EU’s Self-Interest Takes Front Row in Trade Negotiations with Latin America by Suzan van der Meij, Aprodev* At the end of 2007 the EU started trade negotiations with several developing countries in Latin America, using catch phrases relating to regional integration, development and equity. As it did previously in its negotiations for “Economic Partnership Agreements” (EPAs) in Africa, it is clear that in this case the EU is likewise putting forward a hard-core liberalisation agenda, aimed more at its own offensive interests than at advancing developing countries. Development outcomes and regional integration are expected to come about as side effects of the trade agreements and hence do not figure in any significant way on the negotiating agenda. Since October 2007, negotiations for the establishment of Association Agreements have been underway with two regions: Central America (Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica) and the Andean region (Colombia, Ecuador, Peru and Bolivia). These regions include some of the poorest countries of Latin America. Until recently, development cooperation was always at the core of these countries’ relationship with the EU. In addition to trade, the proposed Association Agreements will also extend to the other areas of cooperation: development and political dialogue. However, these are already covered by an agreement concluded in 2003. And with regard to development aid the EU has already unilaterally decided its funding and priorities until 2013, leaving very little to negotiate. The current negotiations therefore essentially revolve around the free trade component. That these agreements will bring development is no more than a hypothetical assumption. Indeed, this would seem highly unlikely, in particular for the poorer countries. An agreement as envisaged by the EU is likely to saddle its poorer trading partners with enormous costs, deprive them of the freedom to determine their own development policies and force them into higher imports, resulting in a negative balance of trade and increased unemployment – in particular because few local industries will be able to withstand the competition from Europe. The EU not only wishes to come to an agreement on trade in goods and services, it also wants to see a range of trade-related regulations brought into force, relating to patents, government procurement, investment, competition, etc. This package (the so-called Singapore Issues) was jointly rejected by the world’s poor countries in the WTO negotiations. The complexity of the legislation and monitoring bodies which these regulations require carry few benefits for developing countries, while constituting a huge onslaught on their limited budgets. In addition, these measures are aimed at forcing poor countries to grant foreign corporations the same rights as local businesses, depriving them of all means to protect or promote domestic industries. What the rich countries failed to achieve in the WTO, they are currently pushing through in their negotiations with individual countries or regions. The United States is pursuing agreements similar to the EU’s, and any US successes are paving the way for the EU to demand parity or more. Except for Bolivia and Ecuador, all of the countries the EU is negotiating with in Latin America have already concluded an agreement with the US. To date, Bolivia is the only country that has had the audacity to put forward substantial counter-proposals. The Bolivians have indicated that, in their view, trade should serve as a means to development. They will therefore refuse to negotiate on any of the Singapore Issues. Bolivia has also put forward a number of preconditions for opening up its markets.
Recently, Europe’s Trade Commissioner Peter Mandelson has personally exerted pressure on the country to either conform to the European trade agenda or leave the negotiating table. Another reason to doubt the professed development objective of these negotiations is the market access limitations the EU is proposing, which are particularly damaging to Latin America’s key industries. Currently, the Latin American countries fall under the EU’s Generalised System of Preferences, which grants the majority of developing country products free access to the European market. But to the chagrin of the Latin Americans, their main competitive products such as bananas and sugar are excluded - to the benefit of Europe’s own producers and those from its former colonies in Africa. At the start of the negotiations, the EU not only proved unwilling to continue the market access granted under the current regime but was also reluctant to start negotiations on bananas and sugar. This was a slap in the face for the Latin American negotiators, some of whom are – quite justifiably – beginning to question why they’re at the negotiating table in the first place. However, the EU’s threat to cancel the current preferential arrangement, sooner or later, is leaving them no alternative. To shine some light on future development effects, the EU’s trade policy includes a laudable principle: trade negotiations with developing countries must be accompanied by impact studies. But alas, here too the true priorities quickly surface. While the EU is showing great vigour in its pursuit of simultaneous negotiations with a substantial number of regions, at the same time it is clearly completely lacking the drive to get the required impact studies underway. Despite repeated promises from Trade Commissioner Mandelson, their initiation has been delayed to such an extent that findings from these studies will arrive far too late to have any significant impact on the negotiations as such. And, last but not least, there is regional cooperation – a negotiating objective much referred to by the EU. The promotion of regional integration is a long-standing part of the EU’s agenda, on which many millions of development aid have already been spent. The fragile cooperation in the Latin American regions is under threat from economic competition or conflicts, as in the case of Colombia where civil war frequently transcends national frontiers. There is no doubt that enhanced regional cooperation between developing countries contributes to peace and development. It is a good thing that the EU is promoting this. At the same time, the EU’s current trade negotiations appear to be aggravating internal tensions within the regional blocks concerned. The EU leaves little room for national differences and sensitivities. The regional blocks are under enormous pressure to arrive at the negotiating table with corresponding positions – which only serves to throw internal differences into ever sharper relief. The EU’s contribution to regional cooperation seems largely to consist of stressing emphatically that it will only negotiate with regional blocks. However, although they took a similar stance with regard to the EPAs, towards the end of 2007 the EU proceeded to sign agreements with individual countries regardless. This pattern is expected to repeat itself in the case of Latin America and the countries with the most extensive economic interests Colombia, Peru and Costa Rica – are already running ahead of things by rejecting collectivity. Meanwhile, in the Andean region deep rifts are emerging between Peru and Colombia on the one hand, and Ecuador and Bolivia on the other. This could mark the end of decades of cooperation. The EU must be held accountable for not taking more dedicated action to strengthen the internal processes among the Andean countries. To replace unilaterally decided policies by jointly negotiated agreements naturally appears to be a laudable objective. But in the way in which the negotiations are currently taking shape, the professed equality between the negotiating partners is nowhere in sight. Even more
worrying is the fact that the negotiations, despite all the fine words being spoken, nevertheless appear to be proceeding in flat contradiction to the EU’s own stated development goals.
* Aprodev is the Association of World Council of Churches Related Development Organisations in Europe