Free Trade Area of the Americas - FTAA


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August 12, 2003

Original: Spanish
Translation: FTAA Secretariat





This project identifies the Andean Community’s financial cooperation and assistance needs in support of the programs for subregional and national competitiveness to effectively contend with and overcome challenges and maximize the benefits associated with trade liberalization under the FTAA, thereby supporting national development strategies and upgrading export capacity as part of the regional and global trade liberalization process, particularly within the FTAA.

This project fits into the framework of the principles and objective of the Hemispheric Cooperation Program.

  1. Project Title: Financial Cooperation and Technical Assistance in support of the programs for Andean Community subregional and national competitiveness

  2. Background

    The productivity gap between Latin America and developed countries has more than doubled and is showing signs of increasing2 /. According to World Economic Forum statistics, competitiveness in Andean countries is low. As with other Latin American countries, Andean exports to the international market are for the most part traditional exports and there are trade deficits, except in intra-subregional Andean trade where more value-added exports and trade surpluses are being observed in four of the five Andean countries.

    Within this context, and with a view to reaping greater benefits from their participation in the FTAA, the Andean countries have begun a “second generation of reforms” which in addition to liberalization and macroeconomic reforms, seeks to increase productivity and emphasize investment- and export-promotion. During the nineties, Andean countries carried out studies and activities to identify key sectors and define strategies to enhance their competitiveness.

    The national competitiveness organizations in the Andean countries are: Sistema Boliviano de Productividad y Competitividad (Bolivian Productivity and Competitiveness System), of Bolivia, created in November 20013 /. Red Colombia Compite (Colombia Competes Network ) headed by the President of the Republic and coordinated by the Ministry of Foreign Trade4 /. The Consejo de Competitividad (Competitiveness Council) of Ecuador, established in 2001. The Peruvian National Council of Competitiveness was created in May 2002. Venezuela’s Red de Competitividad (Competitiveness Network), which will be created in the near future, will be coordinated by the National Investment Promotion Council.

    The need to establish subregional coordination to provide direction for competitiveness-related actions, was underscored at the Andean Competitiveness Forum (in Santa Cruz de la Sierra, Bolivia, 18 and 19 July 2002).5 /

    To this end, we would like to single out some experiments with cooperation and funding for competitiveness enhancement programs being implemented throughout the subregion.

    1. The Andean Competitiveness Program (PAC) – Andean Development Corporation (CAF) and Harvard University
      • Began in December 1999, and seeks to define and promote an integrated agenda for national and regional competitiveness that is based on sustainable growth and improves living standards throughout the Andean region.
      • Enlists the active participation and support of the government, private sector, civil society, and academia.
      • Addresses the microeconomic aspects of competitiveness, macroeconomic policies, and the environment and sustainable development.
    2. IDB support in developing a competitive infrastructure.

  3. Justification

    As stated in the document Methodologies for Analyzing Competitiveness in Latin America and the Caribbean (FTAA.sme/inf/64): “In general, all the different approaches agree that the bottom line of competitiveness is “passing the global markets text” and that export competitiveness is a basic ingredient in the creation of the FTAA.”

    Hence the importance of supporting efforts made by Andean and other countries of the hemisphere to improve the competitiveness of their exports in the hemispheric market.

    The Andean countries have been undertaking efforts to design policies and strategies to improve the competitiveness of their economies, but the viability of these policies and strategies will depend on the availability of resources to overcome current deficiencies which limit efficiency and productivity in the Latin American private sectors identified in the IDB study: credit markets, labor markets, infrastructure, technological innovation, and industrial and investment policies.

    It is also worth mentioning that the degree of progress made in competitiveness programs in the Andean countries is very uneven, even though some Andean countries began their studies and preparations for establishing a competitiveness program at the same time. Likewise, the Andean Ministers Responsible for Trade (Commission of the Andean Community) have reiterated that a study on the impact of the FTAA is a priority for the development of a joint strategy to face the risks and take advantage of the opportunities presented by the hemispheric market. For this reason, the Commission of the Andean Community, as part of the joint strategy in FTAA negotiations will need to take charge of the coordination and evaluation of the Program for Andean Community Competitiveness in the FTAA.

    The aim of this project, therefore, is to support subregional and national competitiveness policies and strategies, with a view to supplementing national and subregional initiatives already being implemented, by making it possible to learn from success stories in several Andean countries and other countries of the Hemisphere, with a view to designing and developing an Andean Community Competitiveness Strategy to face the challenges of the FTAA.

  4. Objectives of the project:
    1. General: Support subregional and national policies and strategies to improve Andean Community competitiveness throughout the hemisphere by providing financial resources and technical assistance

    2. Specific
      First phase:
      • Come up with an agreed subregional and national definition of the priority objectives, guidelines, and activities that would make up the Program for Andean Community Competitiveness in the FTAA.

      Second phase: the development of this program shall:
      • Contribute to improving the Andean Community’s regional productivity and sustained growth in terms of its share of the hemispheric export and investment market.
      • Strengthen national systems and coordinate national competitiveness programs in order to complement and support the subregional competitiveness program, ensuring the continuity of its actions, and the participation of the public and private sector, as well as other representatives of civil society.
      • Include specialized technical assistance to transfer competitiveness development experiences, implement policies, strengthen institutional capacities, promote priority-sector exports at the subregional and national levels, and train human resources, inter alia.
      • Financial cooperation needed to develop industrial retrofitting programs, improve infrastructure, support small and medium-size enterprises, promote technological innovation, strengthen the financial sector and capital markets.

  5. Inputs6 : resources needed for the project

    1. Technical Assistance
    2. Financial Cooperation

    Technical assistance resources are needed to finance the following activities during the first phase:
    1. One (1) consultant from the subregion or other country of the hemisphere, who will be responsible for drafting the proposal on the Program for Andean Community Competitiveness in the FTAA. –
      Funds are needed to cover the consultant’s fees for a six-month period

    2. Meeting of Experts and Representatives: define guidelines and general objectives to be taken into account in the preparation of the Program for Andean Community Competitiveness in the FTAA

      Representatives of (1) representative of the Ministry Responsible for Trade (1) national competitiveness agencies, (3) the private sector, and (1) academics from the Andean countries,
      an expert from the subregion or other country of the hemisphere
      representatives of subregional, hemispheric, and multilateral cooperation entities and financial bodies (as guests)

      Airfare and per diems

    3. Subregional Mission of the consultant and the responsible official from the General Secretariat of the Andean Community to submit a proposal, receive contributions and comments for the purpose of consolidating a proposal with the participation of all the sectors involved in implementing it.

      Airfare and per diems for the consultant for a 15-day period

      II. Phase: the resources of the second phase will be defined in the Program for Andean Community Competitiveness in the FTAA

  6. Anticipated Results

    1. Set up a subregional coordination mechanism through the Andean Ministers Responsible for FTAA Negotiations, who oversee actions under the FTAA subregional competitiveness program.
    2. Contribute to improving the Andean Community’s share in trade and investment flows in the FTAA.
    3. Support and strengthen national competitiveness systems.
    4. Support competitiveness policies that have national priority.
    5. Strengthen State institutions, active participation of the private sector and of civil society in general, and achieve proper coordination.
  7. Other relevant information

    An Andean Competitiveness Forum was held under the auspices of CAF (in Santa Cruz de la Sierra, Bolivia from 18-19 July 2002). The main objective was to support Andean countries in framing public policies to improve the competitiveness of Andean countries and promote the formulation of a joint strategy for regional competitive development.7

    Finally, the Andean countries requested support from ECLAC to develop a study to make it possible to measure the impact that the FTAA will have on the competitiveness of Andean economies. The results of this study will be used in designing national policies and strategy aimed at boosting competitiveness. To date there have been no responses to this request.

1 Hemispheric Cooperation Program Principles, objectives, and other general aspects (FTAA.sme/04 of 12 April 2002)
2 Joseph Ramos – Hacia una segunda generación de reformas: políticas de competitividad en economías abiertas – economic quarter January - March 2000 number 265.
3 See
4 See:
5 Evaluation and Future Agenda of the Andean Competitiveness Forum – Chapter 5 – Report – See

Note: In the event that two or more project profiles are proposed, please present in order of priority.

6 If information is available.
7 See

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