Leaders of Andean governments who thought that the Free Trade Agreement with the United States would deepen the process of Andean integration turned out to be dead wrong.

Negative impacts on the standard of living and distribution of wealth are the natural by-products of the economic policies that these agreements seek to consolidate. It was predictable that this would generate political opposition to the model of integration and global insertion imposed by the conditions of these international agreements.

Venezuela's withdrawal from the Andean Community of Nations (ACN) and the electoral triumphs of Evo Morales in Bolivia and Rafael Correa in Ecuador are expressions of popular rejection of the model. Even in Peru, the early criticisms of the FTA from current president Alan García and the similar opinions voiced by his rival Ollanta Humala indicate that the Peruvian elections in April and June demonstrated popular opposition not unlike that of its Andean neighbors.

Peru's foreign trade minister, Mercedes Araoz, noted recently that Correa's win could cause problems for integration from the perspective of projection and globalization within the ACN because the group would encompass “two countries with a marked leftist tendency—Ecuador and Bolivia—and two more open countries, Colombia and Peru.” Her words were not diplomatic, but essentially correct. Undoubtedly Correa's election sharpens the contradictions between the two conflicting conceptions of integration and development within the ACN that led to Venezuela's withdrawal.

Araoz was also right that the new play of political forces among the four Andean nations complicates negotiations with the European Union or any other developed country that tries to negotiate with the subregional block.

The president-elect of Ecuador put it well when he stated that if the Andean nations are a community it should negotiate as such. “I don't criticize Colombia and Peru, they are sovereign, but they can't say that my positions or the withdrawal of Venezuela are what's affecting the ACN.”

The Peruvian government maintains that by consolidating economic policies through FTAs and applying the model of insertion that they imply is the path to achieving a more equal society and higher standards of living for the people. In the ACN, Colombia is the only other country that shares this vision. Even there, the resounding victory of Alvaro Uribe at the polls in May was accompanied by the strengthening of the Alternative Democratic Pole, which is against signing of the FTA. Its candidate, Carlos Gaviria, obtained a healthy 22% of the vote, making the Democratic Pole the second strongest political force in the country.

Like Evo Morales, the Ecuadorian president-elect rejects signing a FTA with the United States. He aims to establish limits on speculative capital, sign agreements of economic cooperation with Venezuela in the area of oil, among other measures. In this context, Correa has announced his intentions to approach Mercosur. Bolivia has already been invited to become a full member. However, as a block that represents the nations of the Southern Cone Mercosur still has its problems and gaps and lacks a proposal for alternative integration.

Despite its difficulties, there is a common denominator among Mercosur countries: the rejection of the models of development implicit in Free Trade Agreements, the attempt to seek alliances with developing countries—even outside the region—to gain better bargaining positions in international economic forums, and the search for new paradigms for regional integration based on complementary economic relations and an active role for the state. Many of these policies are directly opposed to the strategic lines of these agreements. For this reason, Brazilian foreign minister Celso Amorim has pointed out recently that FTAs with third countries are incompatible with membership in the Mercosur.

On Dec. 7, Rafael Correa travelled to Brazil to meet with presidents Lula and Hugo Chavez then accepted Evo Morales' invitation to attend the Presidential Summit of the South American Community of Nations in Cochabamba. Correa has declared that it is necessary to unify integration processes in South America “because the universe should no longer be just the Andean region.”

He's right. The delay in the approval of the FTAs between the United States and Peru and Colombia opens up an opportunity to strengthen the South American region as a differentiated and dynamic factor in foreign relations, through coordination and political alliances.

Translated for the IRC Americas Program by Laura Carlsen, IRC.

- Ariela Ruiz Caro is a Peruvian economist and international consultant and a regional trade analyst with the IRC Americas Program, online at www.americaspolicy.org.