Francesco Ragno - 30/04/2012

     2012 has started with a brisk stepping up of relations between Latin America and Europe. Though some points of conflict across the Atlantic have been stirred by a return to the fore of the smouldering Falkland/Malvinas issue, there has also been a tightening of the web of economic interconnections reflecting chiefly on trade. On 16th March work ended on the 8th round of EU/Mercosur negotiations towards an association and cooperation agreement. Both sides feel such an ambitious treaty must be all-embracing and equally balanced. From the accord an intention emerges to create greater opportunities for a free market between the two areas; according to European sources, the benefits to both sides might run to 25 billion dollars per year.

     It was on this last point that the negotiations turned sticky and ended in a simple “clarification of positions and expectations” on either side. Nonetheless, progress was made in the workgroups on services, dispute-settling mechanisms, public contracts and certification of product origin. The main difficulty centred on a hot issue of trade between Europe and Latin America: the exchange of agricultural produce, especially meat. France has always been extremely sensitive on this subject, which is why diplomatic sources have hinted that the on-going presidential elections are causing negotiations on agriculture to drag their feet. The debate has indeed been suspended with both sides holding to their respective positions: while the Mercosur countries hope to improve access conditions for their produce to the European market, the EU is more for granting better trade conditions to processed goods and services.

     Another cause of hold-up in negotiations is the current presidency of Mercosur by Argentina. The EU members pin much greater faith on Brazil which will be presiding in the immediate future (the second half of 2012). The position was clearly spelt out in February by the German foreign minister. Fresh from this Round, and again in the Mercosur area, the EU has also been exploring further relations with Venezuela. Although she is not yet a full member of Mercosur, the attempt is to establish ground for dialogue going beyond individual European state initiative and extending to the community as a whole. The target is to promote the EU contribution in Venezuela in the agriculture and foodstuff sector. Last year the EU export turnover in Venezuela, according to Eurostat figures, was around 4.9 million euros, while imports settled around 4.1 million.

     Again in March, the EU resumed its bid to increase trade with Colombia and Peru. Building on what was started in September 2011, the idea is to set up a bilateral agreement with both countries by next September designed to cut the high trade tariffs, surmount the technological barriers to commerce, liberalise the service market and protect geographical specificity. This step may form a final answer to the minimum tariff regime that the EU was offering on imports from Colombia and Peru. There can be little doubt that the EU intends to build up its economic presence in Latin America. Events this March chime with statements last November by Catherine Ashton, EU High representative for Foreign Policy and Security.

     The partnership is not confined to Mercosur, but seeks to take in the whole of Latin America. It may benefit by the growth rate which Latin America is achieving at this tricky moment for the global economy (growth estimates for 2012 stand at 3.6%). Another reason for the EU promoting partnership with South America is to gloss over the note of crisis attendant on the Argentinian proposal to nationalise YPF over the heads of the current Spanish owners, Repsol. But neither in Europe nor in Latin America (especially within Mercosur) is there any intention of spoiling consolidated relations which go far beyond economics and commerce. Or so it would seem.

Francesco Ragno