European Commission. The European Union, Latin America and the Carribean: a strategic partnership

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1 European Commission The European Union, Latin America and the Carribean: a strategic partnership EN ES

2 The boundaries shown on these maps do not imply on the part of the European Commission any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. For weekly news by from the DG for External Relations, please visit this site: Guadalajara summit: European Commission Directorate-General for External Relations Latin America Directorate B-1049 Brussels Tel. (+32) Fax (+32) Internet :

3 The European Union, Latin America and the Caribbean: a strategic partnership

4 Europe Direct is a service to help you find answers to your questions about the European Union Freephone number: A great deal of additional information on the European Union is available on the Internet. It can be accessed through the Europa server (http://europa.eu.int). Cataloguing data can be found at the end of this publication. Luxembourg: Office for Official Publications of the European Communities, 2004 ISBN European Communities, 2004 Reproduction is authorised provided the source is acknowledged. Printed in Italy PRINTED ON WHITE CHLORINE-FREE PAPER

5 Contents Introduction 5 1. Background to EU LAC relations 6 Two histories making up a strategic partnership 6 American and EU/Caribbean relations 7 Regional and institutional groups in the Latin American and Caribbean area 8 Lexicon 9 2. Current figures The European Union, Latin America and the Caribbean today EU LAC trade and investment figures EU LAC cooperation in figures The strategic partnership The Madrid May 2002 summit From Madrid to Guadalajara: the achievements Strengthening ties Developing regional cooperation Implementing bi-regional cooperation The challenges and objectives of the Guadalajara summit Discussion topics Participation of all actors in the bi-regional partnership: events in the margins of the Guadalajara summit Thematic challenges Social cohesion Respect for human rights, democracy and the rule of law: shared values Promoting multilateralism Regional integration Enlargement of the European Union: an opportunity for its Latin America and Caribbean partners 34 3

6 5. Bi-regional relations The EU and Mercosur The EU and the Andean Community The EU and Central America The EU and the Caribbean Bilateral relations The EU and Mexico The EU and Chile EU humanitarian aid to Latin America and the Caribbean: the work of ECHO Displaced peoples: Colombia and Mexico Natural disasters: Central America, Peru, Ecuador and Bolivia Dipecho: ECHO s disaster prevention and preparedness programme 60 Conclusion 62 4

7 Introduction The European Union, Latin America and the Caribbean share many values relating to human rights and democratic principles, the market economy,the fair distribution of the fruits of globalisation and the benefits of the advent of new technologies. These common values have enabled the Heads of State or Government of both regions, who met for the first time in Rio in 1999, to set up a bi-regional strategic partnership, laying down certain priorities to ensure coordinated action in the political, social and economic spheres. The European Union (EU), and Latin America and the Caribbean (LAC) must now continue to consolidate their partnership. The third EU LAC summit in Guadalajara (Mexico) in May 2004 is a unique opportunity to review the various initiatives, the dialogue and the negotiations between the two regions since This brochure gives a brief, factual presentation of the richness of the partnership between the European Union, Latin America and the Caribbean, its background and recent developments. It consists of thematic fact sheets focusing on the main aspects of the strategic partnership and how it has developed, and describes the political, trade and cooperation relations between the EU and each sub-region, as well as humanitarian aid. 5

8 1. Background to EU LAC relations Two histories making up a strategic partnership The EU has developed and maintained strong links with Latin America and the Caribbean since the 1960s. Myriam Mercier The institutional structure and implementation of cooperation with these two areas have, however, been managed under different agreements. Relations between the EU and Latin American countries come under the ALA-DC regulation (Asia, Latin America and developing countries), while the Caribbean countries form part of the ACP group (Africa, Caribbean and Pacific countries) and are therefore bound, with the exception of Cuba, by the Cotonou Agreement signed in 2000 (see chronology and lexicon). The strategic partnership between the EU on the one hand and Latin America and the Caribbean on the other, which started with the first summit of Heads of State or Government of both regions in Rio in 1999, was pursued and strengthened at the Madrid summit in The key aspects of the EU LAC strategic partnership include political dialogue and economic, scientific and cultural cooperation. The strengthening of trade links and the harmonious integration of the partners into the world economy are also key objectives of this partnership. Continuing with the action plans adopted at the two previous summits, the Guadalajara summit in May 2004 will consolidate the strategic partnership between the two regions. It provides an opportunity to take up a major challenge: to continue increasing the wealth generated by the economy and to share the fruits of growth on a fairer basis, in the context of increasing economic liberalisation and market integration. 6

9 Chronology of EU/Latin American and EU/Caribbean relations 1952 Establishment of the European Coal and Steel Community resulting in the integration process which was to lead to the European Union in Establishment of the Andean Pact, to become the Andean Community in 1996 (Treaty of Trujillo) Establishment of Caricom: Caribbean Community and Common Market (Treaty of Chaguaramas) Start of the biennial European Parliament and Parlatino Conferences Establishment of the ACP Group (Africa, Caribbean and Pacific) and signing of the first Lomé Convention (EU ACP) 1976 Initial cooperation activities between the EU and Latin America, including certain Caribbean countries which were not members of the ACP at this date Signing of the first cooperation agreement between the EU and the Andean Pact Launching of the San José Dialogue between the EU and the Central American countries Signing of the EU Central American cooperation agreement Establishment of the Rio Group Rome Declaration establishing political dialogue between the EU and the Rio Group Lomé IV (EU ACP), accession by Haiti and the Dominican Republic Signing of the Treaty of Asunción establishing Mercosur (Common Market of the South) Establishment of Cariforum Signing of the Ouro Preto Protocol consolidating and institutionalising the Mercosur process Fourth ministerial meeting between the EU and the Rio Group in Sao Paulo: adoption of a declaration on partnership Communication from the European Commission: European Union Latin America: the present situation and prospects for closer partnership, , COM(95) First meeting of the high-level dialogue between the EU and the Andean Community on combating drugs following the signing in 1995 of the agreements on precursors Signing of the agreement on an economic and political partnership and cooperation with Mexico Communication from the European Commission on A new European Union Latin American partnership on the eve of the 21st century, COM(1999) Rio summit: EU Latin America/Caribbean Launching of negotiations for an association agreement between the EU and Mercosur Communication from the Commission on the follow-up to the Rio summit: Follow-up to the first summit held between Latin America, the Caribbean and the European Union, COM(2000) Signing of Cotonou Agreements between the EU (15 countries) and the ACP countries (77 countries). 7

10 2000 Cuba enters the ACP group Gradual entry into force of the free trade agreement with Mexico Madrid summit: EU Latin America/Caribbean Signing of the EU Chile association agreement Signing of the memorandum of understanding by the European Commission and the Inter- American Development Bank (IDB) Entry into force of the Cotonou Agreement Entry into force of the provisional trade measures in the EU Chile association agreement Signing of the agreement on political dialogue and cooperation between the EU and the Andean Community Signing of the agreement on political dialogue and cooperation between the EU and Central America Launching of the negotiations on economic partnership agreements (EPA) with the Caribbean. Regional and institutional groups in the Latin American and Caribbean area Latin America (geographic) Caribbean (geographic) México Guatemala El Salvador Honduras Nicaragua Costa Rica Panamá Guyana Belize Cuba Dominican Republic Venezuela Colombia Ecuador Peru Bolivia Chile Brasil Paraguay Uruguay Argentina Suriname Haiti - Bahamas Jamaica - Barbados Trinidad and Tobago Antigua and Barbuda Dominica Grenada Monserrat ( 1 ) St Kits and Nevis St Lucia St Vincent and the Grenadines Countries taking part in the Madrid summit Member of the Rio Group (at 1/3/2002) Central American country Andean Community member country Mercosur member country Cariforum member country OECS member country Jamaica Caricom member country ( 1 ) 2003: with the exception of Montserrat, which is an overseas territory, the Community is an association of sovereign States 8

11 Lexicon ACP: Africa, Caribbean, Pacific. The ACP group was established following the signing of the first Lomé Convention with the European Union in 1975.There were 79 members in ALA developing countries regulation: regulation of the European Parliament and Council governing Community cooperation with the countries of Asia and Latin America. ALFA: Latin American academic training. A biregional cooperation programme on higher education. AL-Invest: bi-regional cooperation programme for cooperation between European SMEs and Latin American ALliance for the Information Society. Biregional cooperation programme aimed at promoting the information society and combating the digital divide. CAN: Andean Community of Nations. Caricom: Caribbean Community and Common Market, the main objective of which is to promote regional economic integration. Cariforum: Discussion forum to promote the regional integration of the Caribbean countries that are members of the ACP. Cotonou Agreement: new ACP EU partnership agreement concluded in February 2000 for a 20- year period ( ). This agreement and its financial protocol will be reviewed every five years. Dipecho: ECHO programme for preparing for natural disasters. EC: European Community (see EU). ECHO: Humanitarian Aid Office of the European Commission. EDF: European Development Fund. The EDF finances projects and programmes in the ACP countries and in overseas countries and territories. The ninth EDF covering the first five years of the Cotonou Agreement, represents an amount of EUR 13.5 million. EIB: European Investment Bank. EPA: European partnership agreements. Trade agreements between the EU and the ACP regions. These agreements, which are compatible with WTO rules, are intended to gradually remove barriers to trade and to strengthen cooperation in every domain relating to trade. EU: European Union. From May 2004, 25 members: Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the United Kingdom. The EU was established on the foundations of the EEC (former EC), the ECSC (European Coal and Steel Community) and Euratom (European Atomic Energy Community). FDI: foreign direct investment Flex: this system is used to compensate for financial imbalances in ACP countries caused by significant losses of export revenue. GSP: generalised system of preferences. A system consisting of granting, unilaterally and according to a principle of non-reciprocity, preferential tariffs which are unlimited in terms of quantity, to 180 developing countries, economies undergoing transition and dependent territories. Tariff preferences are modulated according to the classification of imports (sensitive/non-sensitive). Interreg III: The Interreg III Community programme ( ) has an operational framework 9

12 aimed at promoting harmonious and balanced development as well as regional integration in the areas concerned. LAC: Latin America, Caribbean. Lomé Convention: The first Lomé Convention, signed in 1975, involved the nine EU Member States of the time and 46 ACP countries. This Convention was renewed four times between 1975 and 2000, before being replaced by the Cotonou Agreement in Memoranda of understanding (MoU): Bilateral agreements between the European Community and its partners, which lay down the priorities and indicative budgets for development cooperation for a certain period (in this brochure: from 2000 to 2006). Mercosur: Common Market of the South. Regional integration organisation. OECS: Organisation of Eastern Caribbean States. PRRAC: regional programme for the reconstruction of Central America. Rio Group: political consultation mechanism dealing with subjects of common interest to Latin America and the Caribbean. SFA: special framework of assistance for traditional ACP banana suppliers. The aim is to improve competitiveness in the banana sector and/or to underpin diversification. Stabex: used up until the ninth EDF, Stabex compensated ACP countries for losses of export revenue due to fluctuations in prices or in demand for agricultural products. Sysmin: used up until the ninth EDF, Sysmin alleviated the effect of the fluctuations of revenue from the production and sale of mining products. URB-AL: bilateral EU-Latin American cooperation programme aimed at developing links between European and Latin American local authorities by pooling best practices relating to urban policies. WTO:World Trade Organisation. 10

13

14 2. Current figures 2.1. The European Union, Latin America and the Caribbean today Population Population (as a % of the world population) ( 1 ) 2020 ( 1 ) Asia Africa LA & Car. EU-15 US Japan ( 1 ) Estimated value. Sources: Eurostat European Commission Overview of the indicators for both regions Latin America and the Caribbean: per capita GDP Mexico Chile Mercosur Andean Community Central America Latin America Cariforum LAC EU-15 EU-25 Area (thousands km 2 ) Population 2001 (millions) GDP 2001 (euro billions) Per capita GDP 2001 (euro) N.B.: GDP expressed at 1995 constant prices, 1995 average exchange rate used = EUR/USD Source: ECLAC, Eurostat, World Bank. 12

15 HDI per region in 2001 Marc Litvine HDI per region in 2001 United States (0.937) Japan (0.932) European Union (0.893) Courier ACP Central and eastern Europe and CIS (0.787) Latin America and the Caribbean (0.777) East Asia and the Pacific (0.722) China (0.721) Arab States (0.662) Developing countries (0.655) South Asia (0.582) Sub-Saharan Africa (0.468) Least developed countries (0.448) N.B.: The human development indicator measures, in a country, the level reached in terms of life expectancy, access to education and real adjusted income. Source: Human Development Report 2003, UNDP. Per capita GDP at 1995 constant prices, Per capita GDP at 1995 constant prices, (euro) LAC EU-15 EU N.B.: 1995 average exchange rate: EUR/USD (Eurostat). Source: Eurostat, ECLAC 13

16 2.2. EU LAC trade and investment figures The EU is Latin America s second trading partner. The EU has gradually strengthened its economic and trade links with Latin America and the Caribbean, resulting in trade figures that more than doubled between 1990 and CE/EC Latin America and the Caribbean s trade with the EU has remarkably increased since 1980, although the bulk of the rise took place during the last decade. In 2002, EU imports from Latin America and the Caribbean accounted for EUR 53,700 billion, and exports to the region amounted to EUR 57,500 billion. If we examine more closely the trend followed by trade figures during the last five years, we will see Myriam Mercier that EU imports from Latin America and the Caribbean have increased faster that EU exports to the region. As a consequence, Latin America and the Caribbean is steadily reducing its trade deficit with the EU. The main merchandises exported from Latin America and the Caribbean to the EU are agricultural products, transport material and energy. The EU has a trade deficit with Latin America and the Caribbean in agricultural products and energy, and a trade surplus in the rest of the sectors. The structure of Latin America and the Caribbean exports to the EU is not very diversified yet, and remains dominated by agricultural products. EU exports to Latin America and the Caribbean are more varied, the main sectors being machinery, transport material and chemical products. The EU has traditionally been the first investor in the region. European foreign direct investment inflows peaked in 2000 and have since reduced. However, the stock of European investment in Latin America and the Caribbean continues to increase and, in 2002, accounted for more than EUR 200 billion. 14

17 LAC merchandise trade with the world (billion ECU/EUR) Imports Exports Balance EU merchandise trade with LAC (billion ECU/EUR) Imports Exports Balance (billion EUR) EU merchandise trade with Latin America and the Caribbean by product, Agricultural products Imports Exports Balance Energy Machinery Transport material Chemical products Textiles and clothing 15

18 EU imports from LAC, 2002 Agricultural products 40.5% Other 27.7% Textiles and clothing 1.2% Chemical products 4.1% Transport material 9.2% Energy 8.9% Machinery 8.4% EU exports to LAC, 2002 Other 22.2% Agricultural products 6.2% Chemical products 16.4% Textiles and clothing 2.3% Energy 1.3% Transport material 24.9% Machinery 26.7% 16

19 EC/CE Isabelle Lafontaine The Pan-American road network EU foreign direct investment with LAC (flows) (billion EUR) Inflows Outflows , Balance Source: Eurostat EU foreign direct investment with LAC (stocks) (billion EUR) Inward stocks Outward stocks Source: Eurostat

20 Loans The level of collaboration between the Commission and the major international institutions in the field of development cooperation is particularly high in Latin America. These institutions are additional partners for European cooperation policy and, as such, they contribute to such things as financing projects of mutual interest, combating poverty and strengthening democracy. The EIB in Latin America Under the current mandate (ALA III) of EUR million for the period from 1 February 2000 to 31 January 2007, EIB funds are utilised to finance investment projects of mutual interest to the countries of the EU and Latin America in 17 countries in the region.there are no amounts per country. Sectors assisted:the EIB supports viable public and private sector projects in infrastructure, industry, agro-industry, mining and services. Special emphasis is given to the improvement or protection of the environment. Amount: Between 2000 and 2003, the EIB financed projects in Latin America to the tune of EUR million. The EIB in the Caribbean Under the successive Lomé conventions, the EIB has played a significant part in financing projects in the Caribbean. Sectors assisted: Financial support for SMEs (through local financial intermediaries), infrastructures, electricity and energy. Under the Cotonou Agreement s investment facility, funds will be provided for private sector support, in particular small and medium-sized enterprises, supporting the local savings markets as well as facilitating foreign direct investment. Amount: Between 1978 and 2003, the EIB financed projects in the Caribbean to the tune of EUR million European Commission Connecting the world with Charlestown, capital of Nevis island 18

21 2.3. EU LAC cooperation in figures The European Union is the main donor to Latin America and the Caribbean, providing aid in the form of grants and loans (European Investment Bank). Grants In addition to the European Union Member States contributions, over EUR 500 million have been allocated to Latin America under the European Community budget every year since Furthermore, through the European Development Fund, the Member States finance cooperation projects in the Caribbean for an average value of EUR 81 million per year (EUR million between 1976 and 2001). Table 1: The 10 main donors of aid to Latin America and the Caribbean in 2001 Latin America and the Caribbean All beneficiaries % total grants ( 1 ) % own grants ( 2 ) Latin America and the Caribbean All beneficiaries % total grants ( 1 ) % own grants ( 2 ) Millions USD Millions USD 1 United States CarDB Japan IDB Special Fund Spain Spain EC UN Others 5 Germany GEF Netherlands Nordic Dev. Fund IDB 7 Special United States Fund 8 ID Austria United AATNU Kingdom 10 UN Netherlands Others Others Others Total Total ( 1 ) Grants by each donor to the Latin American and Caribbean countries as a percentage of total grants by all donors to these countries ( 1 ) 489/6 044=25 %; 31/6 044=1 %). ( 2 ) Grants by each donor to Latin American and Caribbean countries as a percentage of own grants to all beneficiaries (1 489/6 044=25%; 31/6 044=1 %). 19

22 Table 2: The 10 main beneficiaries in Latin America and the Caribbean in 2001 USD % Millions 1 Nicaragua Bolivia Honduras Peru Columbia Brazil El Salvador Guatemala Ecuador Haiti Latin America and the Caribbean, others Total Praedac/K. Hoffman Table 3: Aid per sector in Latin America and the Caribbean in 2001 Aid for Latin American and Caribbean countries is concentrated in the following sectors in particular: social (41 %), infrastructure (18 %), education and health (17 %), multisectoral aid (14 %) and, lastly, manufacturing (10 %). All beneficiaries 20 % 30 % 17 % 10 % 14 % 41 % 10 % 12 % 18 % 28 % Education, health and population Other infrastructure and social services Infrastructure and economic services Manufacturing N.B.: Multi-sectoral aid Inside circle: Latin America and the Caribbean; Outside circle: all beneficiaries of aid. 20

23 3. The strategic partnership 3.1. The Madrid May 2002 summit The first summit of Heads of State or Government of Latin America, the Caribbean and the European Union was held in Rio de Janeiro on 28 and 29 June The objective was to strengthen the political, economic and cultural ties between the two regions in order to develop a strategic partnership. In Madrid in 2002, the Heads of State welcomed the practical progress achieved by the strategic partnership between the two regions since the 1999 Rio summit. The summit enabled the common values and positions professed by both regions to be reasserted, and gave new impetus to the partnership through the political statement adopted by the representatives of the 33 Latin American and Caribbean countries and the 15 European Union countries. The Madrid summit was also the occasion for concluding negotiations on the association agreement between the European Union and Chile, which establishes a political dialogue, cooperation and the gradual introduction of a free trade area. The European Commission took advantage of the occasion to launch two major new bi-regional programmes in the key sectors of education and the information society: the ALßAN programme, which provides scholarships to Latin American postgraduate students wishing to study in Europe, and programme aimed at promoting the use of information and communication technologies. The ALßAN programmes are also open to the Caribbean countries, which can take part in them by availing of national indicative programme resources. CE/EC EU-LAC summit, Madrid, 17 and 18 May

24 Lastly, the summit expressed renewed support for the coordination and cooperation mechanism adopted by the EU and LAC in 1999 to combat drugs, entitled the Panama action plan. This mechanism is based on the principle of shared responsibility. It aims to promote inter- and intra-regional cooperation on drugs issues (and related crimes). It also seeks to improve the regular pooling of ideas and experiences by the political and technical authorities of both regions. For further information on the Madrid summit: The Madrid summit declaration The Madrid declaration essentially focuses on the strengthening of democratic institutions, sustainable development, the eradication of poverty, cultural diversity, justice and social fairness, plus the continuation of the regional integration process. In relation to political matters, the Heads of State emphasised the need to act in unison within international bodies, in the fight against terrorism and organised crime, and against all forms of discrimination. In relation to economic matters, they expressed their will to increase the flow of trade and investment between both regions, in line with the conditions governing sustainable development. They also stated that they would work together to improve the international financial system. In relation to cooperation, the representatives of both regions reaffirmed their common commitment to respect cultural diversity in the world. This commitment is reflected in an active cooperation agreement concerning the information society, education and culture From Madrid to Guadalajara: the achievements Strengthening ties Signing of two EU Central America and EU Andean Community political and cooperation agreements in Rome on 15 December 2003 The Heads of State had agreed in Madrid to launch negotiations between the European Union and the countries of Central America (Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama) on the one hand, and the Andean Community and its Member States on the other (Venezuela, Colombia, Ecuador, Peru and Bolivia). Conducted simultaneously, these negotiations were concluded virtually at the same time and the two political and cooperation agreements were signed in Rome on 15 December 2003 (see also details in the sections of the brochure dealing with EU relations with each one of these two regions). Implementation of the EU Chile association agreement concluded at the Madrid summit The application of the association agreement between Chile and the European Union produced the expected results. Chilean exports to the EU rose by 11.4 % during the first six months of entry into force of the commercial component of the agreement (February August 2003) compared with the same period the previous year. Imports from the EU increased by 23.1 % compared with the same period in Progress in negotiations for an association agreement between the EU and Mercosur The EU and Mercosur announced in Madrid in May 2002 that the negotiations on two components, the political dialogue and cooperation, were virtually complete. The trade component remains to be negotiated. Strengthened by the results and hence the success of the multilateral trade negotiations launched in Doha, the negotiations between the EU and Mercosur continued to progress at the same pace as the multilateral negotiations.the parties held six negotiation sessions between the Madrid and the Guadalajara summits. Analysis of the migration between Europe and Latin America and the Caribbean In Madrid, the EU LAC Heads of State or Government agreed: To carry out an integrated analysis of the different issues of migration between our regions, which has brought and continues to bring great benefits to both, to implement solutions and to guarantee the full respect of the fundamental rights of migrant workers and their families, in accordance with international law and national legislation (point 31 of the political declaration). At the initiative of Ecuador, representatives from the EU and LAC met for a two-day experts-level seminar on migration in Quito (4 and 5 March 2004). The seminar allowed for a fruitful exchange on a broad range of issues, such as an assessment of the migration flows, causes of migration, the impact 22

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