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Regional Alliances

Latin America Flexes Muscles at Joint EU Summit

SANTIAGO, Jan 29 2013 (IPS) - The nations of Latin America and the Caribbean strengthened their position with respect to Europe at the CELAC-EU summit held this weekend in the Chilean capital, reaching agreements that protect their natural resources from foreign investors and securing a joint condemnation of the United States’ trade embargo against Cuba.

The 33 heads of state and high representatives of the Community of Latin American and Caribbean States (CELAC) managed significant amendments in the Declaration of Santiago signed on Sunday Jan. 27 with the 27 member states of the European Union, changing in their favour the key articles that establish the legal framework for foreign investment in the region.

“Legal certainty is the leading issue of contention with the EU, not because the countries of the region are unwilling to provide it, but because each country has its own view and is adopting its own process,” Bolivian Communications Minister Amanda Dávila told IPS.

“The countries of the Bolivarian Alliance for the Peoples of Our America (ALBA) expressed their opinion on sovereignty and voiced their legitimate right to adopt their own policies and to disagree with positions and commitments regarding positions originating in other blocs,” she added.

“We emphasise the importance of working together to promote investments that support the sustainable and sound use of natural resources, environmental care, and economic and social development, and to maintain a favourable investment climate, with legal certainty and respect of national and international law,” according to the revised clause in the declaration.

Dávila said that the final declaration of the CELAC-EU summit is “a huge step forward, an important achievement”, because progress was made on “establishing sovereignty, as the Latin American region has done when it comes to the Malvinas (Falkland) Islands, Cuba and the maritime demand.”

Dávila was referring to the demands made by ALBA — made up of Antigua and Barbuda, Bolivia, Cuba, Dominica, Ecuador, Nicaragua, St. Vincent and the Grenadines and Venezuela — for the inclusion (in the Santiago Declaration) of Argentina’s sovereignty claim over the disputed South Atlantic islands, the condemnation of the U.S. blockade against Cuba, and Bolivia’s request for a sovereign outlet to the Pacific Ocean.

The Santiago Declaration further established the “importance of providing legal certainty for economic operators” and made a commitment to “maintain a supportive business environment for investors (…) while recognising the sovereign right of states to regulate.”

Dávila said investors must act accordingly, recognising “the right of countries to regulate in order to meet their national policy objectives in accordance with their international commitments and obligations”, as stated in the declaration.

Concurring with her, the director general of the United Nations Food and Agriculture Organisation (FAO), Graziano da Silva, told IPS that the world is used “to treating investment as a private matter, subject to the will of investors, assuming that the country receiving the capital has to yield at all times to the will of the other party.

“But that’s changed,” he said. “A broad agreement must be reached on the issue” in order to ensure that “investments are made responsibly and are, consequently, honoured,” he added.

Trade between CELAC and EU countries grew by an annual average of 13 percent between 2002 and 2011, according to official figures, reaching a total of 276 billion dollars in 2011. In 2012, trade figures were up by 23.9 percent compared with 2011.

As for capital movements between the two regions, the International Monetary Fund (IMF) reported that foreign direct investment (FDI) by the EU in CELAC countries amounted to 613 billion dollars in 2011, representing 47 percent of FDI in the CELAC region, and five percent of the EU’s global investments.

Speaking at a press conference, the president of the European Council, Herman Van Rompuy, recalled that the EU remains the largest foreign investor in Latin America and the Caribbean.

In spite of the achievement of ALBA representatives led by Venezuela, the final text of the Santiago Declaration also includes a commitment to “avoid protectionism in all its forms” in order to “favour an open and non-discriminatory, rules-based multilateral trade system”.

Van Rompuy said the EU “anxiously” awaits a trade agreement with the Southern Common Market (Mercosur), made up of Argentina, Brazil, Paraguay (membership currently suspended), Uruguay and Venezuela.

These negotiations have been stalled for years, and their reactivation appears a far-off prospect, given the protectionist measures imposed by Argentina and Brazil as a defence against the economic and financial crisis in the industrialised North, especially in the EU.

However, Van Rompuy said he was optimistic that the bilateral talks would resume soon. Chancellor Angela Merkel of Germany also called for progress on the negotiations and for an end to protectionism.

The EU announced free trade agreements with Peru and Colombia, and an association agreement between the EU and Central America also took shape at the Santiago Summit.

FAO director da Silva stressed that an EU-Mercosur agreement would allow for further integration of the regions’ economies, both in the agricultural sector and in services and industry. He also expressed his desire to “advance and overcome the barriers that prevent this offer from becoming a real and effective agreement”.

The 14-page Santiago Declaration contains over 40 points of agreement, including the commitment of both blocs to multilateralism, respect for indigenous peoples, gender equality and human rights, and rejection of terrorism in all its forms.

The leaders of the two regions undertook to strive for “sustainable development in its three dimensions: economic, social and environmental”, and expressed their concern about the economic crisis, as “recovery remains very slow”.

“We firmly reject all coercive measures of unilateral character with extraterritorial effect that are contrary to international law and the commonly accepted rules of free trade,” the declaration says.

The signatories of the Santiago summit’s final declaration observe that this kind of practice represents a serious threat to multilateralism.

“In this context, and with reference to UNGA (United Nations General Assembly) resolution A/RES/67/4, we reaffirm our well-known positions on the application of the extra-territorial provisions of the Helms-Burton Act,” they state, referring to the U.S. law that exacerbated its embargo against Cuba, the country that will exercise the CELAC’s next temporary presidency.

Guillermo Holzmann, a Chilean political scientist, said that although CELAC did not come to the summit with one voice, as countries within the region have divergent positions, it did constitute a single organisation that today has “a significant opportunity for consolidation”.

In that sense, he told IPS that the region can rightly flex its muscles, because it is part of the solution to the European economic crisis, but no longer as part of “a single relationship of dependency”.

(END)