10:39 AM Jun 27, 1997


The president of the National Industrial Association, Eduardo Farah, called the negotiations between the Andean countries in Quito, which ended Wednesday with Peru's return to the bloc, "absolutely positive for Peru and a triumph for its proposals."

Juan Raffo, president of the National Association of Exporters, echoed that view, underlining that "the reincorporation was achieved without Peru abandoning its macroeconomic policies, nor the conditions that gave rise to the crisis in April."

In more diplomatic terms, Minister of Industry and Trade Gustavo Caillaux, who had pressed for Peru's withdrawal from the bloc, summed up the accord with the following remarks: "They have yielded in some areas, and we have yielded in others. There has been goodwill on both sides, and there are neither winners nor losers."

Although Peru does not share the development model followed by the Andean Community, April's rupture arose from tariff differences. After five years of discussions, and Peru distancing itself from the bloc, the government asked for a seven-year timeframe for the gradual lifting of tariffs on imports from its Andean partners. But Bolivia, Colombia, Ecuador and Venezuela said they would not accept a deadline more than four years off.

The discrepancy was not resolved, and the bloc's leaders announced that Peruvian President Alberto Fujimori would not be invited to the Andean Community summit, held in Bolivia.

Fujimori responded by announcing that his country would leave the Community. But the decision was never formalised by parliament, a necessary step for backing out of an international treaty.

Peru's withdrawal was welcomed by very few. First of all, it left Bolivia - a land-locked country that had already been granted associate status in Mercosur (Southern Common Market, Argentina, Brazil, Paraguay and Uruguay) - geographically isolated from the bloc.

Second, it weakened the Andean Community just as it was negotiating a free trade accord with Mercosur.

And finally, Peru is an important market for Colombia and Venezuela, the bloc's heavyweights, whose business associations made it clear to their governments that they were unhappy with the "lack of flexibility" in dealing with Peru.

The local business sector here was also distressed by the country's withdrawal from the bloc, of which Peru was a founding member in 1969, and which - they argued - was the most important natural market for Peru's still small industrial export sector.

But several government officials, including Caillaux, Economy Minister Jorge Camet, and Camet's predecessor, Carlos Bolona, interested in a model of isolated economic growth similar to that applied by Chile after its own departure from the Andean bloc in 1976, were pushing for Peru's withdrawal.

The agreement for Peru's reincorporation was reached at Wednesday's meeting of Andean foreign ministers in Quito. Caillaux headed the Peruvian delegation instead of Foreign Minister Francisco Tudela.

"We will negotiate the conditions for our withdrawal," the minister said before he set out for Quito, apparently responding to statements by Ecuadorian Foreign Minister Jose Ayala regarding the Andean countries' readiness to discuss Peru's return.

But Caillaux was unable to sustain his isolationist position, in the face of the acceptance by the representatives of Bolivia, Colombia, Ecuador and Venezuela of the conditions they had rejected in April.

Economy Minister Camet later announced here that the rest of the Andean countries had accepted Peru's conditions. "The tariff scheme established by Peru - the key aspect of our economic policy - will be respected, and the timeframe for a gradual return to the free trade zone, which will end Dec. 31, 2005, was accepted.

"Peru will receive most-favoured nation treatment," meaning it will automatically enjoy "any advantage that any of the Andean countries has conceded or concedes to a 'third party' country," and "Peru's right to negotiate with 'third party' countries on its own or within the bloc will be respected," said Camet.

Analysts say the latter condition refers to Fujimori's interest in knocking on the doors of the Asia-Pacific Economic Cooperation forum (APEC), which includes the United States, Japan and the Asian tigers, and in which Peru has been accepted as an observer.

Representatives of the five countries will meet over the next few days to speed up Peru's reincorporation.

The news that Lima would continue to be the headquarters of the Andean Community was met with rejoicing in the bloc's Secretariat, whose personnel had been facing a move to another country. The announcement was especially celebrated by the Peruvian members of the staff, who still did not know whether or not they would keep their posts in the transfer.