened its scope beyond traditional activity to include developmental ,assisiane and other concerns, the range of topics covered in pi*: series will reflect this breadth of interests in the field Papers in this series are prepared under the direction of the Office of Planning and Analysis. the program planning and development arm of III'_: 0197S Htn,titwie of Internation.111 du,ation 809 l'n,tteerNation% Plaza. Nev. York N Y 10017 3 N The Andean Common Market An Experiment in Regional Cooperation by Reynold E. Carlson Rev, oh! L. Carlv'm haN had a long and tmgin s lied career as an economic derelopment id? 1,1a1 and dumb), t in La Interior. iie r.fluently base lama.'Pern. a.s Regional Program Ad, nrmi the Ford Eimundation, and has several other senior Foundation ions in the area ',whaling that of Resident Representatire in both Argentina and Brazal. Dr. Carlson has taught e«womicA at Johnv llopkias and Vanderbilt, and has ser''c'd a.s economic ion.sultict to the United .Vithons and the World Bung. From 1 966 through 1969, he was U.S. Ambassador ti, cacti iLS the //hie(ithch.scus.sion at the 1 974 Camas conierence o the Owned 5 on Higher Education in t le American Repnbho, The meeting trot he sivteenth in an annual se'rie's of ter-American educators «mferences au was organized ht HE through a grant from the Tinker lonndatum of Vest' York. 4 I. The Problems of LAFTA. dam Smith's seminal would then admit both products at observation that "division m111111,11 tariffs. Argentina, for example, ut laho is limited by the dropped tariffs from 90'; toI C, extent of the market.' has However, sonic two years elapsed horn f ruit in Latin Amencii. between the opening of negotiations and Four major efforts at economic final approval in the form of a integration have fit'.en launched in reclyt complementary agreement. Given such year~. The Latin American Free Trade delays when the producers In questiop Association (LAFTA) and the Central are actively promoting an item, one can American Common Market ((ACM) imagine what happens when competing were the first in 1960, followed by the. producers are indifferent or in open Caribbean Free Trade Association op position to any scheme. (CAR I PTA I in 1968 and the Grupo . Andino(GRAN) )111.1969. This paper is A second basic problem for LAFTA had devoted to GRAN with some initial been built -in at the very beginning. the reference lo I Al I A .14 its precursor. wide variation in stages of development of the member-countries. The Big Three LA l'A's eleven member countries Braril, Argentina and Mexico garnered include Mexico and all of the South the bulk of new industrial investment. American nations. Its ambitious target while lesser members weze in danger pf was to eliminate tiff harriers and other becoming little more than satellites.' At administrative restrictions within the the outset, a special category was region by 1973. This goal.was to be established for the less-developed achieved by developing a "common countries (Bolivia, Ecuador. Paraguay, list- of commodities which would move and eventually Uruguay when 1967 it freely throughout the region and a series had killen. on parlous tunes). of "national lists by mons of which tart fs would be reduced triennially by The general dissatisfaction of most negotiations between the countries. \ LAI:TA members can be partially Neither list, prospered since virtually attributed to (I) the virtual withdrawal every item was negotiated. usuallt !in a of effective political support from key quid pro (140 basis, with individual member countries, (2) the lack of any cOuntries rctallnlig a veto power. conspicuous gains in their own industrial development and (3) the disappointing As the liberation movement slowed to a trade volume generatekl over the decade halt. LAE IA turned to the promotion .of LAFTA's operations. A few statistics or"complementary' agreements" will serve to quantify the minimal trade between two or\more countries, whereby rAults achieved by LAFTA over the specific commodities could move at decade 1961-72 and.the, increasing gap reduced (f not /ern) tariff rates between between the Big Three and the rest of the signatory members. in turn ' ' the region (see Appendix 1). evolved into a labdrious procedure Fo illustrate the problems in Dived in the f he principal interest df LAFTA . t complementary process. one might cite a members, especially of the smaller and recent case involving Sperry Rand and middle-tier countries, has always focused Olivetti. The two companws decided to on the degree to which the LAFTA rationahre their plank in Argentina. program could promote the exports of Brant and Mexico by concentrating their individual countries to the region. production on specific items. e.g.. In 1961 mini-zonal exports within the typewriters and office -calculating. LAFTA region were 7'; of, total exports. machines. Each of the three countries :1.' 1972 they had increased to only 12',' 4' *ea . of the total_The.se..incre'ases Were largety within LAFTA. "measures to accelerate in agricultural and b4sic Taw matecials progress in the lesser developed countries and W.ppld havvz occurrya eyelid- LAFTA and with.those of insufficient markets to lia'd not existed. Over the same decade ' achieve harmonious' and balanced intra-zonal import rose from Fic; Co only, development." (quoted from the LAFTA 10(7c of the total. I-4 two larger countries treaties)." during the-same decade, Mexico increased, intrazonal exports from _2' ;to 8'; , wh4 At Pnnta del.Fste in 1967 ("De'claration Venezuelan exports ;dropped from 7'; to , of the PrOsidents of Americai-,the move 5'with the absolute dollar volume of ,to develop subregional agreements.gained its exports to LAIJA countries actually momentum. In the same year the declining. In the Middle-tier countries Foreign Ministers of'the LAFTA the intra-zonal increment was more countries gave their blessing to the idea. substantml: Colombian exports rose 1 The year 1968 was largely taken up with from .2`,: to 13'; mid Chilean exports the preparation of drafts of the even Mal from 7'; to 14';. i'eru on the Other hand agreement by committees of government reflected no intra-zonal gain. starting at experts. As a prior step, the GRAN 7'; and ending at W; a decade later. countries established the Andean Feuador among the lesser-developed Development Corporation (CAI:).