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LATIN AMERICA-EU: Modest Accords, Major Discord

Julio Godoy

VIENNA, May 12 2006 (IPS) - The fourth EU-Latin America/Caribbean summit ended Friday in Austria with a few limited agreements to bolster trade, while other free trade negotiations were postponed and there were more doubts than certainties in relations between the two regions.

The 58 heads of state and government taking part in the gathering signed a final statement in which they launched negotiations towards an association agreement that could eventually lead to a free trade accord between the EU and Central America.

The governments of Central America committed themselves to ratifying a treaty on investment and services and developing a jurisdictional mechanism that would strengthen regional economic legislation.

The association agreement is only one of the main objectives that the EU wanted to make progress on at the summit in the Austrian capital. The other two – free trade accords with South America’s Andean Community and Mercosur trade blocs – have once again been put off.

The negotiations between the EU and the Andean Community (comprised of Bolivia, Colombia, Ecuador, Peru and Venezuela) are to be renewed this year, with bilateral sessions before Jul. 20, while the talks with Mercosur (Argentina, Brazil, Paraguay and Uruguay) are no closer to an agreement than they were 10 years ago.

Although the final declaration signed by the leaders in Vienna states that the bases for negotiations between the EU and the Andean Community are to be ready by Jul. 20, the crisis currently shaking the Andean bloc would seem to indicate that the deadline is too close to be realistic.

Venezuelan President Hugo Chávez announced last month that his country would pull out of the bloc, which he said had been “fatally wounded” by the free trade accords that Colombia and Peru signed with the United States. Bolivian President Evo Morales also criticised the free trade deals with the United States.

In the meantime, the negotiations between the EU and Mercosur will not be completed before the end of the Doha Round of multilateral trade talks launched in December 2001 at the World Trade Organisation’s fourth ministerial conference in the Qatari capital.

The global trade talks have been bogged down largely by discrepancies between rich and poor countries over trade in agriculture, such as the EU’s refusal to open its markets to farm products from countries like Argentina, Brazil and Uruguay.

European representatives say free trade treaties between the EU and Latin America would bolster trade between the two regions.

Austrian Economy Minister Martin Bartenstein noted that trade between the EU and Latin America currently only accounts for 5.6 percent of the European bloc’s total foreign trade.

Bartenstein said economic and political association agreements between the EU and Mexico and Chile, in effect since October 2000 and February 2003 respectively, are the model to follow.

The summit’s final statement also includes a commitment by the governments of both regions to launch comprehensive reforms of the United Nations in order to make it more democratic, representative, transparent, accountable and effective.

The document also outlines common positions on multilateralism, terrorism, nuclear proliferation, migration and human rights.

Although the declaration recognises the sovereign right of countries to manage and regulate their natural resources, the May 1 decision by Bolivia’s leftist government to renationalise the country’s energy resources has caused jitters, as it affects the interests of corporation from nations like Brazil, Spain and Britain.

At the business forum held parallel to the meeting of the heads of state and government, executives from Europe and Latin America called for compensation for the companies affected by Bolivia’s reassertion of state control over the natural gas industry.

According to Hernán Somerville Senn, president of Chile’s association of banks, “governments have the right to expropriate if they consider it to be a question of national interest, but they should offer the proper compensation.”

The nationalisation of Bolivia’s natural gas, the second-biggest reserves in South America after those of Venezuela, has complicated relations between La Paz and Brasilia, coming on top of the existing tension between Venezuela and Colombia and Peru, as well as Mexico

The tension was palpable in Vienna, where the war of words continued between Venezuelan President Hugo Chávez and his opposite numbers Alejandro Toledo of Peru and Vicente Fox of Mexico.

Toledo once again accused Chávez of meddling in the campaign for the Jun. 4 presidential runoff elections in Peru, while Fox defended the bilateral free trade accords that the United States has been negotiating with Andean Community countries, which he said are “compatible” with regional integration.

Criticism came from other quarters as well. Without naming names, but clearly referring to Chávez and Morales, former Portuguese prime minister José Manuel Durao Barroso, the president of the European Commission, said “populism is a threat to our values.”

He added that if populism is understood as an over-simplification of complex problems and as an appeal to negative sentiments rather than democratic values and the state of law, populism is a threat, whether it comes from the left or the right.

“We are a Europe against populist tendencies,” he declared.

Chávez apparently took it personally. “Neoliberalism in Latin America has come to an end and a new era is beginning, which some call populism, trying to distort the beautiful thing that we have,” he said.

“Europe should have a better understanding of what is happening in Latin America, understand better that we are changing,” said Chávez.