Andean Group - December 2005 (ISSN 1741-4466)

On 22 November Colombia announced that it was ending negotiations for an Andean free trade agreement with the US. Ecuador simultaneously said that it was breaking off talks but hoped to restart talks at the end of January. On 23 November Peru added that it was joining its neighbours and suspending negotiations over the FTA. Both Colombia and Peru subsequently said that they hoped to clinch a deal before the end of 2005.

Colombia's unhappiness at the tough US line in the negotiations has been festering for the past six months. The deal should have been completed by the end of November: the original deadline for the talks which began in May 2004 was January 2005. As all three Andean countries have elections in 2006, the US may have lost its opportunity. Colombia clearly felt that its unswerving support for controversial US anti-drug policies should be rewarded in the FTA. The decision to break off the talks with the US involved the president, Alvaro Uribe. Colombia has not definitively given up on an eventual deal on a FTA. Uribe emphasised on the evening of 22 November that Colombia needs a FTA with the US, but on fair terms. Uribe said that when this round of negotiations, which started on 15 November, ran into problems on 22 November, he rang Rob Portman the US Trade Representative, to try to clear obstacles. This call did not produce results. Colombia may now be switching tack and do a bilateral deal with the US, possibly on the same terms as Peru. 

If there is no pan-Andean FTA, the US will be left with FTAs in the region with Mexico, Chile, Central America, and the Dominican Republic. The US would like a FTA with Colombia and Peru, but it is clearly none too bothered about the rest of the Andean countries. In September 2005, the US agreed that the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which offers trade incentives to Andean countries, should be renewed and extended for Bolivia, Colombia and Peru. The US said that it hoped that Ecuador would join this programme in the near future. The US embassy in La Paz has said that the US will be willing to discuss a FTA with Bolivia when the new government takes office. Whether the US will receive a favourable response depends on the character of the new government: Evo Morales, the leftwing presidential candidate, has come out against a FTA.

The problem for the Colombians is that the US offer on agriculture, in particular, does not go far enough. The Colombians want the US to allow Colombian agricultural products easier access to the US. Intellectual property is another tricky issue for both Colombia and the US. The US wants to insist on the right to patent plants and restrict the share of (locally made) generic pharmaceuticals in Andean markets. A third source of tension is the US offer on textiles. The Colombian textile industry claims that the US offer in the FTA is not as good as the terms the industry currently enjoys under the ATPDEA, which expires at the end of 2005. To be fair, the US does appear to have given some ground to the Colombians in the latest round of negotiations over phytosanitary issues. It agreed to set up a joint monitoring committee to settle phytosanitary disputes, provided the Andean countries end their ban on US beef imports, over fears of mad cow disease. Such a committee would be an almost unprecedented sovereignty concession by the US.

The chief Ecuadorean trade negotiator, Manuel Chiriboga, claimed that the US had underestimated the complexity of the issues involved in negotiating an FTA with the Andean countries. Although Ecuador claims that 16 of the 19 chapters of an eventual agreement have been sorted out, the US seems in no hurry to deal with the remaining three chapters.