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Special Edition 1996

European Union-Latin America: towards a closer association

SELA Permanent Secretariat

Synthesis

    «Association» and «strengthening of ties» are the key terms in the European Commission (EC) document which defines its strategy for Latin America for the period 1996-2000. In effect, the inter-regional relationship, begun in the early 1980s, has been expanded both as regards the quality and quantity of the cooperation instruments as well as the level of political and economic dialogue. The Foreign Ministers of the Rio Group-European Union «dialogue» held in Cochabamba on 15 and 16 April has given the region an opportunity to affirm its interest in developing broader ties of association.

The considerations of the European Union

    The EC Communication, recently approved by the Council and the European Parliament, on the «Current Situation and Prospects for Strengthening the Association, 1996-2000" sets out guidelines and medium-term objectives for strengthening the bi-regonal association:

    -The EU will support Latin America in its efforts to consolidate the state of law, complete economic reforms, and tackle the social debt. These are the huge challenges facing Latin America today.

    -Both the issues covered by EU cooperation (from human rights to fishing), and the agents of cooperation (governments, businessmen, NGO) will continue to be expanded on the basis of the region's needs.

    -«Latin America is one and diverse and therefore demands differentiated approaches on the part of the EU»: within regional unity, the EU's support should be adapted to the diversity of the countries and subregions.

    -The region is an «emerging economic zone» with enormous potential in terms of trade and investment. (The EU is Latin America's second most important trading partner with which it has had a surplus since 1993, and direct investment by the EU represents approximately 50% of the total foreign investment in the region).

    -Growth of the EU's official development assistance (464 million ECUs in 1994) which represents almost 70% of the total aid received by the region.

    -The EU has undertaken important actions recently, such as the strengthening of relations with MERCOSUR, Chile and Mexico, and the renewal of 3rd generation Agreements with the other countries.

    -EU cooperation should be compatible with the stabilization and structural reform programmes which the international financial institutions support in the region.

The strategy proposed by the European Commission

    In the abovementioned context, the bi-regional relationship should have three specific objectives:

    1. Adjust the efficiency of community cooperation to the different levels of development existing in the region;

    2. Consolidate the interregional dialogue, developing a regional approach (centred on the Rio Group) as well as individual focus in light of the diversity of the situations within the region; and

    3. On this basis, facilitate the progressive integration of Latin America, using both subregional actions (MERCOSUR, Andean Community, Central America) and bilateral ones (Chile, Mexico, Cuba).

    From this it seems, therefore, that the EU strategy is aimed at:

    -making a qualitative leap in the relationship with Latin America;

    -recognizing from the beginning the asymmetries of the bi- regional relationship.

    To carry out the technical cooperation, financial and economic activities, the European Commission has 1343 million Ecus available for the period 1995-1999 (there were 925 million for the period 1990-1994).

The EU-MERCOSUR framework agreement

    The Iterregional Framework Agreement for European Union-Mercosur Commercial and Economic Cooperation was signed in Madrid on 15 December 1995. The agreement includes a strategy for trade liberalization (with a view to the establishment of a free trade zone in the year 2000), greater economic cooperation, support for the integration and strengthening of relations between both groups of countries in other areas, in a broad concept of interregional cooperation, which extends beyond economic aspects.

    The objective of the Agreement is to move both parties towards the creation of an interregional association of a political and economic nature, with the free circulation of goods and services.

    This should be negotiated during the next few years, with a focus on the area of trade, where there are differences concerning the inclusion of several sensitive products in the future free trade zone.

    To appreciate the importance of the trade component of the Agreement, it should be borne in mind that the EU is MERCOSUR's main trading partner (US$ 34.9 billion in 1994) and that the EU concentrates 70% of its total investments in Latin America in that area.

    The interregional relationship is structured on a clear political definition, which establishes that «respect for democratic principles and basic human rights, as set out in the Universal Declaration of Human Rights, inspires the internal and international policies of the parties and are an essential element» of the Agreement.

    From the institutional point of view, the Agreement establishes a Cooperation Council which will supervise its progress and which will meet regularly at a ministerial level. This Council is integrated, on the one hand, by members of the European Union Council and the European Commission and, on the other, by members of the Common Market Council and the Common Market Group of MERCOSUR.

    The Council will be assisted by a Joint Commission which will have alternate meetings in Brussels and one of the MERCOSUR States once a year. In the trade area, they established a specific mechanism for dialogue, the Joint Trade Subcommission. This body will be assisted by several Working Groups, whose task will be to identify the «sensitive» products and prepare the agenda for constructing the future free trade zone.

    This framework agreement constitutes the first bi-regional agreement between two customs unions and implies a new kind of link structured on the basis of reciprocity.

    The Chile-European Union negotiations must also be mentioned in the context of the EU's bilateral actions. Chile is currently negotiating a new Framework Cooperation Agreement with the European Union to establish a political and economic association. On 25 and 26 March, the first Round of Negotiations was held in Brussels when much progress was made. In particular, agreement was reached on all the political, economic and cooperation issues. Some issues in the trade and institutional framework areas still have to be discussed. Chile and the European Union intend to reach an Agreement on all the pending issues during the second Round of Negotiations, to be held on 25 and 26 April in Brussels.

The strategy's instrument and priority issues

    According to the EC's strategy document, the bi-regional «association» will be consolidated by the following actions:

    1) A strengthened political dialogue, at the regional (Rio Group), ubregional (MERCOSUR, Andean Community, SICA), bilateral, inter-parliamentary and Iberoamerican levels, and with GRULAC in Brussels. The main issues in the political dialogue would be the following: peace maintenance, democracy, human rights, inter-American relations, APEC, the environment.

    2) Support for the integration processes based on free trade and the market, together with actions to support social cohesion and sustainable development.

    3) Concentration of cooperation on three «priority central issues of strategic importance» and three «subsidiary issues» of common interest:

    The three «PRIORITY STRATEGIC POINTS» are:

    A. The consolidation of democracy, which implies:

    -support for the consolidation of the State institutions of law and good public management, including the local level;

    -support for the reform of the State and decentralization, fiscal reform, the management of privatized services;

    -support for sectoral policies such as education, health rural development.

    B. The fight against poverty (the «social debt»), implementing the conclusions of the action programme drawn up at the U.N. Social Summit held in Copenhagen in 1995, with emphasis on labour issues.

    C. Support for the economic reforms and the improvement of international competitiveness. The EU action will be aimed at diffusing community experience in, for example, such areas as competition, support for the private sector, investments, industrial, scientific and technological cooperation, promotion of foreign trade. Here, instruments such as the programmes of the ECIP (European Community Investment Partners), and ALINVEST, the European Investment Bank, and the complementary financing operations of the Inter-American Development Bank will play a role. The three «SUBSIDIARY ISSUES», which cut across each of the «priority points», are:

    A. Support for Regional integration and cooperation.

    B. The education and training of human resources (at the level of higher and basic education), with emphasis on the least favoured social groups).

    C. The management of North/South areas of interdependence, through the implementation of activities in the areas of the environment, energy, drugs, population policies, health and transport, with the objective of establishing commitments that promote a lasting social and economic development.

New conditions for trade

    The EU, in its press release on the new «agricultural» Generalized System of Preferences (GSP), expessly mentions the treatment of social and environment issues in relation to trade. Those countries that apply more «advanced» social and environment policies will enjoy additional advantages (which have still to be defined by the Commission). These advantages will become effective in 1998, when the Council has defined the modalities for the practical application of the new system.

    The text also mentions the possibility of withdrawing GSP benefits from countries which use «denigrating and unacceptable» practices such as slavery, forced labour or the explotation of products made in prisons. The control of drug trafficking and money laundering is also included. With this proposal, the EC introduces an explicit «social and environmental» condition in its trade preferences.

Guidelines for the Latin American strategy vis-a-vis the European

    The EU proposals are novel and interesting as regards objectives and instruments, and far-reaching in terms of the quality of the bi-regional relationship.

    Three characteristics in particular stand out in the EU strategy, which distinguish this bi-regional relationship from other relations between Latin America and extrarregional partners, and convert it into a «privileged» relation:

    -it recognizes the existence of asymmetries and imbalances to be taken into account;

    -the issues dealt with coincide with the region's priorities;

    -the institutionalized political dialogue is a key element in the totality of bi-regional actions.

    It's now up to Latin America to be an equally precise partner in this relationship, establishing in its dialogue with the EU objectives such as:

    -Maximizing the benefits of the «association» proposed by the EU, especially as regards actions on issues poorly covered in other bi- or multilateral cooperation for support for regional and subregional integration, competition, competitiveness, science and technology, among others.

    -Participating actively in the design of concrete cooperation operations, so that the coincidence between the priority issues proposed by the EU with the Latin American agenda is translated into tangible results.

    -Taking advantage of the political dialogue at all levels: the EU is the only extrarregional partner with which a dialogue has been institutionalized, with an agenda that is also very broad and of common interest. Bi-regional consultations on international economic matters should now be institutionalized (for example, preparation for the Ministerial Conference of the World Trade Organization in Singapore).

    -Increasing the involvement of the Latin American private and academic sectors in the activities derived from this «association».

    -Disseminating the Latin American agenda in the European political and economic media, in order to improve the region's image.

Results of the European Summit in Turin (29.3.1996)

    There has been agreement on the guidelines for the revision of the Maastricht Treaty (which established the EU), which will be carried out at an Intergovernmental Conference beginning in June 1996, called «Maastricht II».

    -Extension of the EU to Eastern Europe.

    -Examination of the relations between large and small countries.

    -Revision of the majority vote and the national veto.

    -More effectiveness in the community's internal and external policies.

    -Introduction of a «flexible integration», but without discrimination, for those EU countries which can make more rapid progress in integration.

    -Revision of the EU's defence policy. Further, German Chancellor H. Kohl has suggested calling a special Summit on social policy in the second half of the year.

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