EU – LATIN AMERICA & CARIBBEAN STEPPING UP RELATIONS

Source: EU and Latin America and the Caribbean stand together.

Hendra Manurung1 and Sebastián Sterzer2

1Hendra Manurung is currently a doctoral candidate in International Relations at Padjadjaran University

2Sebastián Sterzer is Head of International Relations Department at the Observatory of International Trade of National University of Lujan, Buenos Aires, Argentina

In December 2020, the European Union and Latin America and the Caribbean (LAC) aim to reaffirm and give new impetus to the strategic partnership through an informal meeting of EU27 and the LAC Foreign Ministers in Berlin, Germany. This is an opportunity to reinforce the close cultural, social and economic bonds, as well as to coordinate our approach in a less predictable international system. 2020, has been particularly difficult for both EU and Latin American and Caribbean regions due to the COVID-19 pandemic and the economic recession it has brought about. However, during 2021, it is time to start thinking again about stepping up relations. The EU is helping people make Latin American and Caribbean ideas become reality. Faced with growing geopolitical rivalry between great powers, it offers cooperation and dialogue centered on improving the lives of citizens. This relationship is a clue to sustaining the multilateral system in matters such as WTO, the Paris Agreement, human rights, arms control and non-proliferation. While, in the international system, economic diplomacy pertains to the full spectrum of diplomacy relating to economic activities in the pursuit of a country’s policy objectives in general and economic goals in particular. Previously, the economic diplomacy follows a policy direction laid down by Indonesian President Joko Widodo, whereby 70 to 80 percent of all resources should be dedicated to more effective and efficient efforts on economic diplomacy, amid a world full of uncertainty and the upsurge of protectionisms posing challenges to many countries.

Further, as the world strives to deliver joint responses to common challenges, from crushing pandemics to tackling climate change, organizations that encourage research cooperation between regional partners are needed more than ever and united in a common cause. This bond was reaffirmed by EURAXESS Latin America and the Caribbean (LAC), which took part in a recent high-level meeting in 2020 of the EU-CELAC Joint Initiative. It served as a valuable reminder of the common bonds that tie research organizations and communities in all regions together and reinforced the importance of researcher mobility and knowledge-sharing in tackling the biggest challenges facing the world.

The Latin American and Caribbean countries are also still faced with new dynamics challenge, such as the need to respond to the demands of a digital and integrated global economy, the pressure to safeguard the environment, adapting to climate change issue, and to promote growth while ensuring fair social outcomes, or the concern to ensure the continuation of a long-term trend of democratic consolidation and sustainable development.

The EU, with its model of regional economic integration and connectivity, can be an important partner of LAC in tackling those challenges. The EU is sharing its full diplomatic, humanitarian and economic support to solving the ongoing crises in certain LAC countries and will continue to promote democratic principles and respect for human rights in its relations with LAC. More broadly, the EU and LAC should work together to preserve multilateralism and a rules based global order, joining forces to deliver ambitious agendas. This strategic partnership should concentrate on four mutually reinforcing priorities: 1) prosperity, 2) democracy, 3) resilience and 4) effective global governance. Under each of these priorities the communication suggests a number of areas and concrete initiatives to advance this agenda, implemented through a more strategic and targeted EU engagement with the region.

Historically, over the last decades, the EU and LAC have reached an unprecedented level of integration. The EU has signed association, free trade or political and cooperation agreements with 27 (twenty seven) of the 33 (thirty three) LAC countries. This all LAC countries included except Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela. The most important of these are the Association Agreements with Mexico, Chile and Central America, the Economic Partnership Agreement with the Caribbean Forum (CARIFORUM) and the Free Trade Agreements with Colombia, Peru and Ecuador. The EU and LAC countries often align in the United Nations, and have closely cooperated on the Paris agreement, and the 2030 Agenda for Sustainable Development. Since 2016, there is close to six million people from EU and LAC live and work across the Atlantic, and more than one third of LAC students studying abroad do so in the EU countries.

Post 2016, in the wider Atlantic Space, the EU has expanded cooperation and builds stronger partnerships with Latin America and the Caribbean grounded on shared values and interests. It is emphasized clearly at ‘A Global Strategy for the European Union’s Foreign and Security Policy’. The EU and Latin America and the Caribbean have a successful and long-standing partnership which united by history and guided by many shared values. Therefore since 1999 EU and LAC are linked by a strategic partnership and grounded on a commitment to fundamental freedoms, sustainable development and a strong rules-based international system. For over twenty years, such a partnership has been a platform for mutually beneficial cooperation, a driver of change and an incubator for new ideas.

Obviously, the economies are closely interconnected. EU is the third largest trade partner of LAC; total trade in goods increased from €185.5 billion in 2008 to €225.4 billion in 2018, and trade in services amounted to almost €102 billion in 2017. The EU is the first investor in LAC, with a foreign direct investment (FDI) stock of €784.6 billion in 2017, whilst the LAC FDI stock in the EU increased substantially over recent years reached to €273 billion in 2017. The EU investment in LAC is significantly higher than the EU FDI stocks in China is €176.1 billion, except Hong Kong; India with €76.7 billion; and Russia with €216.1 billion combined.

Also, the EU has been the largest provider of development cooperation to LAC, with €3.6 billion in grants for bilateral and regional programs between 2014 and 2020, and over €1.2 billion in humanitarian assistance to victims of man-made crises and natural disasters the last 20 years (1996-2016). The European Investment Bank invests in the achievement of the Sustainable Development Goals in LAC, with a focus on climate change mitigation and adaptation, lending a total of €3.4 billion during 2014-2018. Furthermore, the EU’s development cooperation to LAC also focuses on critical areas such as security and the rule of law, environmental sustainability and climate change, agriculture, food and nutrition security, inclusive economic growth for employment creation, public financial management reform, public sector modernization, and regional integration.

Contextually, this communication proposes to strengthen the EU’s political partnership with LAC, setting out a vision for a stronger and modernized bi-regional partnership, in light of changing global and regional realities. This communication should also be read in light of the agreements that exist or are being negotiated between the EU and individual LAC countries or sub-regions; covering virtually the entire region they represent an important vehicle to implement the vision set out here within. It aims to provide strategic direction for EU’s external action with LAC, in line with the principles set out in the Global Strategy for the EU’s Foreign and Security Policy, the European Consensus on Development, the 2030 Agenda for Sustainable Development, the “Trade for All” Communication and the negotiating directives for a partnership agreement between the EU and the African, Caribbean and Pacific Group of States.

Since 2012, the EU has a long and rich experience on promoting cross-border cooperation. The development of territorial cooperation actions, in particular cross-border cooperation, is considered a fundamental factor for the development of regional integration processes, of economic and social cohesion, and of progress. This EU’s cross-border cooperation program is previously being implemented through agreed cross-border analysis and response strategies, formulated in each of the 53 cross-border program. It deals with a wide range of issues, which include: encouraging entrepreneurship, especially the development of SMEs, tourism, culture and cross-border trade; improving joint management of natural resources; supporting links between urban and rural areas; improving access to transport and communication networks; developing joint use of infrastructure; administrative, employment and equal opportunities work.

The overall aim of disseminating the experience of the EU’s regional policy and its best practices in 2015, both in terms of innovation and cross-border cooperation, the “EU-Latin America Cooperation on Cross-Border Regional Innovation Systems in the framework of Regional Policy” project has promoted cooperation between authorities in the border regions of Peru and Brazil, and has identified the innovative sectors key to cooperation between the regions participating in the project. Selected were the regions of Loreto and San Martin, in Peru, and the State of Amazonas, in Brazil, which borders on the Peruvian region of Loreto. As a result of the work aquaculture was considered a field of economic activity boasting great potential and a basis upon which to bolster cross-border cooperation through the creation of an interregional aquaculture value chain. Based on the lessons learned through European countries experiences, and the results of collaboration with local stakeholders, a strategic approach was devised to guide actions at the regional level, making it possible to coordinate and align the different actors in the border area in light of the needs and opportunities posed by the aquaculture value chain as regards Cross-Border Cooperation, and the development of regions, their companies and peoples. It continues with a description of the research and development structure of the participating regions, more consolidated on the Brazilian side, but featuring a very great potential for cooperation.

These Latin America and Caribbean regions also should share the need to fortify the qualifications of the social capital engaged in the aquaculture sector. There is a high rate of informality, which has a considerable impact, giving rise to market failures. The main problems include a weak corporate culture, poor transport and telecommunications infrastructures, and an inefficient energy system as a key resource affecting the costs and production capacities of the other economic activities. Worthy of special note is the lack of an established system to support research and development activities, oriented towards the needs of the business sector, and the limited technological development, which would make it possible to respond to the challenges posed by other areas, such as transport, logistics and energy.

In Latin American countries, border regions and municipalities are increasingly demanding instruments for cross-border cooperation, being a growing field under permanent development. Previously, in May 2008, the European Union and Latin America Summit took place in Lima, Peru, at which, Venezuelan President Hugo Chavez made a number of provocative statements. Countries in the Latin American region appear with the interests of each country, which are competitive and not yet fully synergized. In fact, it is a condition that does not facilitate economic and trade negotiations which took place at the summit.

Both regions must be able to accelerate economic development in the emerging potential economies by driving skillful job through large-scale initiatives in entrepreneurship, small business growth, innovation, and skilling.  In the years ahead, it is expected that the necessary steps to improve the business and investment environment in the intra and extra region should be taken committedly by all stakeholders. The opportunities the agreements provide which is more effective government procurement, better market access, innovation and competitiveness, intra-regional trade and integration into global supply chains should be exploited. Effective and balanced protection of Intellectual Property Rights enhances opportunities for mutual research cooperation and stimulates regional competitiveness and creative innovation. At the same time, trade agreements should further sustainable development, human rights and good governance, which the EU should work together sustainably with LAC to strengthen the implementation of social, labor and environmental provisions in existing agreements, consistent with their shared commitment to the 2030 Agenda for Sustainable Development, and promote responsible management of global supply chains.

During and post global pandemic, The EU should continue partnering with Latin American and Caribbean countries in generating efforts to address persisting macroeconomic challenges in the region, while diversifying and modernizing the different economic models, making them fit for globalization. Suppose, making results sustainable also means to joining forces to reduce socio-economic inequalities, creating decent jobs and making globalization work for all, and the transition towards a green and circular economy development.

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