MercoPress. South Atlantic News Agency

CAN and Mercosur agree tariff reduction.

Early Sunday dawn and after eight exhausting years of negotiations, three of the five members of the Andean Community of Nations, CAN, signed in Buenos Aires a free trade agreement with Mercosur.

Colombia, Ecuador and Venezuela agreed with Mercosur a gradual reduction of tariffs beginning next July and extending for ten years covering 80% of goods normally traded. The rest of products considered "sensitive", will see a more cautious tariff reduction extending fifteen years.

Given that the two other CAN members had already signed similar agreements (Bolivia in 1996 and Peru, 2003), it can be said that from this weekend's negotiations has emerged a customs union that comprises the whole of South America, excepting the three Guyana, and associate Mercosur member Chile that is far ahead its partners in trade reforms and opening the economy which has enabled it to sign more bold trade agreements with the European Union, United States and lately South Korea.

Among the sensitive products Mercosur included textiles, paper and steel, while the three CAN members added some agricultural produce such as wheat and soybeans, and the automobile industry.

"The confirmation of a free trade zone with CAN and Mercosur is a first huge step towards regional integration", said Argentine International Trade Representative Martin Redrado.

"We've demolished the barriers to regional trade and beginning with this agreement Mercosur has access to a market of 109 million people that annually imports 40 billion US dollars", added Mr. Redrado pointing out that the potential growth for Mercosur exports in the near future was 10 billion US dollars, mainly dairy products, food, cereals, industrial goods and petrochemicals and fuel.

In the specific case of Argentina the agreement should promote sales of wines, fruit, vegetables, cooking oil, dairy products, indicated Mr. Redrado.

"Annual exports to CAN total 1,2 billion US dollars currently, 60% of which agro-industry products. The five countries represent 7% of Argentina's foreign trade".