This post can also been seen on FPA’s Latin America Blog.
Today and tomorrow the Spanish Presidency of the EU will be hosting the 2010 EU-Latin America Summit in Madrid. Since 1999, the Summit has sought to engage Europe and Latin America in increased cultural and trade ties and create a defined relationship between the two regions on a permanent basis. Latin American and European economic interests between the regions hoped to use the Summit to open Latin America beyond America’s backyard and create FTAs between Latin America and the world’s largest economy, that of the European Union. Since 1999 however, little has been done past putting future agreements and plans on paper. Trade between the two regions were agreed to informally, with exceptions from France to protect it’s farming industry, but no real actions were taken to proceed with any formal agreements. In 2004, a plan to open a FTA between the EU and Mercosur was agreed to but not much came of it since that time.
Spain’s ties with their brothers and sisters in Latin America left the onus on Spain’s Presidency of the EU, President Zapatero to make the EU-Latin America Summit of 2010 a memorable one. In the past four Summits, conflicts and divided interests between Latin American states and European ones in their own respective regions often scuttled any real progress. In 2010, despite Brazil’s push to not recognise the current leaders of Honduras and to ban them from the 2010 Summit, Honduras’s appeased its critics and only attended a smaller Central American-EU discussion at the Summit. Venezuelan President Hugo Chavez boycotted the Summit altogether because the new elected Honduran President Porfirio Lobo’s would be attending and present in Madrid. Despite this, upon opening of the main Summit, an announcement was made today of a EU-Central America FTA, including Honduras, El Salvador, Costa Rica, Guatemala, Nicaragua and Panama. Limits to the agreement focus around the importing of mass agricultural products such as imports of milk powder and cheese from Europe, and for bananas, beef and rice from Central America. Limits to the agreement might hurt Central America because of their agriculturally heavy economies not having full access to the EU and the amount of aid coming into the region from Europe flooding local markets. While the US is the closet donor to Central America, the largest donator of aid to Central America has been the EU over the last 10 years. Despite this, the opening of ties between the two regions is a positive one.
In addition to increased ties with Central America, pacts between Peru and Colombia as well as reinvigorating trade ties with Mercosur is at the top of the EU agenda with Latin America. Human rights activists in Europe, as those in the US, wish to discourage greater ties with Colombia due to accusations of human rights abuses in that country, but with a trade agreement between Colombia and Canada taking shape last year and Europe’s need to repair its own economy, it is likely that there will not be many obstacles to opening ties with Colombia or Peru.
The main hurdle for Europe is centralised in the EU as Europe’s internal problems affect the global economy, and trying to convince its Latin American partners that it is not as severe as some expect will be a difficult task for Zapatero. Success could be claimed if Spain and the EU could bring the framework of the 2004 EU-Latin America Summit and trade between the EU and Mercosur back into focus. Much has changed since 2004, and a lot more has changed since 2008. Europe is in the middle of their own financial troubles that $1 Trillion has not been able to settle. Spain is one of the largest investors in Latin America, especially in the Southern Cone region, and Spanish multinationals wish to expand their businesses in the new world as Europe slows down significantly. Mercosur was always fractured, but with the debt crisis in 2001 in Argentina that only brought it back into the fold before the 2008 debt crisis and Brazil’s impressive success on its own, Zapatero is not dealing with the same Mercosur partners of a few years ago. The EU will likely have to deal with a larger and more confident Brazil with Europe needing their support in the lurch towards a new global economy. Brazil as a new powerful broker between themselves, the EU and US is not a bad thing, in fact it is the end result of firm IMF policies, political cooperation within Brazil, years of development policies which often went wrong, and survival by the Amazonian giant after its Mercosur partner went bust in 2001 and a global economic crisis which took down many economies in 2008-2009, and may still break apart the EU itself. There will likely be some agreement between at least Brazil and possibly FTA hungry Chile and the EU, with the Latin Americans negotiating themselves out of past restrictive agricultural limitations often imposed on them in the past. The real effects however will be show in this summer’s G8 and G20 meetings in Toronto, Canada where a weaker Europe will have to work on making themselves healthier with a China, India and newly polished Brazil pushing much of the agenda. It will be an interesting summer indeed, and for their sake, hopefully a successful one for the EU.
