SELA Analysis on relations with Europe
Re-encounter of Two Worlds:
Europe-Latin America Summit

Caracas, 27 January. The Europe-Latin America Summit. Scheduled for 1999, will provide an excellent platform from which to give "an important political thrust to the biregional relation", improve trade, strengthen existing cooperation tools and contribute to "diversifying and balancing dialogue with the United States", according to a report circulated today by the Latin American Economic System (SELA).

In the SELA report, suggestively titled, "Re-encounter of Two Worlds: The 1999 Europe-Latin America Summit", this intergovernmental organization, which groups 27 countries of the region, analyzes the international context in which the meeting will develop, focusing on both positive and negative aspects, mutual priorities and possible results.

SELA is fully convinced that "the preparation of this event will be one of the main activities pursued in the framework of the external relations of the Latin American countries." Another event of overwhelming importance will be the hemispheric summit to take place in April and that will launch the negotiations for the creation of the Free Trade Area of the Americas (FTAA).

The Europe-Latin America Summit, however, cannot limit itself to the role of being a mere "reaction to the FTAA." It needs to push further and set the bases for a dialogue, based on the concept of solidarity among the participants in an effort to deepen current relations and "place emphasis on areas that call for corrective measures."

The international context is responsible for a variety of determining factors in the preparation of the 1999 Summit." On the one hand, there are plans for the expansion of the European Union (EU), institutional reforms in their trek towards an integration process, including the establishment of a single currency next year, and the review of the Uruguay Round agricultural commitments which entails greater openness of their market in terms of sensitive products for Latin America.

From the Latin American perspective, the issues of greatest impact will be the evolution of the FTAA, prospects for convergence of the different regional integration schemes, and the review of Europe's policy towards developing countries which will have an effect on Caribbean nations that benefit from the Lomé Convention.

Structural and circumstantial asymmetries imbue this biregional relationship with yet other differences, including political and economic differences. As SELA correctly points out: "the EU is a consolidated power at the global level, while Latin America and the Caribbean is an emerging region." What is more, different levels exist in terms of the progress of internal integration processes.

The geographic situation also sets them apart. The European Union's natural neighbors are the rest of the European countries and those of Africa and the Middle East. Latin America and the Caribbean, on the other hand, share the same hemisphere with the United States and Canada.

Perhaps the most critical point is lodged in the area of trade. The 9.2 billion dollar trade surplus that Latin America had with Europe in 1990 dropped by a third in 1992, and by the following year, it had become a 3.3 billion dollar trade deficit. Since then, the negative balances have been on an upswing, and by 1996 said balance had reached 13.2 billion dollars.

Further, trade between the two re-encountering regions is also asymmetric. SELA points out that "two-fifths of Latin American exports to the European Union are commodities while industrialized goods account for three-fourths of the sales of the European Union to Latin America."

This biregional relationship does nevertheless have valuable political, cultural, economic and cooperation antecedents. Both the political agendas of Latin America and the Caribbean and Europe are based on democratic values, human rights, sustainable development, and the need for a globalization model aimed at deterring exclusion, unemployment and poverty, while also bearing a heavy hand against drug-trafficking and corruption.

In the sphere of economic policy, these two regions uphold the opening up of trade, attraction of foreign investment, strengthening of integration, and the promotion of free competition.

These favorable circumstances are further buttressed by cooperation mechanisms that range from the Generalized System of Preferences and the Lomé Convention to the third- and fourth-generation agreements, which are of a more advanced nature, and political and economic dialogue with the Rio Group.

SELA works within this rather complex context to find ways to satisfy the needs and interests of each region. "The EU´s position at the Summit will be conditioned to a large extent by the need to advance in the consolidation of its common foreign policy and its perception of the political and economic influence of the United States in Latin America and the Caribbean."

Hence the EU will be watching out for any agreements made in the framework of the FTAA that can have an impact on European enterprises' position in terms of trade, finance and technology and the possibility for expansion in Latin America. It is foreseen that the EU will aim to concert with this region in terms of the "new issues" being treated by the World Trade Organization and could seek support to fortify its international position on financial issues.

SELA further notes that the Latin American and Caribbean region will be attending the Summit with the purpose in mind of turning its trade deficit around, leave with clear promises made in respect of the dismantling of European agricultural protectionism, expand cooperation instruments and consolidate dialogue with the European Union, among others.

SELA foresees that three types of issues will be taken to said Summit: global issues, specific biregional issues, and specific national issues. And three thematic axes will be linked to these three types of issues, namely the political, economic and cultural. In any event, in addition to the important political thrust to relations between Europe and Latin America and the Caribbean, the Summit will "produce concrete results for immediate application."

The Latin American host country as well as the country exercising the European presidency (presumably Germany) will play a pivotal role. SELA's final comment was to underscore the importance of anticipating subregional dialogues and the convenience of ensuring a scenario in which government diplomacy complements "academic, entrepreneurial and parliamentary diplomacy."

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