Orrego-Vicuña, F.

Tolosa, A. O. C.

English

University of Miami School of Law

University of Miami Law SchoolInstitutional RepositoryUniversity of Miami Inter-American Law Review6-1-1973Latin American Economic IntegrationF. Orrego-VicuñaA. O. C. TolosaFollow this and additional works at: http://repository.law.miami.edu/umialrPart of the Comparative and Foreign Law Commons, and the International Law CommonsThis Report is brought to you for free and open access by Institutional Repository. It has been accepted for inclusion in University of Miami Inter-American Law Review by an authorized administrator of Institutional Repository. For more information, please contact library@law.miami.edu.Recommended CitationF. Orrego-Vicuña and A. O. C. Tolosa, Latin American Economic Integration, 5 U. Miami Inter-Am. L. Rev. 367 (1973)Available at: http://repository.law.miami.edu/umialr/vol5/iss2/7LATIN AMERICAN ECONOMIC INTEGRATIONLATIN AMERICANECONOMIC INTEGRATIONFRANCISCO ORREGO-VICUNAProfessor of International LawUniversity of ChileSenior Legal AdviserDepartment of Legal AffairsOrganization of American StatesandALBERTO 0. C. TOLOSALegal OfficerDepartment of Legal AffairsOrganization of American StatesLATIN AMERICAN FREE TRADE ASSOCIATION (LAFTA)The twenty-second period of regular sessions of the Conference ofthe Contracting Parties to the Treaty of Montevideo closed on December 12,1972. During that period, twenty-four Resolutions were approved andmany of the negotiations which the Treaty specifies are to be carriedout annually were complied with.Among the Resolutions approved, the following should be noted:Resolution 304(XII) urging the Parties which have not done so as yet,to ratify the Caracas Protocol to the Montevideo Treaty, subscribedDecember 12, 1969, which extends to December 31, 1980, the time limitstipulated in Art. 2 of the Treaty to bring the Free Trade Area intofull operation. The Whereases emphasize the difficult legal problem facingthe Association should the agreement not be ratified for, in such case, theobligation set forth in Art. 2- bringing the Free Trade Area into fulloperation within not more than twelve years from the date of the Treaty'sentry into force-would be in effect. Resolution 305(XII) complementsResolution 304(XII) in that it stipulates that "the terms of the provisionsin force in the Association in connection with the completion of theFree Trade Area referred to in Art. 2 of the Treaty, shall be in forceuntil December 31, 1973, should the Protocol of Caracas not be ratifiedby the contracting Parties before that date." Three countries have notratified the Protocol, which will only enter into force once all the countriesconcerned have done so.LAWYER OF THE AMERICASThe significance of the ratification of the Caracas Protocol shouldnot be overlooked in view of the far-reaching juridical and politicalrepercussions resulting from non-ratification. If the Protocol is not ratifiedby December 31, 1973, Art. 61 of the Treaty will become operative.This article provides that "on the expiration of the twelve-year termstarting on the date of entry into force of the present Treaty, the con-tracting Parties shall proceed to study the results of the Treaty's imple-mentation and shall initiate the necessary collective negotiations with aview to fulfilling more effectively the purposes of the Treaty and, ifdesirable, to adapting it to a new stage of economic integration." If theFree Trade Area is not brought into full operation and if the term forso doing is not extended, the evaluation of the Treaty will raise problemsof a dual nature: political, within the organization itself, and, as regardsthe rest of the world an apparent lack of flexibility to adapt to integrationneeds. On the other hand, from a juridical point of view, ensuing negotia-tions would lack the clear and solid legal basis necessary to face the manyproblemr still unsolved in connection with trade liberalization, sectoralaspects, effectiveness and accomplishments of the Agreement of Cartagena,etc. All Governments represented in the Association are hopeful that theProtocol will be ratified before December 31, 1973.Other resolutions approved refer to problems inherent to the regularadministration of the Association, some of them modifying previousresolutions. By Resolution 319(XII) the Parties approved the work planof the Permanent Executive Committee for 1973. This plan coversimportant topics such as the liberalization and coordination of tradepolicies, and industrial, agriculture and cattle raising, statistical andeconomic matters.With regard to the negotiations, various NABALALC topics werediscussed as well as some of the pending problems and future exchangeprospects, and certain aspects of the sectoral negotiations.SUBREGIONAL INTEGRATION AGREEMENTAs regards the Agreement of Cartagena, the most relevant event ofthe last quarter has been Venezuela's adherence to the Agreement. Itshould be remembered, that by Decision 35 the Commission of the Agree.ment of Cartagena established a joint working group of experts of thesignatory Governments to the Agreement and of the Government ofLATIN AMERICAN ECONOMIC INTEGRATIONVenezuela, to study the conditions and position of that country relativeto its possible entry to the so-called Andean Group or Sub-regionalAgreement.On January 14, 1972, the Group's task came to an end and theGovernment of Venezuela took the necessary steps to initiate the appro-priate official negotiations. These negotiations extended throughout 1972and ended on February 15, 1973. A definite understanding was reachedon the subjects discussed during that period.The negotiations climaxed with the signing of the Final Act, whichcontains the Consensus of Lima. The latter sets forth the agreementsreached and consists of two documents, i.e., Ancillary Instrument to theAgreement of Cartagena for the Adherence of Venezuela, and Conditionsfor the Adherence of Venezuela to the Agreement of Cartagena. Becauseof the potential readjustment problems, both documents constitute two im-portant juridical instruments, not only to the Andean Group itself but tothe broader ALALC as well.Ancillary Instrument to the Agreement ofCartagena for the Adherence of VenezuelaArt. 109 of the Agreement of Cartagena provides that it may notbe signed with reservations, and that it shall remain open to adherenceby the other Contracting Parties of the Montevideo Treaty. Further, thatthe conditions of adherence shall be defined by the Commission, bearingin mind that acceptance of new members must conform to the goals ofthe Agreement. Thus, in twelve articles, the ancillary document establishescertain standards on adjustment to special circumstances in the applicationof the Agreement, so that Venezuela may be able to enter as a full memberof the Andean Group.Conditions for the Adherence of VenezuelaBy virtue of Art. 109 of the Agreement and through Decision No. 70,the Commission established the conditions for adherence. The Decisionconsists of thirty-eight articles divided into nine chapters dealing with theliberalization program, common external tariffs, NABANDINA, metal/mechanic sectoral program and other aspects including some of the treat-ment of foreign capital, established in Decision 24.LAWYER OF THE AMERICASCENTRAL AMERICAN COMMON MARKETThe first meeting on the rebuilding and improvement of the CentralAmerican Common Market, convened by the General Secretariat of theTreaty for Central American Economic Integration, was held in Guate-mala City on December 1-2, 1972, with five Central American countriesofficially attending. Among those present were the Ministers of Economyand Finance; the Presidents of the Central Banks; representatives ofthe Executive Secretariat of the Central American Monetary Council,the Central American Bank for Economic Integration, the Central Ameri-can Institute of Industrial Technology and Research, and the CentralAmerican Institute of Public Administration. The presence of the fivecountries at the meeting marks a forward step towards the eliminationof the difficulties arising from the 1969 conflict between El Salvadorand Honduras.A high-level committee, integrated by a representative from eachGovernment, for the improvement and rebuilding of the Common Marketwas created at the meeting. The main task of the Committee will be tostudy the proposals submitted by the Permanent Secretariat to the Treatyfor the establishment of the Central American Economic Community (3Law. Am. 127, 1972). SIECA, the Permanent Secretariat of the Treaty,was designated Technical Secretariat of the Committee. One of themain subjects to be considered by the new organism, already at work,will be the revision of the juridical and institutional instruments of theCommon Market. It is too early as yet to determine just how far theGovernments of the Central American Isthmus desire to go on the matterof the powers of the institutions of the Common Market. Meanwhile, theconsensus of governmental representatives is that only a bold outlook andstrong political action can pull the Common Market out of its presentstate of inertia and lead it towards true economic unification, a necessaryrequirement to the economic progress not only of each country, but ofthe entire area as well.CARIBBEAN FREE TRADE ASSOCIATION (CARIFTA)Three meetings of great significance to the establishment of theCaribbean Community and Common Market were held in Antigua, Feb-ruary 18-26, 1973. All three meetings were attended by officials ofMember Countries of CARIFTA, the East Caribbean Common Market(ECCM) Secretariat and the Commonwealth Caribbean Regional(CARIFTA) Secretariat.LATIN AMERICAN ECONOMIC INTEGRATIONThe First meeting, held on Sunday, 18th February, was called forthe purpose of the drawing up of Intra-Regional Agreements for theAvoidance of Double Taxation (with tax-sparing provisions) principallyas a means of encouraging the flow of private capital from the MDC'sto the LDC's, particularly in the form of joint ventures, involving manu-facturers from both the MDC's and LDC's. A Draft Agreement on Intra-Regional Double Taxation was drawn up at this meeting for Ministerialconsideration.The second meeting, held on Monday, 19th February, was called tofinalize at official level outstanding technical issues in the Scheme forHarmonization of Fiscal Incentives to Industry which provides, amongother things, for a longer maximum number of years of tax holiday toindustries set up in the LDC's than to those established in the MDC's.The meeting was able to resolve all outstanding issues and its recom-mendations will be submitted for Ministerial consideration.The third meeting, held from 20th to 26th February, dealt with theconstruction of a Common External Tariff and Protective Policy for thecountries of the Region. In relation to the Common External Tariff,the main task of the meeting, as mandated by the Twelfth CARIFTACouncil Meeting held in December, 1972, was to work out for Ministerialconsideration a Common External Tariff for the CARIFTA countries,using as a basis the ECCM Common External Tariff, the Belize NationalTariff and the Draft CARIFTA Common External Tariff preparedbetween 1970 and 1972 by officials of Member Governments, the ECCMSecretariat and the Commonwealth Caribbean Regional (CARIFTA)Secretariat. This meeting was able to complete its task within the allottedseven days and was able, among other things, to construct for Ministerialconsideration a revised draft CARIFTA Common External Tariff.MEETING OF ATTORNEYS.GENERALThe Attorneys-General of Commonwealth Caribbean Countries metat the Commonwealth Caribbean Regional Secretariat in Georgetownfrom 9th to 12th March, to consider the Draft Treaty establishing theCaribbean Community and Common Market later this year. The meetingconsidered the proposals put up by the Working Group which held fourmeetings earlier this year.372 LAWYER OF THE AMERICASHEADS OF GOVERNMENT CONFERENCEThe Eighth Conference of Commonwealth Caribbean Heads of Gov-ernment is scheduled to be held in Georgetown, Guyana from 9th to11th April, 1973. The Conference, at which all Commonwealth CaribbeanGovernments and the Commonwealth of the Bahamas are expected toparticipate, will pursue follow-up action on matters referred to it by theSeventh Reads of Government Conference held in Chaguaramas, Trinidad,in October 1972, with specific reference to the establishment of theCaribbean Community and Common Market. The Conference will bepreceded by the Thirteenth Meeting of the CARIFTA Council of Ministers,also to be held in Guyana.

Latin American Economic Integration

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Latin American Economic Integration

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