Brussels, 15/05/2008 (Agence Europe) - The EU-Latin America and Caribbean summit to be held in Lima, Peru, on 15-16 May has raised great expectations - European leaders hope that it will help break the deadlock in the multilateral negotiations of the Doha Round and take forward bilateral talks on free trade agreements (FTAs) with a number of groups of Latin American countries. “Lima will give us the opportunity to take stock of the negotiations launched in 2007 with Central America and the Andean Community, and where we are with Mercosur,” said External Relations Commissioner Benita Ferrero-Waldner last week. “We trust than if we continue to make progress, we will be able to conclude the agreements towards the end of 2009,” she added. Is the political will shown by the EU going to be enough to conclude bilateral negotiations, especially those with the Mercosur (Argentina, Brazil, Uruguay, Paraguay and Venezuela) which are very dependent on the outcome of the talks at the WTO on world trade liberalisation which the EU wants to complete before the end of the year?
At the heart of the issues to be discussed in Lima is the matter of a possible Doha Round agreement in 2008, said Trade Commissioner Peter Mandelson. “Around the table in Lima will be some of the countries who can make a key contribution to making that happen,” he went on. Ahead of the next ministerial meeting (between May and the end of July) to validate a compromise on the modalities for liberalising trade in agriculture and manufactured goods (NAMA), negotiations are intensifying in Geneva, with no solution yet being found to the problem over the agriculture chapter. The main difficulties that are still to be resolved are the issues of sensitive products, like beef and poultry, which the EU wants to continue to protect from competition from countries like Argentina and Brazil through high customs duties, and topical products, such as bananas, where, Mandelson says, the Latin American countries have an “absolutely central” role to play. The current world food crisis will not help find compromises, encouraging, as it does, countries to protect their agriculture to ensure self-sufficiency in key sectors. In addition, while the emerging countries, led by Argentina and Brazil, the two South American heavyweights, are calling for an end to agricultural subsidies and a significant reduction in Customs protection for agriculture in Europe, the EU is pressing Latin American countries to give more in terms of opening up their industrial and services markets.
EU-Mercosur talks, which have been deadlocked since October 2004, remain blocked because of their close correlation with the Doha negotiations (see EUROPE 9202). Mandelson has said that they would not be concluded until the outcome of the Round is known. The Lima summit may only result in a political message calling for resumption of serious negotiations with Mercosur, but the EU hopes for real progress in negotiations on free trade agreements within the framework of association agreements with the Andean Community (Bolivia, Colombia, Ecuador and Peru) and Central America (Costa Rica, El Salvador, Guatemala, Honduras, Panama and Nicaragua). Negotiations on these agreements, launched in spring 2007, have made good progress (see EUROPE 9656). The aim of the agreements is not only to encourage trade with the EU, but also to create regional markets between these countries. Hitherto, only Mexico and Chile have concluded FTAs covering trade and investment with the EU. Since they were adopted, bilateral trade has increased by 70% and 250% respectively.
The EU is the second largest trading partner of Latin America and the Caribbean, with trade more than doubling between 1990 and 2006. Bilateral trade amounts to almost €160 billion per year. In 2007, 14% of Latin American exports went to the Community market. While the EU imports largely agricultural and energy products from Latin America, it mainly exports machinery, transport equipment and chemical products. The EU is also the largest investor in many Latin American countries, with €400 million in foreign direct investment (FDI) to Latin America, approximately 12% of its total FDI. The EU also attracts FDI from Latin America, mainly from Brazil, Chile and Venezuela.
All the Latin American and Caribbean countries, which represent almost 10% of the world's population and nearly 3% of world GDP, enjoy preferential access regimes for their exports to the Community market. In December 2007, the Commission initialled an economic partnership agreement (EPA) with the Cariforum countries (Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Lucia, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Surinam and Trinidad and Tobago) which fully opens the community market to the exports of these 15 ACP countries and provides for the phased opening of their market to new trade flows from the EU. Between 2004 and 2006, the Cariforum countries' exports to the EU increased by 40%, exceeding €4 billion. (E.H.)