Andean Community in Crisis

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The crisis in the Andean Community (CAN), following Venezuelan President Hugo Chávez´s declaration that Venezuela will withdraw from the group has opened up the possibility of a presidential summit according to the Secretary General of CAN, Allan Wagner.

The presidents of Perú, Colombia, and Ecuador all regretted the decision made by Venezuela but insist that the group will continue. Peruvian President Alejandro Toledo has asked that Chávez reconsider his decision.

Venezuela’s decision to withdraw from the group will have two major implications for the Peruvian economy. Presently, thanks to CAN, Peruvian products enter Venezuela without any tariffs or taxes. If Venezuela does officially withdraw from the group these Peruvian products could begin to be taxed putting at risk many business and thousands of jobs that depend on free trade with Venezuela. Additionally, the potential withdrawal of Venezuela also puts in jeopardy the ongoing free trade agreement negotiations with the European Union. Representatives of the EU are currently evaluating if the CAN group is cohesive enough to negotiate as a legitimate trade group.

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