Codification of the Andean Subregional Integration Agreement
(Cartagena Agreement)
(continuation)
Chapter XI: Physical Integration
Article 116. The Member Countries shall develop joint actions in order to improve the use of physical spaces, to strengthen the infrastructure and services that are necessary to promote the process of economic integration of the Subregion. This action shall be taken primarily in the fields of energy, transportation, and communications and shall cover the necessary measures for facilitating border traffic among the Member Countries.
To this end, the Member Countries shall seek to establish multinational entities or businesses when possible and desirable for assisting in the execution and administration of those projects.
Article 117. The Commission shall, at the General Secretariat�s proposal, adopt programs in the fields referred to in the preceding Article in order to promote a continuous process aimed at expanding and modernizing the physical infrastructure and the transportation and communications services of the Subregion. These programs shall include insofar as possible, the following:
The identification of specific projects for incorporation in the national development plans and an indication of the order of priority for their execution:
The essential steps for financing the necessary preinvestment studies;
The technical and financial assistance needs to ensure the execution of the projects; and
The methods of joint action before the Andean Development Corporation and the international lending institutions to ensure that the required financial resources shall be provided.
Article 118. The Programs referred to in the foregoing Article, as well as the Programs and Projects of Industrial Integration, shall include measures of collective cooperation to adequately cover the essential infrastructure required for their execution and shall give special consideration to the situation of Ecuador and the landlocked situation of Bolivia.
Chapter XII: Financial Matters
Article 119. The Member Countries shall carry out actions and coordinate their policies regarding financial and payments matters, to the extent necessary to facilitate the attainment of the Agreement�s objectives.
For that purpose, the Commission, at the General Secretariat�s proposal, shall adopt the following actions:
Recommendations to channel the financial resources through the appropriate bodies, to meet the development requirements for the Subregion;
Promotion of investments for the Andean integration programs;
Financing of trade between the Member Countries and with countries outside the Subregion;
Measures that facilitate the movement of capital within the Subregion and particularly the promotion of Andean multinational companies;
Coordination of positions to strengthen the reciprocal payments and lending mechanisms within the framework of the ALADI;
Establishment of an Andean lending and payments system that includes the Andean Reserve Fund, a common unit of accounting, lines of credit for trade, a subregional clearinghouse, and a system of reciprocal credits;
Cooperation and coordination of positions with respect to external funding problems of the Member Countries; and
Coordination with the Andean Development Corporation and the Andean Reserve Fund for the purposes described in the preceding subsections.
Article 120. If, as a result of the fulfillment of the Tariff Reduction Program of the Agreement, a Member Country experiences problems with its fiscal revenues, the General Secretariat may propose to the Commission, at the request of the country affected, measures for resolving those difficulties. In its proposals, the General Secretariat shall take into account the degrees of relative economic development of Member Countries.
Chapter XIII: Special Regime for Bolivia and Ecuador
Article 121. In order to gradually lessen the differences in development currently existing in the Subregion, Bolivia and Ecuador shall enjoy a special regime; this shall enable them to attain more rapid economic growth through effective and immediate participation in the benefits of the industrialization of the area and of the liberalization of trade.
To fulfill the aim of this Article, the bodies of the Agreement shall propose and take necessary measures, in accordance with its rules.
Section A. On the Harmonization of Economic Policies and the Coordination of Development Plans
Article 122.
In harmonizing economic and social policies and coordinating the plans referred to in Chapter III, differential treatments and sufficient incentives shall be established to compensate for the structural weaknesses of Bolivia and Ecuador and to ensure that the essential resources for attaining the objectives envisaged for their benefit by the Agreement are mobilized and allocated.
Section B. On Industrial Policy
Article 123. When carrying out the Industrial Development Programs, Bolivia and Ecuador�s situation shall be given special consideration in assigning, on a priority basis, the productions in their favor and the corresponding locations of the production facilities in their territories, specially through participation in the modes of industrial integration provided in Article 58. It shall also consider the development of a program for the integral industrialization of the natural resources of Bolivia and Ecuador.
Article 124. The Programs and Projects of Industrial Integration shall provide for exclusive benefits and effective preferential treatments for Bolivia and Ecuador to help them effectively take advantage of the subregional market.
Article 125. The General Secretariat, in proposing to the Commission the complementary measures envisaged in Article 69, shall provide for exclusive advantages and preferential treatment for Bolivia and Ecuador, when necessary.
The Commission, at the General Secretariat�s proposal, shall adopt the measures that are necessary to ensure that the allocations granted to Bolivia and Ecuador, are effective and fully utilized, specially those aimed at strengthening commitments to respect the allocations made to those countries, to extend the time periods for the maintenance of the allocations, and to carry out the projects assigned in the Industrial Development Programs.
Section C. On Trade Policy
Article 126. To enable Bolivia and Ecuador to participate immediately in the benefits of the enlarged market, the Member Countries shall, in an irrevocable and exclusive manner, eliminate for them all levies and restrictions of all kinds on the importation of products originating in the territories of the two countries, in the terms provided in Articles 127 and 128.
Article 127. For the purposes indicated in the previous Article, products originating in Bolivia and Ecuador shall be governed by the following rules:
By December 31, 1973 at the latest, the products included in subsection d) of Article 75 shall have free and definitive access to the subregional market. Accordingly, the levies shall be eliminated automatically in three annual and successive reductions of forty, thirty, and thirty percent, respectively, the first of which shall be made on December 31, 1971, using as a starting point the levels indicated in paragraph a) of Article 82;
The Commission, at the General Secretariat�s proposal and prior to December 31, 1970, shall approve lists of products whose tariffs shall be eliminated for the benefit of Bolivia and Ecuador on January 1, 1971;
The products on the list referred to in the third subsection of Article 77 shall be totally freed from levies for Bolivia and Ecuador on December 31, 1978 and the products referred to in Article 83, shall be freed at the time the corresponding Tariff Reduction Program is begun.
Before March 31, 1971, the Commission, at the General Secretariat�s proposal, shall establish margins of preference in favor of the two lists of products of special interest to Bolivia and Ecuador and shall decide on the length of time that such margins, which are to enter into force on April 1, 1971, shall be in effect. The list referred to in this paragraph is comprised of products from subsection d) of Article 75; and
The same procedure as that indicated in subsection d) shall be observed in connection with a list of products from those referred to in Article 83.
Article 128. The elimination of levies on the products of the Common List for which the Member Countries have granted exclusive advantages to Bolivia and Ecuador, shall apply only for their benefit. Said exclusiveness is restricted to the country which granted that benefit.
Article 129. The corrective measures referred to in Articles 102 and 108 shall be extended to imports from Bolivia and Ecuador only in duly qualified cases and when the General Secretariat has been able to ascertain that the serious adverse effects substantially derive from those imports. In this case, the General Secretariat shall observe the procedures of Articles 103 and 108 and the rules adopted by the Commission at the General Secretariat�s proposal with respect to the corresponding safeguard regulations.
Article 130.
Bolivia and Ecuador shall carry out the Tariff Reduction Programs in the following way:
They shall liberalize the products incorporated in the Industrial Integration Programs in the manner provided for in each;
They shall liberalize the products referred to in Article 83 in the manner and within the time period determined by the Commission, at the General Secretariat�s proposal. In making that decision, the Commission and the General Secretariat shall mainly take into account the benefits derived from the programming and site location referred to in Article 123. This time period may not exceed from December 31, 1999;
They shall liberalize the products that are not yet produced in the Subregion and that are not part of the reserve provided in their favor in Article 80, sixty days after the Commission approves said reserve.
Nevertheless, those products that the General Secretariat, on its own initiative or upon Bolivia or Ecuador�s request, determines to be luxuries or dispensable, may be excepted from this treatment.
The subsequent tariff reduction for these products shall be subject to the procedure provided in paragraph d) of this Article; and
They shall begin on November 21, 1988, to carry out the Tariff Reduction Program for those products not covered under the previous paragraphs, through the elimination of all restrictions. They shall be followed by three annual and successive reductions of five percent each, starting on December 31, 1988. Once these reductions have taken place, said Program shall cease until the Commission, within ninety days, at the General Secretariat�s proposal and after an evaluation of the compliance with the Tariff Reduction Program by all the Member Countries, adopts the appropriate adjustments and determines the time periods and methods for its continuation.
With respect to the tariff reductions previously provided, the Commission, on August 23, 1988, shall establish the starting point for the tariff reduction, based on the respective national tariff schedules of Bolivia and Ecuador, bound and in effect on that date.
Article 131. The General Secretariat shall periodically assess the results obtained by Bolivia and Ecuador in their trade with the rest of the Member Countries and the degree to which they are effectively taking advantage of the benefits of the enlarged market. On the basis of those evaluations, the Commission may revise the time periods indicated in paragraphs b) and d) of the preceding Article.
Article 132.
The Lists of Exceptions of Bolivia and Ecuador may include products comprised in no more than six hundred items of the NABALALC.
The products included by Bolivia and Ecuador in their lists of exceptions will be free from levies and other restrictions through a process that will include three segments of 105, 105, and 210 items, the first of which will be freed on December 31, 1997, the second on December 31, 1998, and the last one, on December 31, 1999. These time limits may be extended in duly qualified cases by the General Secretariat.
After December 31, 1999 or after the termination of their extension, Bolivia and Ecuador shall maintain a residual set of exceptions which shall not comprise products included in over 180 items of the NABALALC.
Article 133. Regarding the cooperation policies to which Article 68 refers to, the General Secretariat shall give special and priority attention to the industries of Bolivia and Ecuador whose products are excluded by such countries from their Tariff Reduction Programs, with the purpose of contributing to equip them to participate in the subregional market as rapidly as possible.
Section D. Common External Tariff
Article 134. Bolivia and Ecuador shall begin the process of adoption of the Common External Tariff on an annual, automatic, and linear basis on the date established by the Commission.
Bolivia and Ecuador shall be required to adopt the Minimum Common External Tariff with regard to products which are not produced in the Subregion, as referred to in Article 80. In relation to such products they shall adopt the minimum tariff levels through a linear and automatic process which shall be concluded three years after the date in which they are first produced in the Subregion.
Without prejudice to the stipulations of the first subsection of this Article, the Commission, at the proposal of the General Secretariat, may determine that Bolivia and Ecuador should adopt the minimum tariff levels with regard to products of interest to the other Member Countries provided that the application of such levels does not cause disturbances to Bolivia or Ecuador.
The Commission, based on the evaluations referred to in Article 131, shall determine the procedure and time limit for the adoption of the Common Minimum Common External Tariff on the part of Bolivia and Ecuador. In any case, the Commission shall bear in mind the problems derived from the landlocked situation of Bolivia referred to in Article 4 of this Agreement.
At the General Secretariat�s proposal, the Commission may also determine the adoption of the minimum tariff levels on the part of Bolivia and Ecuador regarding products whose importation from outside of the Subregion may cause serious disturbances to the Subregion.
In drafting its proposals about the Common External Tariff, the General Secretariat shall bear in mind the provisions of Article 4 in favor of Bolivia.
Article 135. Bolivia and Ecuador may establish the exceptions authorized by the Commission, at the General Secretariat�s proposal, to the process of approximation of their national tariff schedules to the Common External Tariff so as to enable them to apply their existing industrial development laws, mainly with respect to the importation of capital goods, intermediate goods, and raw materials necessary for their development.
Such exceptions shall not be applied in any case more than two years before the Common External Tariff is fully implemented.
Section E. On Financial Cooperation and Technical Assistance
Article 136. The Member Countries commit themselves to act jointly before the Andean Development Corporation and any other subregional, national, or international organizations to secure technical assistance and financing for Bolivia and Ecuador�s development needs and specially for projects related to the process of integration.
The allocation of the resources for those projects should be made in accordance with the basic objective of reducing the existing differences in development among the countries while making an attempt to favor Bolivia and Ecuador markedly.
The Member Countries, moreover, shall act jointly before the Andean Development Corporation so that it allocates its regular and special resources in such a way that Bolivia and Ecuador receive a substantially larger share than would result if the distribution were to be made proportional to the countries� contribution to the Corporation�s capital.
Section F. General Provisions
Article 137. In its periodic evaluations and annual reports, the General Secretariat shall give separate and special consideration to Bolivia and Ecuador�s situation in the subregional integration effort and shall propose to the Commission the measures which it deems appropriate to substantially improve their possibilities for development and increasingly expedite their participation in the area�s industrialization.
Article 138. The Commission may establish in favor of any of the least developed countries more favorable condition�s and procedures than those considered in this Chapter, bearing in mind the degree of development achieved and the conditions for taking advantage of the benefits of integration.
Chapter XIV: Economic and Social Cooperation
Article 139. Member Countries may begin programs and policies in the area of economic and social cooperation, which must be agreed upon within the Commission and shall be limited to the responsibilities established by this Agreement.
Article 140. Member Countries shall begin policies with an external scope, in matters of common interest, with the purpose of improving their participation in the international economy.
Article 141. With respect to the provisions of the previous Article, the Commission shall adopt programs to direct the joint external actions of the Member Countries, particularly as regards to the negotiations with third countries and group of countries, as well as for the participation in fora and organizations specialized in matters related to the international economy.
Article 142. Member Countries shall promote a joint scientific and technological development process to attain the following objectives:
- The creation of the ability to respond subregionally to the challenges of the scientific-technological revolution in course;
- The contribution of science and technology to the conception and execution of Andean development strategies and programs; and
- Taking advantage of the mechanisms of economic integration in order to induce technological innovation and productive modernization.
Article 143. With respect to the previous Article, the Member Countries shall adopt in the fields where there is a common interest:
Programs of cooperation and joint efforts in science and technology in which the subregional level is more effective to train human resources and to obtain the results of the investigation;
Technological development programs that contribute to the attainment of solutions to the common problems of the productive sectors; and
Programs for taking advantage of the enlarged market and of joint physical, human, and financial abilities, in order to induce technological development in sectors of common interest.
Article 144. Member Countries shall undertake policies that promote the integral development of border regions and their effective incorporation to the domestic and Andean subregional economies.
Article 145. In the area of tourism, the Member Countries shall develop joint programs seeking a better understanding of the Subregion and to stimulate economic activities related to this sector.
Article 146. Member Countries shall undertake joint policies that enable a better use of their renewable and nonrenewable natural resources and the preservation and improvement of the environment.
Article 147. Member countries shall undertake cooperation actions in the services sector. For that purpose the Commission shall adopt programs and projects in selected areas of the services sector, defining for each case the mechanisms and instruments to be applied.
Article 148. Member Countries shall undertake joint cooperation actions destined to contribute to the attainment of the following objectives of social development of the Andean population:
The elimination of poverty among the excluded classes, in order to achieve social justice;
To strengthen the cultural identity of the Andean area;
Full participation of the inhabitants of the Subregion in the integration process; and
To meet the needs of the depressed areas, that are predominantly rural.
For the attainment of such objectives, programs and projects shall be developed in the areas of health, social security, social interest housing, education, and culture.
The fulfillment of the actions to be developed within the framework of this Article shall be coordinated with the different organizations of the Andean system.
Article 149. Member Countries shall undertake policies in the area of social communication and policies oriented to promote a better understanding of the cultural, historical, and geographic heritage of the Subregion, its economic and social reality, and that of the Andean integration process.
Article 150. The projects, policies, and programs to which this Chapter refers to shall be developed, in parallel and in coordination, with the improvement of the other mechanisms of the subregional integration process.
Chapter XV: Accession, Effective Date and Denouncement
Article 151. This Agreement may not be signed with reservations and shall remain open to the accession of the rest of the Latin American countries. Least developed countries which accede to the Agreement shall be entitled to a treatment similar to that agreed upon in Chapter XIII for Bolivia and Ecuador.
The terms of the accession shall be defined by the Commission, which shall bear in mind that the incorporation of new members shall comply with the objectives of the Agreement.
Article 152. This Agreement shall be submitted to the Permanent Executive Committee of the LAFTA for its considerations and once the Committee has declared its compatibility with the principals and objectives of the Treaty of Montevideo and with Resolution 203 (CM-II/VI-E), each of the Member Countries shall approve it in keeping with its respective national legal procedures and shall inform the Executive Secretariat of LAFTA of the corresponding act of approval. The Agreement shall become effective when three countries have communicated their approval to the Executive Secretariat of LAFTA.
For the rest of the countries the date of the Agreement�s entry into force shall be that in which they communicate the respective instrument of approval in accordance with the procedure set forth in the first subsection of this Article.
This Agreement shall remain in effect indefinitely.
Article 153. Any Member Country wishing to denounce this Treaty shall so inform the Commission. From that moment on it shall cease to enjoy the rights and have the obligations deriving from its status as Member, with the exception of the benefits received and granted in accordance with the Subregional Tariff Reduction Program, which will remain effective for a period of five years after the date of the denouncement.
The time period stipulated in the paragraph above may be shortened in duly grounded cases by decision of the Commission and at the request of the interested Member Country.
As regards the Programs of Industrial Integration, the stipulation of paragraph i) of Article 59 shall be applied.
To continue on to Chapter XVI: Final Dispositions
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