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By Mark Godfrey
For more than a decade the European Union has focused its Latin America strategy on expanding trade and investments while building closer relations with the Mercosur economic bloc. The four-nation trading bloc, which includes Argentina, Brazil, Paraguay, and Uruguay, hopes to overcome current difficulties to emerge someday as the EU of Latin America.
As Latin American economies attempt to bounce back from the multiple ravages of IMF surgery, the European Commission is pursuing a new, broader strategy in the region. Brussels has shifted its priorities about the continent, towards typically American-aligned states like Colombia, Chile, and Mexico.
The immediate purpose is to establish what Chris Patten, the commissioner for foreign relations leading the EU initiative, describes as 'a strategic political partnership', which has targeted a wide range of areas for cooperation. The Colombian peace process, human-rights and labour standards, military stability and disarmament have all become announced EU priorities in Latin America, alongside education assistance to the continent's youths.
Patten's officials hint that the biggest problem in building EU policy towards Latin America is the luke warm attitude of many member states. France and Germany, the powerhouse members, are behind Patten, as are Portugal, Spain and Austria. Trade policy conflicts between Argentina and Brazil, and Chile's surprise decision to open bilateral free-trade talks with the United States, have caused the Europeans some headaches but nothing compared to the challenge posed by the Washington-led emergence of FTAA in Quebec in April 2001.
Many observers are convinced that because of its scope and US predominance the FTAA represents both a threat to Mercosur and to the EU's attempts to build ties with the bloc. 'If Brazil goes into the FTAA, then Mercosur is finished', Gilberto Dupas, head of international studies at the University of São Paulo, recently told the New York Times. Amid fears that the FTAA will swallow up Mercosur and weaken the EU's strategy, Chris Patten has speeded up his search for political partnerships, while colleague Pascal Lamy, EU trade Commissioner, has been bulking up EU-Latin America trade and investments.
'It is clear that Patten wants to establish strong, non-trade relations with Latin America, combining economic and political ties and presenting a counterweight to the United States', said Carlo Binetti, the European representative of the Paris-based Inter-American Development Bank (IADB). EU initiatives in Latin America and the Caribbean appear to be aimed at turning social and legal policy in the region to a more European bent. Hence Chris Patten's strategy of tying aid packets to talks on the ending of the death penalty in nations ranging from Antigua and Barbados to Guatemala, Jamaica, and Saint Lucia. 'We are committed to building alliances to prevent this practice', Patten said in a recent speech in Santiago. The EU Commission meanwhile paid $125 million into the International Support Group for the Peace Process in Colombia, making Europe the largest single contributor to the fund.
While trade between the EU and the region grew from $49 billion in 1990 to nearly $90 billion in 1998, two-way volumes have been declining since 1999 according to economists of the IADB. The EU's share of markets has fallen steadily, despite an overall increase in EU exports. US exports meanwhile rose sharply.
Nevertheless, the overall levels are substantial and, when Mexico is excluded, the EU remains the largest single investor in the region, and the leading contributor of governmental financial aid. The EU has at the same time speeded up its partnership plans for Mexico, signing a trade agreement with the US neighbour in Madrid in summer 2002. Recently Lamy completed negotiations for a free trade agreement with America's southern neighbour, which he noted 'will put the EU on a level footing with the US and Canada in the Mexican market'. The EU's motives may be quite similar to those of the Americans, i.e. primarily selfish; but Brussels does make an attempt to spread its money around in a socially constructive way. Whatever its hopes for self-enrichment from the process, Brussels has a far more intelligent attitude towards aid policy, putting money into tangible projects rather than short-sighted military projects which have ultimately regressive effects on the effected Latin American societies. A last-ditch rush to solidify its presence in Latin America will however be essential if the EU is not to be washed out of the region in an FTAA tide.