Special Issue: The European Union and Latin America: Changing Relations || Introduction

IntroductionAuthor(s): Alexandra Barahona de BritoSource: Journal of Interamerican Studies and World Affairs, Vol. 42, No. 2, Special Issue: TheEuropean Union and Latin America: Changing Relations (Summer, 2000), pp. 1-7Published by: Center for Latin American Studies at the University of MiamiStable URL: http://www.jstor.org/stable/166279 .

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Introduction

Alexandra Barahona de Brito

This issue was prepared with a view to analyzing relations between the European Union and the countries of Latin America at the turn of the

twenty-first century. In June 1999, the first summit meeting ever among 48 EU, Latin American, and Caribbean heads of state was held in Rio de Janeiro. The joint declaration they signed listed 54 political, economic, and cultural areas for action and cooperation with the aim of building a strategic alliance and working to establish free trade between the two regions. If the wide-ranging objectives listed in the action plan are to succeed, however, both regions must overcome a number of historical obstacles that have traditionally prevented a more dynamic relationship from evolving.

Contemporary EU-Latin American relations can be roughly divided into three phases. The first, initiated in the mid-1970s, was inaugurated by the signing of the so-called first-generation cooperation agreements between what was then the European Economic Community (EEC) and various countries of the region, including Argentina, Brazil, and Mexico. These agreements were nonpreferential, but through them the parties essentially extended to one another Most Favored Nation (MFN) status. For Latin America, these agreements represented an opportunity for trade diversification and penetration of the European market. For the EEC they were first steps toward finding new international trade partners. With the EEC's high levels of protectionism and the economically and politically unfavorable situation in Latin America, however, this phase did not see great advances in biregional trade or political relations.

The second phase was eminently political. It was spurred by the accession of Portugal and Spain to the EEC in 1986 and the end of a period of "Europessimism" regarding European integration. The Single European Act (SEA), passed in 1987, provided for the creation of a single market by 1993 and established the EEC as a major international actor. The Commu- nity played a mediating role in the Central American conflict, consolidating new political ties with those countries and Mexico. It also strengthened ties with other Latin American countries that were helping to mediate the crisis through a dialogue with what became the Rio Group. Economically, this period did not produce great results, given the onset of the debt crisis in Latin America. Although the crisis had the effect of shifting the balance of trade in favor of Latin America, trade and investment declined significantly.

The third phase, which began in the early 1990s, was prompted by deep changes in the international arena as well as in both regions. In Latin

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America the process of redemocratization, the end of the debt crisis, and the beginnings of economic recovery, spurred on by liberalization, privatization, and regional integration processes, created the conditions for the establishment of more stable political and economic relations with the world. In addition to these positive changes in Latin America, a number of important events in Europe also promoted efforts to seek renewed trade and political relations with the region.

In 1992 the EEC became the European Union with the signature of the Treaty of European Union (TEU), or Maastricht Treaty. If the SEA had given European economic integration new dynamism, the EU's constitution signaled the member states' intention to create more than just an economic region-to proceed with political union. The most important foreign policy manifestation of this process was the creation of a Common Foreign and Security Policy (CFSP), marking the EU's desire to become a coherent and recognized global actor. Nevertheless, as the EU's handling of the Yugoslavian crisis over the last few years shows, the CFSP is still a weak mechanism, and the EU is far from developing a true common political or security identity. A political alliance with the countries or some subregions of Latin America thus may provide a way to strengthen the CFSP in a less controversial area of the world.

Meanwhile, the EU's need to position itself favorably in a competitive global economy by gaining entry into the so-called "emerging markets" has also been an important motivating factor. The EU has pursued stronger trade relations in the context of its own deepening integration process, with the creation of the single market and European Monetary Union (EMU) and the launching of a single currency, the euro, in January 1999. Ensuring the future viability of an integrated European market requires dynamic trade relations with the emerging markets of the world, and the EU must compete with other countries and regions, particularly the United States, to gain a foothold in such markets.

The most important international shifts have been economic and political. Economically, the process of globalization and multilateral liberalization through the General Agreement on Tariffs and Trade (GATT) and now the World Trade Organization (WTO) is changing the rules of the game for international trade. Politically, the end of the Cold War and of the bipolar world is leading countries to seek new "game rules" to manage international affairs and issues of mutual interest, including arms prolifera- tion and trafficking, the drug trade, environmental problems, and poverty, that individual states can no longer address. Part of this search involves building new forms of alliances between regions-the so-called "new regionalism." For both the EU and Latin America, biregional relations offer strategic opportunities. For the EU, they can help to promote and validate the CFSP; they can also increase the Union's international clout in a region where the United States is the only remaining superpower and multilateralism



DE BRITO: INTRODUCTION

is still weak. For Latin America, relations with Europe can contribute to the diversification of foreign relations and increase the region's leverage with the United States as it negotiates in the international arena.

In this context, the North American Free Trade Agreement (NAFTA) and the launching of the Free Trade Area of the Americas (FTAA) by the United States have had an important motivating effect on the EU. The trade diversion that NAFTA has produced, to the detriment of European- Mexican trade, has served as a warning signal for EU authorities to ensure that the same does not result from the FTAA. This fear, combined with the wider requirements of competing in a globalized economy, largely explains why the European Commission drew up the new Guidelines for Cooperation with Latin America for the period 1995-2000. It also explains why the EU sought new cooperation agreements, with greater emphasis on trade and economic cooperation, with the Southern Cone Common Market (MERCOSUR) and all the other countries and subregions of Latin America except Cuba. Hence, too, the decision to hold a European-Latin American summit and the constitution of such an ambitious plan of action. All these actions emphasize the need to give what has been a successful relationship in the area of economic cooperation and development assistance a firmer grounding through trade liberalization.

RESPONSIBILITIES AND PREOCCUPATIONS

Despite these advances, various blockages clearly continue to impede the development of greater trade and political ties. One of the main challenges lies in each party's very conception of the relationship. The EU has always claimed, in an attempt to present itself as a truly alternative and distinct international actor, that unlike the United States, it tempers its pursuit of free trade by a concern with social equity and solidarity. In relations with Latin America, the promotion of the "European model" has led to great emphasis on development assistance; the EU is the most important donor of official development assistance (ODA) to Latin America. It has also led to an emphasis on "shared responsibility" regarding problems such as drug trafficking, the environment, and sustainable development. The EU has promoted regional integration as a means to solve those problems and, furthermore, to consolidate democracy and respect for human rights, reflecting its own experience with integration.

Although the EU has pursued these objectives with some success, an excess of rhetoric clutters EU-Latin American links. Not only does the United States also pay attention to social issues but it has also pursued, with greater vigor, a process of trade liberalization. For many in Latin America, it is the opening of Europe's market that would constitute the EU's greatest contribution to Latin American development.

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This leads to the main challenge in the economic sphere. Europe's resistance to opening up its markets, particularly its agricultural market, will be challenged by the WTO Millennium Round. In March 1999 the EU member states agreed to reform the Common Agricultural Policy (CAP). But some member states still resist changing this policy, which denies Latin American agricultural products fair access to the European market and protects the interests of the powerful agricultural lobby in Europe. Many commentators also consider the CAP essential for the preservation of a certain way of life in European rural areas.

European market access is only one side of the coin; the other is the low quality standards (according to the EU) of many Latin American goods and the scarcity of technical knowledge to penetrate the EU market. For Latin America, therefore, it is important to bring the export market up to WTO standards.

In the political arena, the EU is preoccupied with various internal problems that could threaten Latin America's prospects. Most important is the possibility of expansion to Central and Eastern Europe. Unlike the last enlargement, to Austria, Finland, and Sweden (forming "the EU of the 15"), expansion to the east challenges Latin America's already low position in the hierarchy of EU foreign policy priorities. Cooperation and development assistance funds, for example, have already been diverted from Latin America to Eastern Europe. While the WTO Millennium Round places pressure on the EU to reform the CAP, the accession of new countries producing agricultural goods may lead to renewed political pressure to maintain and widen the benefits of the CAP to the east. At the same time, the EU's renewed efforts to ensure greater security on its Mediterranean flank through new cooperation initiatives with the countries of that region may divert more attention away from Latin America.

The EU's self-absorption and its focus on more immediate geographi- cal areas are mirrored by a Latin American weakness in placing its demands coherently on the negotiating table. Political and economic dialogue within the region is still inarticulate, so when the region talks with the relatively more unified EU, the relationship becomes very asymmetrical. This is true even for MERCOSUR, which has arguably achieved the greatest level of political and economic unity of all the region's integration processes. Relatively undeveloped technical capacities mean that, with the possible exception of Argentina, Brazil, Chile, and Mexico, countries lack the ability to bargain complex multilateral trade issues.

For these reasons, both regions need to rethink what they wish to achieve as global partners, to rediscover what common aims they can advance through partnership, and to identify the aspirations on which they diverge and must find other alliances. They must rethink, in a mutually beneficial way, the links between political and economic cooperation and integration on the one hand, and trade liberalization in a context of




globalization on the other. The EU must be prepared to offer Latin Americans a competitive "package" if it is not to be outdistanced by the United States in its search for overseas markets and strategic allies in the global arena. Latin America must do more than remain a passive recipient of limited EU offerings.

FRAMEWORKS FOR COOPERATION

This issue aims to examine different aspects of the relationship between the EU and Latin America, highlighting its strengths and weaknesses, with the aim of understanding the actual potential for both partners to carry out their ambitious cooperation and trade action plan. The first article, by Andrew Crawley, assesses the overall strategic as well as political and economic challenges both regions face. Cultural ties are not sufficient to ensure the development of substantive relations between the two regions at the governmental and nongovernmental levels, Crawley notes. The main question is the EU's real commitment to liberalize trade with Latin America and, more specifically, to pursue free trade agreements with Mexico and MERCOSUR.

Only days before the Rio summit, the EU approved a mandate to negotiate a free trade agreement with MERCOSUR and its associate member countries, Bolivia and Chile. Turning a negotiating mandate into reality, however, is a complex business. Crawley notes that despite the difficulties, both sides have much to gain by working on a deeper economic and political relationship. Strategically, too, an international partnership can be useful as both regions work toward self-affirmation as valid global actors.

Jose Antonio Sanahuja focuses on the establishment of a new, specific political and economic partnership between the EU and Mexico aimed at trade liberalization and greater economic cooperation. Mexico has traditionally been a major destination for EU foreign investment; there the EU has developed a sophisticated form of high-level entrepreneurial economic cooperation. Nevertheless, for a variety of reasons-one being EU trade protection policies-the full potential of commercial relations remained unexplored for many years until NAFTA provided the wake-up call. Sanahuja traces the development of trade, economic, and political relations through the signature of four successive cooperation agreements between 1975 and 1997. The latest agreement includes the so-called "democracy clause," part of all EU cooperation agreements with the countries and subregions of Latin America, which permits the EU to modify or suspend relations in the event of a challenge to the democratic order from massive human rights violations. Sanahuja shows how this agreement is part of the new strategic framework for relations with Latin America launched by the EU in 1994.

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The following two articles focus on a strong area of biregional cooperation: development assistance and civil society links. Christian Freres looks at official EU development cooperation within the broader

perspective of the EU's attempts to establish itself as a "global civilian

power." This approach, Freres says, favors diplomacy and cooperation over the use of traditional forms of power, which is more characteristic of the U.S. approach. The difference can be seen in the main characteristics of donor flows and the objectives attached to them. At the same time, however, European cooperation policy toward the region is challenged by a lack of resources, evidenced by a downward spiral in development assistance over the last few years; and by a need to unify member states'

policy objectives. Ultimately, development cooperation policy depends on the overall consistency of the EU's policy toward Latin America. Here Freres coincides with Crawley in his assessment. He contends that the EU's current focus on the east, its internal preoccupations, and some member states' resistance to trade liberalization agreements with the region will not serve the relationship with Latin America well.

The article by Jean Grugel complements Freres's discussion of ODA

by concentrating on what can be called the "European approach" to aid and cooperation, assessing the evolution of civil society relations between the two regions. As part of its "foreign policy and international cooperation identity," the EU has emphasized the need for building citizenship, developing civil society, and promoting democratization in Latin America. At the same time, European NGOs-which have been legitimated as

partners in governmental and Community-level cooperation-view the

strengthening of citizenship as the only meaningful foundation for

development strategies, in contrast to an earlier emphasis on economic entitlements.

While NGOs have made an important contribution to development in Latin America, Grugel cautions, it is increasingly important to challenge the belief that such organizations can be a key vehicle for promoting democratization. In truth, they can play only a supporting role. As Grugel concludes, "international activism signifies a commitment to change; it is not a solution in its own right."

THE GOALS OF PARTNERSHIP

As these articles show, the EU and Latin America face four key challenges in the next century. In the economic sphere, they must prepare to compete in an increasingly global economy and ensure that they obtain a favorable outcome from the negotiations at the WTO Millennium Round. In the social realm, they must see that economic growth is environmentally sustainable and socially equitable. In the political arena, they must work toward the consolidation of democracy and the rule of law, an objective that depends




to a great extent on success in the former areas. In strategic terms, both regions must find their places as credible international actors in a post- Cold War world of undefined polarities and weak multilateralism.

In building its relationship with Latin America, the EU has come to emphasize three main objectives. First, democracy and respect for human rights and the rule of law as the only form of government and as the basis for interstate relations. Second, regional integration as a way to achieve peaceful relations between neighbors, as well as sustainable economic development. Finally, increased trade and economic relations, with attention to the importance of social "solidarity." Implicit and sometimes explicit in the pursuit of these objectives has been the aim of presenting the EU as a qualitatively different actor from the United States, one that places more emphasis on social justice and partnership. Fostering strong links with subregional integration projects that eventually pursue similar aims legitimates the European model abroad.

The EU's policy of "critical dialogue" with Cuba, in contrast to the U.S. embargo and aggressive diplomacy, is a clear example of the different approach the EU attempts to advance in the international arena. This and its emphasis on "shared responsibility" for problems such as drug trafficking also help to differentiate it from the United States. This position, however, is no longer sufficient to ensure the EU a competitive position in Latin America, or vice versa. Losses in trade share with countries like Mexico and declining levels of development cooperation atttest that the rhetoric of shared interests is often overstated. Nor is this posture enough to make the EU a more attractive trading partner than the United States. The EU must compete with the FTAA initiative and the "pull" of hemispheric free trade, a process that is partly incompatible with the European emphasis on regional integration, with its implied trade discrimination by member countries against outsiders.

The articles in this issue help to clarify key aspects of the EU-Latin American relationship and point the way to the areas where cooperation can be most fruitful to meet these challenges.

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Special Issue: The European Union and Latin America: Changing Relations || Introduction