Introduction

The First European Union-Latin America and the Caribbean Summit (EU-LAC), held in Rio de Janeiro on 28 and 29 June 1999, opened a new chapter in the long history of relations between both regions. Its aim was to create a strategic bi-regional association to strengthen economic relations between both regions, and institutionalize the political dialogue and cooperation in order to solve Latin America's social, cultural and ecological problems.

The main objectives of the second EU-LAC Summit (Madrid, 17 and 18 May, 2002) are, on the one hand, to evaluate progress made by both regions following the first meeting In Rio and, on the other, to adopt an action plan to grant impetus to the bi-regional association.

In this regard, mention should be made of the efforts carried out by participating countries, particularly the host country, in the organization of the meeting's preparatory work. Spain, which presides the EU during the first half of 2002, has declared the Madrid Summit one of the highlights of its presidency, pointing out that the meeting is aimed at strengthening relations, establishing an open and direct dialogue between both region and identifying cooperation actions that may be embodied in a programme for future progress. Spain also hopes to celebrate the signing of one or both of the association agreements with MERCOSUR and Chile that are currently being negotiated. On their part, the Latin American and Caribbean countries require something more: a clear commitment by the EU to adopt a strategy and launch a comprehensive bi-regional association agreement.

In view of the difficulties posed by substantive issues such as economic and financial relations and technological development, which are the conditions needed for the establishment of a strong bi-regional association, the agenda could focus on the identification of some less sensitive topics, such as the transfer of technology, the information society and social welfare systems. This would stimulate civil society to participate more fully in the summit's preparatory work and in the discussions on those and other issues such as social equality, the protection of human rights, cultural development and meetings between business sectors.

According to the program prepared by the presidency and the European Commission, among the Madrid Summit's preparatory activities are several events that involve not only official organizations and institutions but also civil society in Latin America and the Caribbean and the European Union. These events include: the Civil Society Forum, to be held in Alcobendas, Spain, from April 3 to 5; the Forum of the Economic and Social Committee, from April 17 to 19, in Madrid; the Business Forum, on April 25 and 26, in Mexico; the International Dialogue on Human Rights, on April 24 and 25, in Madrid; the Cultural Forum, on May 16, also in Madrid; the Meeting of Ministers of Science and Technology, in Brasilia and two more ministerial meetings to be held before the Summit, one on the Information Society, in Seville, and the other on Social Security, in Valencia, in May 2002.

I.  Progress Made Since the Rio de Janeiro Summit

In the Rio Summit, the participating heads of state and government adopted an ambitious plan of action with 54 priorities and established a bi-regional group of high level government officials in charge of overseeing and promoting the implementation of these priorities, comprising participating countries' National Coordinators.

This bi-regional group in charge of the follow up to the EU-LAC Summit has held five meetings: the first in Tuusula, Finland, on November 4 and 5, 1999; the second in Vilamoura, Portugal, on February 25, 2000; the third in Santiago, Chile, on March 29, 2001; the fourth in Brussels, Belgium, on October 9 and 10, 2001; and the fifth in Bridgetown, Barbados, on January 29 and 30, 2002.

In the first meeting, the group agreed to redefine and regroup the actions envisioned in the Rio Summit into eleven priority areas: 1) to cooperate at the international level; 2) to protect human rights; 3) to promote women's role; 4) to cooperate in the protection of the environment and during natural disasters; 5) to fight drugs and the illegal traffic of arms; 6) to promote worldwide a stable and dynamic economic and financial system; 7) to promote trade forums; 8) to cooperate in the areas of education, university studies, research and technological development; 9) to protect the cultural heritage; 10) to implement a common initiative regarding the information society; and 11) to support research, university studies and training in the area of integration.

In the three years since the Rio Summit, progress has been made in the three major areas of bi-regional relations - politics, the economy and cooperation - at both the regional and the sub-regional level.

a)   The political dialogues

These dialogues have been carried out through the meetings of Ministers of Foreign Affairs, which have been held annually since 1987 and are aimed at guiding bi-regional relations (the IX meeting took place in Vilamoura, Portugal, on 24 February, 2000, and in the X meeting, held in Santiago de Chile on March 28, 2001, an important document was issued: the Santiago Declaration). The Bi-regional Group has contributed to the political dialogue through the follow up of the commitments entered into at the Rio Summit and the initiatives and implementation projects agreed upon at a later date.

Because of the new reality that emerged following the September 11 attacks against U.S. civil and military targets, a clearer political affiliation with the U.S. may be warranted, particularly in the areas of security, the struggle against terrorism, drug trafficking and guerrilla groups in some Latin American countries, as well as between European countries. The new situation that emerged after those attacks may also affect the economy to the extent that it deepens the crisis already underway in the U.S. and the whole international economic system.

However, this will probably not affect in a substantial way the possibilities of developing a bi-regional association between the EU and Latin America and the Caribbean aimed at strengthening reciprocal contacts, common interests and relations. To counterbalance the risks posed by unbridled terrorism we must establish a bi-regional relation that promotes democracy, trade, and joint investment, the elimination of poverty and social exclusion, cultural links and the progress in Latin America and the Caribbean.

Under the current conditions the bi-regional political dialogue is a must and needs to be continued and strengthened. However, we should classify the different scenarios for political dialogue by hierarchy and specialization, keeping bi-regional summits as the foremost forum for dialogue, which should be held periodically but with a long enough time-frame so that each may produce developments and policies that strengthen bi-regional relations. Such agreements and decisions as may be reached at the regional level should be mirrored at the sub-regional political dialogue level, where more specific geopolitical, economic, historical and cultural realities are clearly defined and dealt with.

b)   Trade relations

Even though the European Union is the region's second trade partner, following the U.S., and MERCOSUR and Chile's first, its participation in the region's trade fell from 20% in 1980 to 15% in 2000. In fact, important obstacles, particularly as regards access to Europe's agricultural market and the expansion of exports flows from the region, hamper reciprocal trade. Thus, Latin America and the Caribbean's trade deficits have increased, limiting the region's possibilities for development. In this regard, the European Union's Common Agricultural Policy (CAP), which protects Europe's agricultural production through tariffs and export and production subsidies, represents a veritable bottleneck that must be cleared for bilateral relations to progress.

Regarding external influences over the region, it can be stated that the United States enjoys a more advantageous position compared to the EU. This is due to several factors: the U.S. is the centre of world power and has the largest consumer market; it is geographically closer and throughout the 20th century it established important links with most Latin American countries. The U.S. has even proposed the establishment of a free trade area that stretches from Alaska to Tierra del Fuego, the FTAA, which is currently being negotiated.

Given the difficulties of competing under such conditions, the EU has adopted reactive or partial actions, which are usually insufficient to counterbalance U.S. influence. In this regard, one could ask the question: is the EU willing, capable and interested in playing a leading role in the region? At this point the EU does not appear willing or capable to compete openly with the U.S. in all areas and all the sub-regions of Latin America and the Caribbean. Thus, perhaps the EU would do better to follow a step-by-step strategy, strengthening first ties with those sub-regions and actors with which it enjoys a closer relationship, while maintaining as its long term objective the establishment of some type of association with the region as a whole.

The signing of the EU-Mexico Free Trade Agreement has been the most successful such initiative during the last few years. However, the signing of the free trade agreements with MERCOSUR and Chile and the launching of negotiations with the Andean Community (CAN), Central America and the Caribbean have lagged behind. Even the EU-Mexico agreement, though favourable to the European Union's economic interests, is not enough to satisfy the needs of the region and counterbalance U.S. influence.

c)   Bi-regional cooperation

Besides the numerous existing sub-regional and bilateral agreements, a number of cooperation initiatives between the EU and LAC are underway. These are:

The cooperation programme between universities and institutes (ALFA), created in 1994, which involves over 1,100 institutions.

· The cooperation programme between EU and Latin American enterprises (ALINVEST), aimed at establishing links between firms with a view to promoting investment and trade. By the end of 2001, 179 business meetings had been carried out, involving 300 chambers of commerce and business associations, and over 20,000 small- and medium-sized enterprises.

·  The URBAL programme, which has established alliances between 1,200 cities in both regions.

· In October 2000, the EU Commission decided to adopt a new strategy and focus its cooperation activities with Latin America and the Caribbean on four priority areas:

-    The promotion and protection of human rights;
-    the promotion of the information society (ALIS Programme);
-    the reduction of social unbalances and the struggle against poverty; and
-    the strengthening of civil society.

·    The following are some of the activities scheduled for the period 2002-2006:

-   To support relations between both regions in order to strengthen associations between
     civil society groups;
-    to contribute to the decrease of inequalities through social initiatives and actions
     aimed at the poorer sectors of the population;
-    to prevent natural disasters and participate in reconstruction efforts; and
-    to undertake actions aimed at supporting strategic associations by monitoring
     bi-lateral relations.

The Madrid Summit may be a good occasion to evaluate progress made so far on these issues and to develop new directions for future action in the area of bi-regional cooperation.

II.    Strides and Limitations in Sub-Regional Negotiations

Given the diversity between sub-regions in Latin America and the Caribbean, the EU has established, parallel to its activities at the regional level, a number of dialogues and negotiations with the different sub-regional arrangements: Central America, the Andean Community, the Caribbean, MERCOSUR and Chile, and Mexico.

a)   The EU and Central America

The so-called "San José Dialogue" was established in 1984 at a ministerial meeting held in San José, Costa Rica. The Dialogue, which played a very important role in the peace and democratization process in the Central American countries, has come to cover other areas of political and economic cooperation. It has also supported the integration process, helped in the prevention of natural disasters and contributed aid when these occurred in the region over the last few years.

Central American countries are eligible for the tariff benefits contemplated in the Generalized System of Preferences (GSP) and the EU "special regime on drugs", which benefit a substantial portion of their exports.

It is expected that in the period 2002-2006 the EU will contribute 550 million euros in cooperation programs, beside important allocations to the reconstruction programs to repair the damages caused by recent natural disasters.

The XVII Ministerial Meeting between the EU and Central America took place in San José, Costa Rica, on 26 March 2001.

b)   The EU and the Caribbean

The European Union's relations with Caribbean countries have traditionally been carried out under the framework of the Lomé Agreement (recently replaced by the Cotonou Agreement), which encompasses the Asian, Caribbean and Pacific (ACP) countries with which it has signed association and cooperation agreements.

The Cotonou Agreement, signed in June 2000, is aimed at the progressive elimination of obstacles to reciprocal trade and at strengthening cooperation in different trade related areas. Even though it is yet to be ratified (only 3 of the 15 EU members and most of the ACP countries have ratified it) it is expected that it will enter into force at the next meeting of the Council of Ministers of the EU-ACP countries, which will be held in the Dominican Republic at the end of June. The negotiations for the Economic Partnership Agreements envisioned in the Convention are expected to be launched at that meeting.

Similarly, with the ACP countries members of CARIFORUM the EU has agreed on a technical assistance programme on trade issues. This is aimed at training negotiators from those countries to enable them to better face ongoing multilateral trade negotiations and implement the agreements convened upon. Programmes in the areas of higher education, the struggle against drugs, health (particularly the fight against AIDS) and trade have also been implemented.

c)   The EU and the Andean Community

The Andean Community (CAN) was the first sub-region to receive development cooperation from the EU. In fact, ever since the 1970s the EU has been supporting the Andean countries in the social, educational, health, housing and civil society areas, among others. The EU is the largest donor in the Andean region, particularly as regards its regional integration process, which it has supported from its very beginning. Every year the European Commission contributes approximately 130 million euros to the CAN and it is expected that by the year 2006 it will have contributed 330 million euros to support Colombia's peace process.

The 1996 Declaration of Rome launched the current political dialogue and economic cooperation between the EU and the Andean Community, extending it over time and widening the scope of relations between both regions. To this end, mechanisms for dialogue were created, among them the presidential summits, regular meetings between ministers of foreign affairs and technical meetings on specific issues. Following the first EU-LAC Summit in Rio, high-level meetings have multiplied. The last ministerial meeting was held in Santiago, Chile, on March 28, 2001, on the occasion of the X Ministerial Meeting between the European Union and the Group of Rio.

One of such cooperation's priority areas is the fight against drugs and the eradication of cocaine plantations. The agreements signed on this issue have given rise to an "open dialogue" based on two important principles: shared responsibility and comprehensive struggle. The EU grants 90% of Andean exports privileged access to its market through the GSP (even though this covers only 23% of exports' total value), as a way of contributing to the struggle against the illegal production of drugs.

In December 2001 the EU approved new GSP regulations whereby developing countries (including Andean countries) will continue to be granted unilateral tariff preferences, albeit requesting compliance with some requisites and demands, until the year 2004, at which time the EU will evaluate the results and consider whether to extend GSP benefits to the year 2014. With this extension the EU has postponed the launching of negotiations to establish a free trade agreement similar to that signed with Mexico and to another one that is currently being negotiated with Chile and MERCOSUR - something the Andean countries and CAN have been suggesting for some time.

d)   The EU and Mexico

Even though they began negotiations after MERCOSUR and Chile, after just 16 months of discussions, in November 1999, the EU and Mexico convened on a free trade agreement, the first of its kind. The agreement comprises two decisions by the Joint Council: one regarding trade in goods, government procurement, cooperation in the areas of competition, intellectual property and dispute settlement; and the other regarding trade in services, investment and intellectual property. The first decision entered into effect on July 1, 2000 and the second on March 1, 2001. This free trade agreement is part of the Economic Association, Political Concertation and Cooperation Agreement signed by Mexico and the EU on December 8, 1997.

The second meeting of the joint EU-Mexico Council was scheduled to be held during the first quarter of this year to evaluate the application of the agreement and consider new future initiatives. One of the issues that may be on the agenda is whether to speed up liberalization of the automotive industry and other sectors, something the EU has been considering, in accordance with the bilateral association and free trade agreement, which envisions the faster reduction of tariffs. In exchange for a similar treatment to that received by Mexico's partners within the NAFTA, the EU will eliminate tariffs on a number of Mexican products, basically medicines and automobiles.

e)     The EU and MERCOSUR and Chile

The European Union's negotiations with its main trade and investment partners in the region, which are MERCOSUR's countries (Argentina, Brazil, Paraguay and Uruguay) and Chile, have met with a number of difficulties and have thus progressed much slower than negotiations with Mexico. Problems such as the European Union's Common Agricultural Policy, the degree of preferences and the incorporation of Eastern European countries to the EU, and the effects of an eventual expansion of agricultural imports from MERCOSUR countries almost threatened to sink the first EU-LAC Summit.

Negotiations actually began in Brussels in November 1999, when EU and MERCOSUR negotiators presented to their ministers a document with the negotiations' structure, methodology and timetable. The Bi-regional Negotiations Committee (BNC), the Sub-Committee on Cooperation and several other technical and working groups have been the main forums for the negotiations.

Once the initial stage of exchanging information was concluded, and in line with the European Commission's mandate regarding the timetable for initiating tariff negotiations, these were launched in July 2001, in Montevideo, on the occasion of the V Meeting of the BNC, with a EU proposal covering tariffs, trade in goods and services and government procurement. A draft proposal regarding the institutional framework was also considered and it was agreed that MERCOSUR would present its negotiating proposals before October 31, 2001. MERCOSUR did in fact present its proposals, which also included the issues of services and government procurement, during the VI Meeting of the BNC, held in Brussels. Given MERCOSUR's difficult economic and political situation at the time, the European countries welcomed the effort warmly.

Both proposals, though rather modest, particularly in the area of agricultural and animal products (whether processed or not) in the case of the EU and the liberalization of industrial products, in the case of MERCOSUR, assume that both parties have began the negotiation process with a view to establishing a free trade area, even with long transition periods. The cautious manner in which both parties began discussions was due to the difficult economic situation in the EU and MERCOSUR countries and commitments and processes external to the bi-regional relation, such as, for example, commitments entered into within the WTO, the FTAA or the European Union's expansion process.

A VII round of negotiations is to take place in Buenos Aires, in April 2002, in preparation for the second EU-LAC Summit.

As for the European Union's negotiations with Chile, it is possible that a Political and Economic Association Agreement may be concluded before the Madrid Summit, given the less controversial character of both parties' offer.

In this regard, between December 2001 and March 2002, three rounds of negotiations were carried out (the VII and IX in Santiago, the VIII in Brussels), leading to important strides: I) in the political area, the inclusion of the democratic clause as pillar of the agreement and cooperation in the fight against terrorism; ii) in the area of cooperation, the conclusion of an agreement on science and technology which will facilitate joint actions in these fields and will enable Chile's universities and enterprises to access Europe's scientific networks; iii) in the area of regulations, the chapter on intellectual property has been closed and work has concluded on customs procedures and sanitary and phytosanitary norms. Also, progress has been made regarding the issues of competition, public markets and investments.

In the area of trade, work has begun on tariff offers covering several sectors, namely agriculture, agricultural products, fishing and industries. Important strides have been made in the assessment of each party's interests, as well as in devising solutions to existing problems, particularly regarding agricultural products. As for the most sensitive products, wine and fish products, reference was made to the "constructive spirit" prevailing as regards the areas of grape-growing and wine-making, particularly enological practices, and confidence was expressed that problems concerning fishing would be solved before the month of May.

The X Round, which could be the last, will begin in Brussels on April 15, however it is expected that some of the working commissions will continue to meet in order to reach an agreement before the Madrid Summit, which was considered as an "ambitious but attainable" goal.

III.  Proposal to Strengthen the Bi-Regional Association

On November 30, 2000, the President of the European Parliament (EP) announced that the Commission for Foreign Affairs, Human Rights, Common Security and Defence Policy had been authorized to prepare, on its own initiative, a report on a global association and common strategy for relations between the EU and the Latin American and Caribbean region, based on decisions taken by the heads of state and government during the Rio Summit. Such report was examined during the meetings held on October 9 and 10, 2001, and the draft resolution was approved by 48 votes with 2 abstentions.

The draft resolution reiterates their support for the EU-LAC bi-regional strategic association, criticizes delays in the implementation of actions aimed at applying the main principles agreed upon for such association and requests the European Council to adopt such strategy as a guideline for EU actions at the moment the Bi-regional Association enters in force, adding that the Madrid Summit could be the appropriate occasion for its adoption.

The draft resolution establishes that the new common strategy shall have the following objectives:

i)   In the political field, the adoption of an expanded Bi-regional Agenda; the updating of the political dialogue at ministerial and parliamentary levels, including the creation of a Trans-Atlantic Euro-Latin American Assembly and the launching of an Euro-Latin American political and security association, as well as the signing of a peace chart.

ii)   In the economic, financial and trade areas, the completion of the network of association agreements currently under negotiation (MERCOSUR and Chile) and the establishment of new negotiating guidelines in order to conclude in the medium term the agreements with the Andean Community and Central America; the continued granting of GSP benefits and the establishment of a shared prosperity area by strengthening regional markets.

iii)   In the social field, a resolute and ambitious cooperation policy in the areas of culture, education, migrations, internal, legal and judicial affairs and the fight against poverty; the establishment of a plan for the global war against drugs; the creation of an Euro-Latin American Centre for Studies (ELACS) and the creation of a Bi-regional Solidarity Fund.

iv)   The creation of the above-mentioned fund would grant new dynamism to the European Union's Latin American cooperation policy, which must be centred on the struggle against poverty and social inequality. The draft proposal estimates that such fund should be endowed with adequate sectoral financial resources, coordinated by the European Commission in collaboration with organizations such as the European Investment Bank (EIB), the Inter-American Development Bank (IDB) and the World Bank and those countries willing to make contributions.

IV.    Concluding Remarks

One can hardly fail to share the good will expressed in the above-mentioned report on a EU-LAC common strategy and association, which has already been approved, by vast majority, by the European Union's Commission on Foreign Affairs, Human Rights, Common Security and Defence Policy.

The report's suggestions mirror the profound coincidences that exist between the people of the European Union and Latin America and the Caribbean, because of their common heritage, tradition and culture, and their relations. However, in the medium and short term its objectives and proposals may not be carried out at the Madrid Summit, because neither the timing nor the conditions are ripe yet.

Most likely, pragmatism will be the order of the day at the Madrid Summit and the minimum common denominator will be the main guideline. Therefore, other less ambitious actions may be considered in Madrid and to the extent that they will maintain alive the dialogue between both regions while waiting for better conditions to develop in order to further strengthen the bi-regional association. And this would be a positive outcome.

However, the bi-regional association will continue to be on the permanent agenda of EU-LAC meetings. For the countries and the peoples of Latin America and the Caribbean a minimalist approach would have negative consequences: the absence of new possibilities to overcome poverty and today's economic and social crisis. Naturally, it cannot be forgotten that the EU has enormous responsibilities and commitments in the old continent and the rest of the world, at such uncertain times as these we are living in, but this should be one more fundamental reason for the EU to make its intentions, possibilities and limitations clear, so that the region may cease dreaming about greater alliances.

In this regard, mention should be made again of the obstacle posed to the bi-regional association by agricultural issues. Europe must accept that the agricultural sector is of strategic importance for the development of the countries of the region, In order to reach a meeting point between apparently contrasting interests, the idea of exchanging free access to the European agricultural and agro industrial market for participation by European agricultural and agro industrial enterprises in Latin America's development could be explored.

One of Latin America and the Caribbean's dreams throughout history has been to establish alternative routes that may enable it to balance its international relations, based on cooperation and bi-regional associations. To this end, Europe's policy towards the region should be based on an economic, political, social and cultural plan of action, endowed with corresponding funds for the comprehensive development of Latin American and Caribbean countries. The objective would be to overcome the obstacles to the region's full incorporation into the world economy and society within a time span that is neither so short that it belongs to the universe of good wishes, nor so long that it erases all hopes of overcoming limitations, frustrations and poverty.


Bibliography

European Parliament: Report on a Global Association and a Common Strategy for Relations between the European Union and Latin America, October 11, 2001, Final, A5-0336/2001 PE 302.042. It includes draft resolutions and commissions' opinions. (http://www.europarl.eu.int).

·E-RECAL Bulletin No. 3, February 2002, of the Euro-Latin American Cooperation Network (RECAL). Internet site containing a chronology of actions, events and documents related to the Madrid Summit (http://www.recalnet.org).

EUROPA: Madrid Summit EU/Latin America and the Caribbean. Web site of the European Commission. It contains information on events, meetings, chronology, documents, reports related to negotiations and preparatory work for the Madrid Summit (http://europa.eu.int/comm/world/lac).

EUROLAT, Carta Informativa No.42, December 2001-January 2002. CELARE, notes on progress in the negotiations between MERCOSUR, Chile and other Latin American countries with the European Union (http://www.celare.cl/eurola42.pdf).

EUROLAT, Carta Informativa No.43, February-March 2002, CELARE, notes on progress in the EU-LAC negotiations (http://www.celare.cl/eurola43.pdf).

Observatorio de la Globalización. MERCOSUR No.9 Series: MERCOSUR-EU: "Las negociaciones entran en una nueva fase", by Roberto Bouzas and Pedro Motta Veiga, March 2002 (http://www.ub.es/obsglob/Seriemercosur.html).

"La evolución, el estado actual y las perspectivas de las relaciones de la Comunidad Andina con la Unión Europea", CAN document by Gianpiero Leoncini, March 2002 (http://www.comunidadandina.org/documentos).

·"Central points of the European Union policy towards Latin America and the Caribbean", presentation made by Stella Zervoudaki, Head of the European Commission Delegation in Uruguay and Paraguay, XV Meeting of Directors of International Cooperation of Latin America and the Caribbean, organized by SELA, in Montevideo, from 11 to 13 March, 2002. (Di Nº 29-02).

SELA has prepared a number of analytical and follow-up reports on bi-regional relations between the EU and LAC and on the first bi-regional summit. These are included in its publications Capítulos and Integration Bulletin and are currently available on SELA's Web sites: (http://www.sela.org) and (http://sela2.sela.org/WM2/WM10.ASP).

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