RNM UPDATE 0420

December 14, 2004

Prepared by the Communications Division of the Caribbean Regional Negotiating Machinery (CRNM), this electronic newsletter focuses on the RNM, trade negotiation issues within its mandate and related activities.

Special Issue:  VISION BECOMES REALITY, LANDMARK SUMMIT ADVANCES AN INTEGRATED SOUTH AMERICAN SPACE

NEWS BRIEF: ROHEE TO BROKER AGREEMENT ON ACP CANDIDATE FOR TOP WTO POST                       

[South American leaders] “are witnessing a historic event that is turning into flesh and bone the dream of Liberator Simon Bolivar from 180 years ago”  --

Bloc Launched                                                                                                                  At the Third South American Presidential Summit convened in Cuzco, Peru December 8 to 9, an accord establishing the South American Community of Nations was adopted, effectively launching a nascent political and economic bloc of nations.  The Cuzco Declaration on the South American Community of Nations is the founding document.

Twelve South American countries were represented at the two-day Presidential Summit.  President Bharrat Jagdeo and President Runaldo Venetiaan, respectively, led the Guyana and Suriname delegations.

Institutional Set up and Member States                                                                      It is not envisioned that the South American Community of Nations will have a Secretariat of its own, instead coordination will be based on pre-existing agreements and institutions.  Peruvian Foreign Affairs Minister, Manuel Rodríguez Cuadros, explained, “our objective is not the creation of another international organization with budget and secretariats, but rather a swift mechanism taking advantage of the current infrastructure.”

The new bloc comprises members of the Andean Community of Nations (CAN, i.e. Venezuela, Colombia, Ecuador, Peru and Bolivia) and the Southern Cone Common Market (Mercosur, i.e. Argentina, Brazil, Paraguay and Uruguay; in recent months, Mercosur has increased its ranks - at Mercosur’s Twenty-Sixth Presidential Summit this year, Mexico and Venezuela joined as associate members).  Members of neither grouping, the South American bloc also comprises Chile and two CARICOM countries, Guyana and Suriname. 

According to a senior official at the Conseil Régional de Guyane, French Guiana did not participate in the summit, as the invitation to the summit was extended to independent countries.  That official confirmed to RNM UPDATE that efforts are underway, however, to include French Guiana as an observer, on behalf of France, in the Amazon Cooperation Treaty Organization (ACTO).  Signed in July 1978 by Bolivia, Brazil, Colombia, Ecuador, Guyana, Peru, Suriname and Venezuela, in addition to focusing on conservation and sustainable use of renewable natural resources in the Amazon territories, ACTO promotes regional integration, competitiveness and institutional strengthening.

Lead up to the Establishment of the Community                                                   The summit in Cuzco was the third such encounter since an initial meeting of South American Presidents in Brasilia in 2000.  Dialogue amongst Presidents of CAN and Mercosur on this integration effort began a decade earlier, though.

Preliminary steps toward the signing of the accord for the South American Community of Nations were advanced in 2003 and subsequently July and October 2004, resulting in the signing of accords between CAN and Mercosur for the creation of a free trade zone.

Areas of joint action and the development of an integrated South American space will be advanced at the organization’s first meeting, to be held in Brazil next year.

Focus of the Bloc                                                                                                              In creating the new bloc, it is expected South America will consolidate a shared identity and solidarity, galvanizing its capacity for effective action in the hemisphere and on the world stage.  Encompassing an area of 17 million square kilometres with a market of 361 million people, according to the Andean Community Secretary General, Ambassador Allan Wagner, the total exports of the South American Community of Nations to the world in 2003 topped US$ 180 billion, and the bloc had a combined Gross Domestic Product of US$ 974 billion in the same year.

Cooperation amongst the new bloc of nations is primarily on economic, commercial, and infrastructural integration.  It has been revealed, the South American Community will incorporate the project for the Regional Infrastructure in South America (IISRA) and the free-trade accord signed between Mercosur and CAN.  In addition, the expectation is the South American Community of Nations will foster closer and stronger cooperation with the Caribbean Community (CARICOM) and the Central American Common Market.  According to the Peruvian Foreign Minister, the South American grouping would also complement the work of institutions such as the Organisation of American States (OAS).  “A more united and homogeneous South America will allow the OAS to act with greater efficiency,” he said. 

Ambassador Ramdin, Special Adviser to the Government of Suriname on Western Hemispheric Affairs (and CARICOM Candidate for the post of Assistant Secretary General, OAS), told RNM UPDATE “while the new bloc can complement the OAS, the OAS remains the pre-eminent body in the hemisphere as regards consensus building in a multitude of areas.  That having been said, the OAS faces challenges; in this respect, it needs to be more active in bringing together all the sub-regional entities and integration systems to meet under its auspices, at least once a year, to advance a hemispheric agenda in a holistic manner in various areas.” 

The very first summit in 2000 sought to devise concrete proposals for the establishment of an integrated communications network in South America, since then there has been additional focus on energy infrastructure.  Underscoring the focus of the bloc on infrastructural projects, at the summit Peruvian President Alejandro Toledo and Brazil’s President Luiz Inacio Lula da Silva signed an agreement with respect to financing for an inter-oceanic highway, intended to connect Assis in southeast Brazil with the ports of Matarani, Ilo and Marcona and Pisco on the Pacific coast of Peru.  The 1,200 kilometre long highway linking the Atlantic with the Pacific Ocean is expected to take two years to build at a reported cost of US$ 700 million.  “The decision by Brazil and Peru to build the highway in partnership is a crucial factor in the stimulation of trade flows,” said Lula, in an address at the closing ceremony of the Presidential Summit.

Lula emphasized the importance of support from international financial institutions for the consolidation of the new South American grouping, making special mention of the International Monetary Fund in respect of infrastructure investments.

Guyana’s Ambassador to Venezuela, Ambassador Odeen Ishmael, told RNM UPDATE “in a sense, the community has already gotten off the ground with the establishment of the initiative for the Integration of IISRA. This body, established by the Second Summit in Ecuador in 2002, has already started to identify and implement projects on the integration of communication networks in South America.  Greater development in the process will certainly be realised if an initiative on integrating the continent’s energy infrastructure is pursued by this third Summit.”  The Guyanese envoy further noted, “with regard to the communication initiative, at a meeting held in Peru last month, IISRA approved the development of three projects for Guyana – the road link with Venezuela, the Linden-Lethem road, and the Takutu Bridge. A new road link stretching from Surname to Linden has also been identified for consideration.”

Guyana and Suriname in the New South American Bloc                                           In speaking with RNM UPDATE on the subject of Guyana’s dual membership in CARICOM and the South American bloc, an official Guyanese source emphasized “Guyana’s participation in the South American Community of Nations is without prejudice to its obligations under the Revised Treaty of Chaguaramas.”  Permanent Secretary in the Ministry of Trade and Industry-Suriname, Mr. Mauro Tuur, confirmed to RNM UPDATE that this was Suriname’s view as well.  “While Guyana and Suriname are members of CARICOM, they are also South American countries, hence their involvement in the new South American grouping,” Mr. Tuur said. 

Commenting on the role of Guyana and Suriname in cementing closer relations between CARICOM and the South American bloc, Guyana’s Minister of Foreign Trade and International Co-operation, Hon. Clement Rohee, told RNM UPDATE,  “Guyana and Suriname will be an important gateway between South America and CARICOM.”  Ambassador Ramdin added “these two CARICOM countries can play a critical role in  forging bridgeheads between CARICOM and South America.”  The senior Surinamese Government advisor confirmed that Celso Amorim is slated to visit Paramaribo, Suriname to meet with his counterpart Hon. Maria Levens, during the week of December 13 - on the agenda, Suriname-Brazilian relations. 

Shifting Dynamic of Regional Integration                                                               Sub-regional integration has traditionally been geographically determined.  We have seen this in Central America, even in CARICOM.  This approach has increasingly been turned on its head, by countries engaging in multiple integration movements.  The revised Treaty of Chaguaramas enables CARICOM countries to engage third countries.  The involvement of Guyana and Suriname in the South American bloc reinforces a shift away from conventional, linear integration movements, determined by geographic disposition; thus breaking the mould of traditional integration efforts.  This is certainly not the first time the traditional ‘configuration’ of integration has changed in the CARICOM context.  Belize, for example, is part of the Central American integration system, as well as a part of CARICOM.  Similarly, while the Dominican Republic has strong ties with CARICOM, it has traditionally been aligned with Central America; a relationship that has been reinforced by its inclusion in the US-Central America Free Trade Agreement (CAFTA). 

The recent efforts at closer integration as regards the involvement of Guyana and Suriname in the South American bloc could conceivably involve other CARICOM countries, in the near future.  Trinidad & Tobago, for instance, once part of the South American land mass, has extensive trade and commercial relations with South America.  Speaking on condition of anonymity, a diplomatic source said that it is logical to assume Trinidad & Tobago may have an interest in joining the South American Community of Nations at some point.  Traditionally, using Venezuela as a spring-board into South America, Trinidad & Tobago has recently made commercial in-roads into Brazil.  

“CARICOM needs to further study the strategic implications of certain member states engaging in closer linkages with third countries,” said another diplomatic source.

Brazil and South American Integration, some Geo-Political Considerations       In respect of a pan-South American community of nations, the election of Luiz Inacio Lula da Silva as Brazil’s President in late 2002 altered Brazil’s role in Latin America and the Hemisphere in two important ways.  Through Brazil, Mercosur - the world’s third-largest trading bloc - has emerged as the nexus for the consolidation of a resurgent South America.  The new South American bloc reinforces this, as is evident in a recent statement by the Peruvian Foreign Minister that not only will economic, political and infrastructure integration underpin the South American bloc, but the Community will also be a factor in achieving more balanced hemispheric relations.

A resurgent Brazil has become a rallying point for South American countries across a continuum of issues.  Importantly, Brasilia has emerged as a counter-balance to Washington in respect of the Free Trade Area of the Americas (FTAA). 

Second, emerging alliances amongst Mercosur countries and the Andean Group have made for a more assertive Latin group.  Shared ideological convictions as regards social justice issues have cemented this bond.

Spearheaded by the Brazilian President but also supported to varying degrees by like-minded South American Presidents, clearly there is a growing movement to prioritize greater continental integration. 

A new vision is being fashioned for relations amongst South American countries, but also between them and third countries in the Americas.  More importantly, the sense of with whom and how partnerships are to be leveraged is also changing.  One such partnership is the FTAA, negotiations for which have been languishing.  The Summit of the Americas process, in which the FTAA is embedded, grew out of the Enterprise for the Americas Initiative (EAI).  The intention of the Initiative was to encourage and support market-oriented reforms and economic growth in Latin/Central America and the Caribbean, the broker in this exercise being the United States.  Key in this was the economic model exported by the US to govern this commercial and trading relationship. 

The model has come under increasing criticism, especially in Latin American countries most affected by the scourge of financial and economic crises in recent years.  A former union boss, Lula da Silva’s left-of-center world view is a major obstacle to the economic orthodoxy of Washington.  The Council on Hemispheric Affairs contends Lula has a “strong orientation towards multilateralism and progressive social policy”. 

Conceivably, the birth of the South American Community of Nations consolidates Brazil’s new found prowess in the hemisphere and its role as a champion of developing country causes, at large. 

Critics and Advocates                                                                                               Critics of the new bloc remain sceptical about whether it will be able to advance the creation of a common market, as in most cases these countries export similar products.  Similarly, they express concern with the proliferation of regional blocs in Latin America, and what they argue is an absence of tangible results to show for them.

The absence of some South American presidents from the summit has added to prevailing scepticism, as regards the degree of commitment by all South American leaders to the regional alliance. 

Expressing confidence in the success of the new continental community, the Peruvian Foreign Minister recently responded to critics of the bloc saying “there will be born a new area of political integration with a vision to promote commerce, create regional and interregional markets and expand communications.”  An affirmation to the new South American bloc, former Argentine president Eduardo Duhalde has said the new bloc represents the realization of an ‘old integration dream’, but also is a recognition that “our countries cannot face alone the challenges of the new economic and political world order.”

While not overly critical, other observers are more guarded about just how cohesive a grouping a continental bloc can be when within regional blocs, like Mercosur, for example, commercial relations amongst members are often fraught with disputes, pitting various national trade interests against one another.  In a December 9 article on the incipient continental grouping formed this past week in the capital of the ancient Inca civilisation, The Economist cautioned “practising integration is harder than talking about it.”

NEWS BRIEF: ROHEE TO BROKER AGREEMENT ON ACP CANDIDATE FOR TOP WTO POST

On the occasion of the 80th Session of the African, Caribbean and Pacific (ACP) Ministerial Council, November 29 to December 3, the Kenyan Delegation announced it was putting forward Mukhisa Kituyi, Kenya’s Trade Minister, as a candidate for the post of World Trade Organization (WTO) Director General.  The term of the current WTO Director General, Dr. Supachai Panitchpakdi, comes to an end September 1, 2005, and WTO members have until month-end to formally name candidates for the post. 

There are currently three other candidates vying for the high-profile post.  Some weeks ago, Mauritius had disclosed its intention to field its own candidate, putting forward Jayakrishna Cuttaree, Minister of Foreign Affairs and International Trade and Regional Cooperation.

At the recent ACP Ministerial Council, Guyana’s Minister of Foreign Trade and International Co-operation, Hon. Clement Rohee, was asked to be an intermediary between Kenya and Mauritius.  Minister Rohee met with representatives of the two countries in Brussels.  Coming out of those consultations, Minister Rohee revealed a December 15 deadline had been agreed to, by which time a decision would be made on which of the two would be designated as the over-all ACP candidate.

“The issue is to reach agreement on one ACP candidate, either Mauritius or Kenya,” Minister Rohee told RNM UPDATE December 13, shortly before getting an update from the two sides on the status of their bilateral discussions.

Note:  Dear Subscriber, this is the last issue of RNM UPDATE for 2004.  This has been a mixed year in the international trade policy arena.  Through it all, your feedback has been invaluable.  I extend a special word of thanks to those of you who regularly correspond, your insights have been especially useful.  RNM UPDATE will come back on stream with its first issue of the year in late January 2005.  All the best for the Holiday season, and best wishes for the New Year!

For More Information Contact:

Nand C. Bardouille 

Communications Officer

Caribbean Regional Negotiating Machinery (RNM)
3rd Floor, The Mutual Building, Hastings Main Road, Hastings, Christ Church, Barbados
Tel: (246) 430-1678
FAX: (246) 228-9528
email:  nand.bardouille@crnm.org

Previous issues of RNM UPDATE are archived on and can be downloaded from the RNM website: http://www.crnm.org

The ‘RNM DRAFT CALENDAR 2004 ', that provides an account of hemispheric and multilateral trade meetings, is available on the RNM website.