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EUROPEAN PARLIAMENT DELEGATION FOR RELATIONS WITH THE COUNTRIES OF SOUTH AMERICA AND MERCOSUR Delegation visit on 27 to 31 October 2003 to CHILE and participation in the ‘Mercosur Parliament’ Seminar on 3 November 2003 (Foz, BRASIL) REPORT CR\518559EN.doc PE 334.514 EN EN PE 334.514 2/22 CR\518559EN.doc EN Report on the delegation working part visit to Chile (Santiago, Antofagasta and La Serena) (27-31 October 2003) Introduction: The programme of delegation activities adopted by the Conference of Presidents on 21 November included a South American delegation working party visit to Chile. On 25 September the Conference of Presidents authorised eight Members to take part, having on 4 September authorised the participation of three working party Members in the Seminar on ‘The Mercosur Parliament’ on 3 and 4 November. The IVth EU-Chile interparliamentary meeting had been held in Strasbourg in September 2003. Domestic situation: Since the first democratic elections, held in December 1989, when President Patricio Alwyn was elected, and a line was drawn under 17 years of military dictatorship, the ‘Convergencia’ coalition of parties has continuously held power. The coalition comprises the Christian Democrat Party, the Socialist Party, the Party for Democracy and the Radical Social Democrat Party. However, in the most recent elections, Ricardo Lagos won (with 51.31%) by the narrowist of margins against the right-wing alliance candidate, Joaquín Lavin. The background to these elections was Baltasar Garzón’s request for the extradition of General Pinochet from the UK, which revealed that Chilean society remains divided in its attitude to the dictatorship. Both the elections themselves, and political life since the Alwyn presidency, have demonstrated that democracy is functioning perfectly normally, and that democratic institutions have been consolidated, despite the continuing restrictions on appointments at the highest level within the military, the continuing existence of the concept of ‘senator for life’, and the fact that the press cannot be described as entirely pluralistic. Various problems, such as corruption scandals leading to some cabinet changes in February, have affected the coalition’s solidity. There are those who believe that Convergencia will be unable to agree on a candidate in the 2005 elections. Municipal elections will be held in 2004. In the Congress of Deputies, Convergencia has a one-seat majority, which could create problems when it comes to adopting the legislation which President Lagos is seeking to introduce as part of his state modernisation programme. The country’s economic situation has in recent years been extremely positive, with 7% growth between 1990 and 1997, and estimated growth of 3.5% for 2003, hand in hand with inflation running at under 3% (estimated at 3.5% for 2003). These results were stimulated by the economic reforms of the 80s and 90s, whose driving ideal was an open economy; using privatisation and export promotion, a strong, highly competitive industrial fabric was developed. Chile has very low customs tariffs, circa 8%. Most of its exports are raw materials, mainly minerals, and above all, copper. CR\518559EN.doc 3/22 PE 334.514 EN Market diversification is a priority for Chile, but Chilean exporters are encountering major difficulties when it comes to finding new markets for their products, given that the neighbouring markets exhibit high levels of protection in respect of Chile. The Asian crisis and the mineral price slump reversed the trend in 1998 and 1999. From 2000, growth turned around again (4.4% in 2002 and 2.8% in 2001). This was, and is, due to the dynamic export sector, rather than a growth in domestic demand. Chile’s ‘good’ results can be classified as ‘excellent’, when compared with those of its neighbours: growth forecasts for 2000 are: Brazil 2%, Colombia 2.1%, Venezuela -20%; and Argentina 4.5% (-10.9% in 2002). However, Chile’s economic development has not had any serious impact on the poorest strata of society. 18% live in poverty, thanks to the way in which wealth is distributed. Nonetheless, there has been progress - 40% lived in poverty in 1980. The EU is Chile’s major trading partner, and its main export market (26.1% in 2001). EU imports to Chile account for 18.5%. Finally, the development of economic relations with the USA (24.8% of exports and 22.4% of imports) means that interest in Europe has fallen in the economic sphere (as well as in terms of culture). The signing of the Association Agreement with the EU could see this change. At Community level, the agreement has come into force, but to date it has been ratified only by certain Member States. It comprises three chapters: political dialogue, cooperation and trade. Chile is not a full member of Mercosur (Argentina, Brazil, Uruguay and Paraguay), although like Bolivia, it enjoys special status. Chile’s integration into Mercosur is problematic, since Chile’s average trade tariffs run at 7%, while Mercosur’s run at 14%. Meetings with members of the Government: The delegation’s meeting with the President of the Republic, Ricardo Lagos, first of all tackled the general situation in South America. On the basis of the Washington consensus ‘recipe book’, Mr Lagos assessed the results of its application in the various countries of the region, particularly Bolivia, Ecuador and Venezuela. He believed that positive results could only be achieved if the book’s application went hand in hand with social policy measures which would enable an adequate policy to combat poverty to be carried out. In the case of Chile, poverty had been halved in twelve years from 40% to less than 20%. The President then set out his country’s position with regard to regional integration, and Mercosur in particular. He said that the major difficulty was the difference in customs tariffs, which made it impossible for the two sides to draw any closer together, but he also said that he had proposed greater alignment of macro-economic policies, eliminating competitive currency devaluation. Parliamentary Association Committee: PE 334.514 4/22 CR\518559EN.doc EN Hitherto, EU-Chile interparliamentary relations had been based on the ‘Declaration on institutionalising the interparliamentary dialogue between the EP and the Chilean Congress’ signed in Santiago de Chile in June 1998, it provided for annual meetings, to be held alternately in Chile and Europe. The Fourth Interparliamentary Dialogue, held in Strasbourg on 25 and 26 September 2002, concluded with a Declaration whereby both parties undertook to take the requisite steps to set up a Parliamentary Association Committee at the end of 2003 in Chile. Article 9 of the Association Agreement sets up a Parliamentary Association Committee, comprising members of the EP and the Chilean National Congress, which may request information from and make recommendations to the Association Council. The latter will report its decisions to the Parliamentary Committee. On this basis, rules of procedure governing the working of the Parliamentary Association Committee, annexed to this report, were debated and approved. During the interparliamentary meeting, two further major issues were dealt with: · the political, economic and social situation in the EU, Chile and Latin America in general · EU-Chilean scientific and technological cooperation. Under the first heading, the Chilean MPs learned about the European draft Constitution and EU enlargement, and the impact of the latter on EU’s workings. The MEPs heard about the various free trade agreements negotiated by Chile, and also those under negotiation. There was also an exchange of view on the AFTA negotiations and the prospects for the forthcoming Miami meeting. There was also debate on the role that the various parliaments should play in the negotiations, are planned in the follow-up to the agreements once the latter came into force. The foreseeable consequences of the WTO Cancun Round were also discussed, as was the reform of the United Nations, and particularly the share-out of standing membership of the Security Council. There was also the request for Internet access to information on legislation and the work of the EP. Under the second heading, both sides discussed the major possibilities offered by the EU Chile Agreement, which would enable Chile to take part in the VIth framework programme. The Chilean members said that SMEs were very excited, given that the fact that their accounting for 75% of the total would have a positive affect on competitiveness and job creation. There was also a need for a group of experts to monitor technical and scientific cooperation within the framework of interparliamentary dialogue. It was suggested that one of the first aspects to be studied should be developing alternative energy sources, particularly geothermal energy, although there was also reference to bio-fuels. It was agreed that specific projects, including deadlines and priorities, would be submitted to a forthcoming meeting. Finally, the Chilean members asked for EP mediation to ensure that those EU national parliaments, which have not yet ratified the Agreement, should do so as soon as possible. CR\518559EN.doc 5/22 PE 334.514 EN The delegation also met representatives of various political parties. The Concertación party representatives provided information on the coalition's future in view of the rumours that it might incapable of producing a presidential candidate. They defined Concertación as 'the broadest and longest lasting political alliance in Chilean history'. They were optimistic about the future, saying that different opinions on specific issues did not mean irreconcilable divergence. They also mentioned grass roots support for Concertación as an electoral formula. Amongst the government's pending tasks, reference was made to the indigenous minority and the constitutional reforms deemed necessary, including the appointment of high-ranking military personnel and the abolition of 'senators for life'.