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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
A PARTNERSHIP WITH 2020 AS THE PROJECTED TIME HORIZON?
The expected outcomes of the upcoming LAC-EU Madrid Summit.

by Félix Peña
April 2010

English translation: Isabel Romero Carranza


 

The upcoming VI LAC-EU Summit, to be held in Madrid on May 18, will offer an opportunity to reaffirm the identity as a differentiated international space and to encourage the reciprocal relations between both regions with a future projection.

The LAC-EU relation is made manifest by a wide array of interactions that take place at multiple planes, with varying degrees of density, depending on the countries and sectors involved, and with pronounced asymmetries as well. It may be considered as a very particular relation due to at least three factors: its deep roots, its economic and political relevance and its future prospects.

One of the results that can be expected from the Madrid Summit is an action plan aimed at projecting the interregional space into 2020 as a time horizon, promoting initiatives and mechanisms that enable joint work.

Three are the paths that would enable to harness the future joint action of both regions. The first one is related to the relevant issues of the global agenda, in relation to which the LAC-EU countries could contribute a great deal if they are able to coordinate their respective positions. The second path refers to the gradual creation of a strategic bi-regional partnership that takes into account the existing diversities and that is equipped with differentiated mechanisms and flexibility. Finally the third path refers to the specific initiatives aimed at enabling bi-regional cooperation, such as facilitating investments in Latin America, the creation of the Euro-Latin American Foundation and a joint action plan in the areas of research, technology and innovation.

The abovementioned results would undoubtedly be magnified if the negotiations for a bi-regional association between the European Union and Mercosur were to be re-launched during the Summit. This outcome seems highly possible.


When the Heads of State and Government of Latin America and the Caribbean (LAC) meet on May 18 at the Madrid Summit, they will have the opportunity to confer and take decisions concerning the particular relation between two very significant regional spaces.

The sole fact of having generated an ambit for the dialogue at the highest political level is in itself a positive outcome of a Summit such as the Madrid one. Many of the participants don't know each other. There have been several changes in government leaders on both sides of the Atlantic since the last Summit, held in Lima two years ago. At least two Presidents of LAC countries - Chile and Uruguay - that will be attending the Summit have taken office very recently. There have also been significant changes among the high commission of the European Union. The newly appointed officers are probably not familiarized with the LAC region.

More substantial still is the fact that the Summit offers an opportunity to reaffirm the identity of the inter-regional space and to encourage mutual relations. It is expected that the roadmap towards a 2020 time horizon will be designed in Madrid. At the same time new instruments and mechanisms will be devised for the joint work between both regions.

The personal acquaintance among the political leaders is always useful, as is the adoption of decisions aimed at increasing the bi-regional cooperation, much more so in a moment such as the present one in which the international system is undergoing a process of deep change, plagued with uncertainty.

In the area of world trade, even though a scenario of strong growth can be foreseen after the pronounced fall of last year, the questioning over the real and long-term effects of the financial crisis is still prevalent (on the subject, see the press release by the WTO on the perspectives of world trade for this year on http://www.wto.org/spanish/news_s/pres10_s/pr598_s.htm). The effect of the financial crisis on some of the EU member countries, such as Greece, has generated a debate over the need to intensify integration at the level of economic policy, especially in the case of those countries that have adopted the Euro currency.

On another note, in spite of the efforts made by the negotiators in Geneva, there is no evidence of a favorable outlook regarding the specifics for the conclusion of the multilateral negotiations of the Doha Round, within the scope of the World Trade Organization. (On this regard refer to the report by AITIC listed under the Recommended Reading section of the present Newsletter. Additionally, see the periodical by ICTSD, Bridges Weekly Trade News Digest, volume 14, number 12, March 31, 2010, on http://ictsd.org/i/news/bridgesweekly/73389/).
It would seem that the trend towards the proliferation of preferential trade agreements - i.e.: which are discriminating for those countries not participating in them - has accentuated lately. It has recently been anticipated that it is possible that the negotiations for a free trade agreement between the EU and India could be concluded by the month of October (the negotiating mandate was formally adopted in April 2007 and during her recent trip to New Delhi, Karen de Gucht, responsible for Trade at the European Commission, pointed out that the expectation is to conclude a free trade agreement by next October - on this issue see Agence France Press of March 5, 2010 on www.bilaterals.org. On the possible India-EU FTA refer to the book by Sangeeta Khorana and other authors listed under the Recommended Reading Section of this Newsletter which introduces some interesting considerations on the practical implications of the "substantial trade" requirement of WTO regulations). The dimensions of both markets make it impossible to underestimate the effects on the future of world trade.

The LAC-EU relation is made manifest by a wide array of interactions that take place at multiple planes, with varying degrees of density, depending on the countries and sectors involved, and with pronounced asymmetries as well.

It may be considered as a very particular relation due to at least three factors: its deep roots, its economic and political relevance and its future prospects. However, it is not an exclusive nor excluding relation. It couldn't be. In today's world all countries and regions have numerous choices for their international insertion and need to profit from them fully. This is valid for the EU as well as for the LAC and for each and every country that forms part of their respective geographical spaces. In the case of the South American countries, for example, the growing economic presence of China - both in the trade and investment planes - has increased the potential for the diversification of its international trade relations. In this sense, President Hu Jintao's April visit to Brazil, Chile and Venezuela is an event laden with future expectations, even due to the investment announcements that have been made for such reason. The April 15 meeting of the II Summit of the BRIC countries in Brasilia signals a redesign in the map of global economic competition. (For the conclusions of this meeting go to http://www.mre.gov.br).

The deep roots that characterize the special relation between the LAC and the EU have been nurtured by a shared history of mixed signals and varied outcomes. Not all of them have been considered positive. Memories from the past not always evoke events that are perceived or appraised in the same manner on both sides of the Atlantic. Even today some aboriginal Latin American people aspire to claim the rights of those identities that were weakened by the arrival of the Europeans to the region. However, the important point is that migrations, trade, investments, technical progress and cultural standards have generated through time a dense web of shared life experiences and interests.

From there, the political and economical relevance of the bi-regional relation. It is precisely the result of shared values and of a vision of society that has common elements; of economic interests that have been made manifest through flows of trade and investments. In the case of Europe this has materialized through the presence of many of its companies in Latin American countries, or in their interest to capitalize on the potential for future economic growth of some countries of the region. However, the presence of Latin American companies with investments in EU markets has been observed only in the last years.

For this reason the Euro-Latin American space constitutes a differentiated inter-regional space within the global international system, with its own history and characteristics. It would be hard to imagine a future path that doesn't include, such as in the past, multiple connection points.

Thus, one of the outcomes that can be expected from the upcoming LAC-EU Summit is an action plan aimed at projecting the inter-regional space into a 2020 time horizon, encouraging initiatives and mechanisms that facilitate joint work. This has been the focus during the past months of the preparatory stages of the May Madrid Summit, which includes several field-specific meetings such as the one which will take place on April 19 - 20, within the scope of the Ibero- American General Secretariat (SEGIB).

There are various paths that will enable to continue building on the idea of a bi-regional strategic alliance, an idea that was launched in 1999 at the first LAC-EU Summit of Rio de Janeiro. This is precisely the main concept upholding the biannual summit system, which has been in place for more than a decade.

A first course of joint action is related to the great challenges originated by the deep changes that are taking place worldwide. In this sense it is to be expected that the future bi-regional agenda focuses the joint work on the main issues that have a bearing on global governance. Due to the number of countries involved, the nations from both regions may play a relevant role, provided they are able to coordinate their positions in accordance with their diverse national and regional interests. A top priority, among others, is the bi-regional cooperation for the creation of conditions that guarantee peace and international security. This would imply strengthening the multilateral system, within the scope of the UN, and the effectiveness of the G20 mechanism, which will have the chance - and the challenge - to prove itself at the upcoming Toronto Summit. However, this also implies that both regions can play an active role to ensure the conclusion of the Doha Round, as well as to achieve a reasonable outcome from the negotiations on climate change during the Summit that will take place in Mexico (something that was not possible to achieve at the past Copenhagen Summit). A third relevant issue for the Madrid agenda is related to the role of both regions in the fight against organized crime and the different modalities of international terrorism.

The second path is related with specific issues of the reciprocal relations and, in particular, with the idea of a bi-regional strategic partnership conceived as a gradual, long-term process that will require the conciliation of multiple diversities through variable geometry and multi-speed flexible work methods and instruments. Among them, the priority is the creation of a network of multiple association agreements of a preferential nature and with a deep strategic purport. Until the present day, the EU has signed preferential agreements with Chile and Mexico and, at the same time, strategic partnerships with Brazil and Mexico. It is expected that the preferential agreements with Colombia, Peru and the Central American countries will be formalized in Madrid. Additionally, the possibility that the bi-regional negotiations with Mercosur could be re-launched on such occasion has also gained momentum.

A complementary third path refers to the creation of special mechanisms to strengthen cooperation between both regions and their different countries. Three of these mechanisms could be mentioned as a result of the preliminary work completed for the Madrid Summit. The first one would be a Facility for Investments in Latin America, with an initial endowment of European funds and aimed at strengthening regional integration, encouraging social cohesion programmes and developing physical infrastructure. The second one would be a Latin American Foundation that would help support the idea of achieving greater visibility with the actions taken towards the development of the bi-regional partnership. On this regard there is a Foundation within the scope of the ASEM that already has an accredited history (on the Asia-Europe Foundation see http://www.asef.org/). The third would be a joint action plan for research, technology and innovation which would unfold in multiple ways depending on the different fields of bi-regional cooperation.

If these were the main results of the Madrid Summit, the expectations that meetings at the highest political level such as this one generate on the public opinion would be fully justified. Such results would no doubt be magnified if, on occasion of the Summit, the negotiations for the establishment of a bi-regional association agreement between the EU and Mercosur, halted in October of 2004, were to be re-launched. Indeed, this outcome seems highly possible.


Recommended Reading of Recent Publication:

  • AITIC, "Situation Report on The WTO Stocktaking Excercise held March 2010", Agency of International Trade, Information and Cooperation (AITIC), Geneva April 2010 en http://www.aitic.org.
  • Castro, Lucio; Saslavsky, Daniel, "Cazadores de Mercados., Comercio y promoción de exportaciones en las provincias argentinas", CIPPEC, Buenos Aires 2009.
  • CEPAL-BID, "Cambio climático: una perspectiva regional", Informe preparado para la Cumbre de la Unidad de América Latina y el Caribe (Riviera Maya, México, 22 y 23 de febrero de 2010), CEPAL-BID, Santiago de Chile, febrero 2010, en http://www.eclac.org.
  • DeShazo, Peter, "Outlook for Indigenous Politics in the Andean Region", A Report of the CSIS Americas Program, Center for Strategic & International Studies (CSIS), Washington, December 2009, en http://www.csis.org.
  • Evenett, Simon (ed.), "The US-Sino Currency Dispute: New Insights from Economics, Politics and Law", a VoxEu.org Publication, Centre for Economic Policy Research (CEPR), London, April 2009 en http://www.voxeu.org/reports/currency_dispute.pdf or click here.
  • Foxley, Alejandro, "Market versus State. Postcrisis economics in Latin America", Carnegie Endowment for International Peace, Washington 2010, en http://www.CarnegieEndowment.org/pubs.
  • Giambiagi, Fabio; De Barros, Octavio (orgs.), "Brasil Pós-Crise. Agenda para a próxima década", Elsevier-Campus, Rio de Janeiro-Sâo Paulo 2009.
  • Hont, Istvan, "Jealousy of Trade. International Competition and the Nation-State in Historical Perspective", The Belknap Press of Harvard University Press, Cambridge and London 2010.
  • Innovation Task Force, "Innovation Ireland. Report of the Task Force", Report of the Innovation Taskforce, March 2010, en http://www.innovationtaskforce.ie.
  • Joshi, Vivek, "Preferential Tariff Formation: The Case of the European Union", CTEI Working Paper, Geneva June 2009.
  • Khorana, Sangeeta; Perdikis, Nicholas, Yeung May T.; Kerr, William A., "Bilateral Trade Agreements in the Era of Globalization. The EU and India in Search of a Partnership", Edwar Elgar, Cheltenham, UK - Northampton, MA, USA 2010.
  • Mercosur ABC, "Temas del Mercosur - Dossier de Integración", Nº 67, Enero 2010, en http://www.mercosurabc.com.ar.
  • Sader, Emir; García, Marco Aurelio (orgs.), "Brasil entre o passado e o futuro", Editora Fundaçao Perseo Abramo-Boitempo Editorial, Sâo Paulo 2010.
  • Shapiro, Jeremy; Witney, Nick, "Towards a Post-American Europe: A Power Audit of EU-US Relations", European Council on Foreign Relations (ECFR.EU), November 2009.
  • Slocum-Bradley, Nikki, Identity Construction in Europe: A Discursive Approach", UNU-CRIS Working Papers, W-2010/2, Brugge 2010, en http://www.cris.unu.edu.
  • Slocum-Bradley, Nikki; Bradley, Andres, "Is the EU's Governance Good?: An Assessment of EU Governance in its Partnmership with ACP States", UNU-CRIS Working Papers, W-2010/1, Brugge 2010, en http://www.cris.unu.edu.
  • Stamponi, Guillermo, "Una visión argentina de la Revolución Rusa. Informes diplomáticos reservados y confidenciales", Asociación Profesional del Cuerpo Permanente del Servicio Exterior de la Nación, Buenos Aires 2009.
  • Wignaraja, Ganeshan; Lazaro, Dorothea, "North-South vs. South-South Asian FTAs: Trenes, Compatibilities, and Ways Forward", UNU-CRIS Working Papers, W-2010/3, Brugge 2010, en http://www.cris.unu.edu.
  • WTO, "International Trade Statistics - 2009"; World Trade Organization, Geneva 2009, en http://www.wto.org/english/res_e/statis_e/its2009_e/its2009_e.pdf or click here.


Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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