The recent enactment of a freedom of movement statute affecting citizens of Bolivia, Colombia, Ecuador, and Peru, offers opportunities for workers, as well as greater agility for businesses operating in those countries.
The Andean Migration Statute — officially known as ‘Decision 878’ — is the latest move by the Andean Community of Nations (CAN) to promote regional integration, and the culmination of almost two decades of work since the project was put forward in the early-2000s.
The statute eases travel for tourism between the four nations, while also establishing two types of residency that citizens of any member nation can apply for to live and work in one of the other countries.
The implementation of the statute on August 11 further deepened integration in South America, which is considered to have the world’s most developed human mobility regime outside of the European Union (EU).
While it goes without saying that there are stark differences between South America and the EU — spanning social, economic, and political conditions — many of the advantages of free movement enjoyed by workers and businesses can be expected in both contexts.
The Andean Community of Nations: Half a Century of Integration Efforts
Established in 1969, CAN originally included Chile, before it was excluded in 1976 following a bloody coup three years earlier that saw the elected government overthrown and a military dictatorship come into power.
The same year as that coup, in 1973, Venezuela became a member of CAN, only to leave in 2006 in order to join the Southern Common Market (Mercosur) — a regional association that includes Argentina, Brazil, Paraguay, and Uruguay.
At the time of its establishment, CAN sought to inaugurate a common market inspired by the European supranational model, with the aim of subsequently bringing in a free movement regime.
The Andean Migration Statute is not the first move made by CAN to ease movement. Worker migration was earlier facilitated via a categorization system, while provisions were also implemented to guarantee fair treatment of all citizens, including the likes of equal access to education, housing and healthcare for any CAN citizen residing in another member country.
In the early-2000s, CAN further extended mobility by creating the Andean Passport, allowing citizens of all member nations to travel visa-free within the region using only their national ID cards. The move also saw enhanced cooperation between migration authorities on shared borders, including preferential access lanes for CAN citizens crossing those borders.
The Andean Migration Statute takes those moves a step further, with all CAN citizens having the right to spend up to 180 days per year as a tourist in any of the other member nations, while temporary and permanent residency statuses have now been established.
Temporary residency applies for a period of up to two years, as long as the applicant has a clean criminal record and the means by which they will support themselves.Permanent residency, meanwhile, is an indefinite arrangement that similarly demands proof of the applicant’s ability to support themselves and their dependents.
Freedom of Movement for Workers
The deepening of regional integration and furthering of free movement within CAN offers a great deal of opportunity for workers from across the region — especially in-demand skilled workers. With movement made easier, workers will have the ability to seek out new opportunities and move into another member nation in a time of boom or escape during a period of hardship.
Latin American countries are known for periodic fluctuations in economic fortunes — a good recent example being the squeeze seen in Colombia when oil prices crashed in 2014 — and free movement means that workers affected by such situations have a wider set of options available.
With movement made easier, workers will have the ability to seek out new opportunities and move into another member nation in a time of boom or escape during a period of hardship
For businesses operating in one of the four CAN countries, freer movement offers a greater level of agility and labour market flexibility, with workers from any of the four countries effectively available to any company willing to endorse their relocation by supporting a residency application.
This has been seen in Europe, where integration and free movement has created a much more flexible recruitment environment, allowing companies to nimbly respond to shifting conditions, as well as letting workers seek out better employment prospects.
For CAN members, it also promises more stable market conditions, by easing labour shortages and controlling wages in any given market. Because when an economy experiences labor shortages, the effect is to drive wages up, in turn leading to inflation. With freer movement, the labour pool is considerably larger, promising to reduce such pressures and bolster confidence among businesses and investors.
For businesses based in one CAN country, the arrangement will also arguably make expansion to other nations within the block an even more enticing prospect, given the ease with which workers can be moved between them.
With that in mind, multi-jurisdiction market entries involving those countries also become all the more attractive. Because flexibility to easily shift resources, especially human capital, means greater agility for companies.
The particular popularity of Colombia and Peru as investment destinations potentially stands to pay dividends for Bolivia and Ecuador
On that basis, the particular popularity of Colombia and Peru as investment destinations potentially stands to pay dividends for Bolivia and Ecuador — at a time when we are seeing increasing investor interest in starting a business in Ecuador thanks to the recent election of business-friendly President Guillermo Lasso.
An additional advantage seen within CAN is the fact that workers from all four countries will speak Spanish fluently — eliminating an obstacle that can be seen in the EU.
All of this flexibility means greater levels of resilience — not only for workers and businesses, but also the economies that they drive — and resilience will ultimately deliver greater investor confidence.