President of Brazil announces his country’s membership of CAF

(Caracas, July 4, 1995).-- During an official visit to Venezuela on July 3, 4 and 5, the president of the Republic of Brazil, Fernando Henrique Cardoso, announced his government’s decision to join CAF, multilateral financial organization formed by the five countries of the Andean Group: Colombia, Ecuador, Peru and Venezuela.

Brazil will subscribe to CAF "C" series shares, which are reserved for extra-regional countries. The decision is singularly important for regional integration because it represents a concrete step toward closer relations between the two South American economic blocks: Andean Group and Mercosur, and fundamental first step for much more ambitious proposals such as the region’s participation in the hemispheric and world economies.

When this union has been formalized, the nine member countries will have a market of almost 300 million consumers open to them, and their products will circulate freely throughout a territory of 15 million km². The combined GDP will be over US$900 billion with sales of US$120 billion to the rest of the world.

The president of Brazil today met with CAF President & CEO Enrique García. Both agreed on the importance of the South American integrationist processes and the relevance of the role which the Corporation will play in financing integration infrastructure projects between its member countries and Brazil, especially in the areas of roads, energy and telecommunications.

The two leaders also emphasized the potential of Brazil’s membership of CAF for expanding the economic space and raising its efficiency and competitiveness to facilitate productive diversification and access by the countries to world trade flows and technological changes.

The potential for joint business and investments will increase considerably by means of the various credit facilities which CAF provides to finance trade.

Brazil exports to the Andean region mostly automobiles, buses, paper, cotton and light machinery, and imports zinc, copper, silver, tin, oil, acetylene, cellulose, tuna, hats, vegetable colorings, conserves, acetate and glass.

CAF contribution Latin America and the Caribbean are not isolated from the globalization process and are currently directing their efforts toward improving the various integrationist schemes with a view to forming, in the future, a hemispheric free-trade area, together with the United States and Canada, as well as deepening multilateral integration by increasing regional negotiating capacity in organizations such as the World Trade Organization.

CAF participates in this effort in two directions: support for the structural reforms of member countries in an effort to achieve competitive participation in the international economy, and become an effective bridge between the regional integration schemes: Andean Group, Mercosur, G3, Caricom, and CACM with the aim of developing closer commercial and financial ties, promoting joint investments, attracting more capital and accepting the challenges of multilateral integration.

For its part, Brazil formulated specific actions for a South American Free Trade Area (ALCSA) to be set up within ten years through a network which would group the existing free-trade agreements between the countries of the area. In fact, the Agreement would be an effort to organize and rationalize the trade dynamic which is already taking place in the region.

Physical infrastructure The physical infrastructure of this extensive geographical macro-unit, which is endowed with vast natural resources, is one of the great challenges of the end of the century. By creating a series of communication channels across countries, the Atlantic and Pacific oceans, the Antarctic region and the warm Caribbean Sea could be united in an economic space of great size which is very attractive to investors.

CAF is now working along these lines. Since 1992, it has been executing an action plan to facilitate the physical integration of its member countries, especially cross-border. Through this work, CAF has accumulated valuable experience which will now be made available to a broader range of nations. The provision of infrastructure is taking place in a strict framework of environmental sustainability designed to protect natural resources.

In this context, Brazil’s presence in the Corporation will speed up cross-border integration and development of an extensive physical space, given that four of the CAF member countries -- Bolivia, Colombia, Peru and Venezuela -- share a long border with this country which has great potential for development. Brazil borders all the countries of South America along its 15,719 km of frontier, except Chile and Ecuador.