7.2. Models of the South American economic integration

Variants of the South American economic integration represented by the three integration processes (the processes, but not unions): the Andean Pact, MERCOSUR and the Chilean model.

7.2.1. Andean Community of Nations

Andean Community of Nations originated in 1969 from the agreement, which was signed in Cartagena (Colombia) by Bolivia, Ecuador, Peru, Chile, Colombia.

The Andean group Of Cartagena Bogota 1969 Bolivia Venezuela Ecuador Colombia Peru Chile

The countries participants of the Andean Community of Nations by this agreement were focused on carrying out the industrial development policy, based on the extended model of import substitution; tariffs regulation and establishment of single external tariff (although the level of market openness of the constituent countries of Commonwealth practically made this intention impossible); establishment of the single model of regulation of activity of foreign companies based on “Decision of 24” - a general mode concerning foreign capital, trade marks, licenses, patents. But in 70s the Andean Pact was sharply criticizes by the countries participants for the prematurity of tasks foreseen by the agreement. The level of political interrelations was not sufficiently high for the solving of the tasks.

Were not accepted by foreign companies and the "Resolution of 24”, which substantially limited the space of entrepreneurship activity in countries-recipients, the volume of profits remittances directed abroad, and also foresaw the transformation of foreign branches in mixed companies with a part of national capital. TNCs responded to "a general regime for foreign capital" by a sharp decline of the amount of foreign direct investment.

A number of Latin American authors believe that the very structure of the Andean Pact had a negative flaw, because the economic interests of the constituent countries mostly did not coincide.

Only since the late 80s there has been intensification of economic relations between the CIS member states, due to the previously mentioned reasons.

Growth rates in the countries of the subregion in the 80-90s were above the average Latin American rates. Gross domestic product, for example, of this group of countries grew from $ 70 billion (1970) to $ 145 billion (1994), and per capita - in accordance with $ 515 to $ 810.

With the growth of commodity circulation between countries of the subregion and trade liberalization the question about the creation of custom union appeared again, which started to act in late 1994. An that same 1994, after 25 years of The Andean group existence, the Heads of Governments of participating countries decided to provide radical reforms. Bolivia, Colombia, Ecuador and Venezuela create a free trade zone, and in 1995 Peru joined this free trade zone.

In the 90s of the 20 - early in the 21 century a trend towards the intensification of world integration process on all continents was clearly identified, including Latin America region. The main peculiarity of the trend manifestation is that world trade liberalization is implemented in numerous projects at the level of free trade agreements, agreements on trade unions, agreements on a common external tariff, regional trade agreements. According to the WTO in late 2007 there were 385 registered regional and subregional agreements, three quarters of which were legally executed at the level of free trade agreements. Economic integration in the world economy has become an effective instrument of development.

In Latin America, the modern trends towards the liberalization of world trade manifested in the extension of agreements about active complementarity and free trade agreements as the main forms of contractual and legal support of bilateral and multilateral integration cooperation.

From 1993 Andean Community uses a special regime of trade preferences from the USA. In 1999 a partial agreement on complementarity of economies of Andean Community of Nations with Brazil was signed, and in 2000 - with Argentina. In 2005, the MERCOSUR countries became the associated members with the Andean Community of Nations. On this basis, in late 2007, Banco del Sur was created with a capital of $ 7 billion. The Act of its creation was signed by Argentina, Brazil, Bolivia, Ecuador, Paraguay and Venezuela. Nevertheless, integrating cooperation in the Andean Community of Nations after a new strategic model did not differ in stability and consistency. In 1996 and 1997 Chile, Peru, Bolivia withdrew from the Community, and in 2005 Venezuela that gave preference to integration with MERCOSUR. Thus the countries of Andean Community of Nations became active participants as integration and disintegration processes in Latin America.

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