AFTER THE SPANISH EU PRESIDENCY: looking ToWARDS A nEW lATin AMERiCA-EU PARTnERSHiP? Summer 2010 With the support of: Media Partner Latin_America_EU_partnership_cover_17-08-10.indd 3 31/08/10 07:16 AFTER THE SPANISH EU PRESIDENCY: TOWARDS A NEW LATIN AMERICA-EU PARTNERSHIP? Report of the high-level European Policy Summit co-organised by Friends of Europe, Telefónica and Real Instituto Elcano with the support of Enel and Endesa with media partner Europe’s World Summer 2010 Concert Noble, Brussels The views expressed in this report are the private views of individuals and are not necessarily the views of the organisations they represent, nor of Friends of Europe, its Board of Trustees, members and partners. Reproduction in whole or in part is permitted, provided that full credit is given to Friends of Europe, and provided that any such reproduction, whether in whole or in part, is not sold unless incorporated in other works. Rapporteur: Mike Scott Publisher: Geert Cami Project Director: Nathalie Furrer Project Executive: Maximilian Rech Photographer: Frédéric Remouchamps Layout: Nicolas Bernier This report is printed on sustainably produced paper. Table of contents EXECUTIVE SUMMARY 4 SESSION I: Taking the lead: Where next for trade and investment links? 7 Political will 9 Integration agenda 11 Engine for growth 13 From problem to solution 16 SESSION II: Seizing the potential: What strategy for EU-Latin American energy relations? 19 Technology transfer 21 Policy changes 25 Lessons to be learnt 28 SESSION III: Strengthening the ties: What should be the EU’s Latin American priorities? 31 Losing ground 32 Global architecture 33 Barriers to growth 35 Ideological divide 36 Otherwise engaged 39 ANNEX I - Programme 40 ANNEX II - List of Participants 45 4 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 EXECUTIVE SUMMARY Latin America was one of the themes of Spain’s recent EU Presidency and Madrid successfully concluded a number of deals with the region, Friends of Europe’s Latin America summit heard. As well as sealing agreements with Central America, Peru and Colombia, the EU also saw the revival of talks with Mercosur that have been on hold for six years, said Juan Pablo De Laiglesia y González de Peredo, Spain’s State Secretary for Latin America. The Spanish approach was to foster greater political and economic co-operation between the EU and Latin America, to encourage greater integration within the region and to address the needs of Caribbean countries. It was widely agreed that the EU needs to strengthen its links with a region that has come through the financial crisis in good shape and that is going to be one of the main engines of growth in years to come. But it is only when Spain holds the EU Presidency that the region gets the focus it deserves, despite being home to more than 1bn people and 30% of the world’s GDP, noted Sandra Fuentes-Berain, Mexico’s Ambassador to the EU. Economically, the Mercosur talks should be the most significant achievement, and it is important for the EU because the members of Mercosur are thriving economies that are developing quickly, said EU Commissioner for Trade Karel De Gucht. However, concluding an agreement will not be easy, not least because of the extreme sensitivity of the subject of agriculture to both blocs. Telefónica’s Carlos López Blanco said the business community hopes the deals will lead to a more open trading regime, transparent rules of the game and a more secure environment for investment. Latin America’s recent growth is symptomatic of the shift in the economic balance of power to emerging markets. These markets are going to be even more important to future growth, which makes it crucial for the EU to deepen its ties to the region. One reason for the region’s confidence is its experience of emerging from a period of instability and stagnation, explained Henrique de Campos Meirelles, Brazil’s Central After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 5 Bank Governor. This experience could be useful to EU countries experiencing similar problems, while the Latin American success story also has lessons for other EU priorities such as Africa, said the World Bank’s Augusto de la Torre. One of the key requirements for Latin America to continue its growth is secure energy supplies in a low-carbon world. Here the continent has unique advantages in its vast hydro power potential and Brazil’s world-leading ethanol industry. However, the EU is in danger of failing to capitalize on this natural area of co-operation because this situation is far-removed from the EU’s low-carbon paradigm, which virtually ignores hydro because most of Europe’s hydro potential has been tapped. The EU is also in danger of losing out on the benefits of Latin American biofuel supplies, which could help it to meet its renewable fuel obligations, because of sustainability criteria that are so restrictive they make it impossible to import to Europe, said Markku Nurmi of Finland’s Environment Ministry. There is also huge potential in other renewable technologies, most obviously wind, solar and energy efficiency, and the EU can help with technology transfer and funding through the Copenhagen Accord, said Endesa’s José María Calvo-Sotelo. Energy is one of the key areas where EU experience in integrating and deregulating markets could help Latin America, said Eurasia Group’s Will Pearson. The EU experience of integration is a key competitive advantage in dealing with a region as diverse as Latin America, the UN’s Osvaldo Rosales pointed out. EU companies would be able to invest more in Latin America if local capital markets were better developed and more local currency debt instruments were available, emphasised Francisco de Paula Coelho of the European Investment Bank. Such moves would also help to put the excess domestic savings of these countries to better use locally. If Europe is to strengthen ties with Latin America, it needs to take seriously the talk of strategic partnership and acknowledge the shortcomings of its own single market, said Charles Powell of the Real Instituto Elcano. There is a unique opportunity for the EU to deepen its links with a region with which it has much in common, but Brussels must build on the good work done by Spain and not allow relations to be neglected again. After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 7 SESSION I Taking the lead: Where next for trade and investment links? In the dying days of the Spanish EU Presidency, Friends of Europe’s Latin America summit opened with Secretary General Giles Merritt’s remark that Brussels has been very slow to focus on the opportunities that partnerships with Latin America offer, not just commercially but in the political and development spheres. It is only when Madrid is in the chair that the region gets the attention it deserves, he added. This is odd, said Sandra Fuentes-Berain, Ambassador and Head of the Mission of Mexico to the EU, given that Latin America and the Caribbean are home to more than 1bn people, more than 30% of the world’s GDP and hosts one third of UN member states and one third of the G20 members. In a keynote speech, Juan Pablo de Laiglesia y González de Peredo, State Secretary for Latin America at the Ministry of Foreign Affairs of Spain, highlighted Madrid’s achievements on EU policy towards Latin America, following a commitment to reinforce relationships with Latin America. “The Madrid summit focused on just two items on the global agenda – the financial crisis and the global financial architecture that will allow us to get through this crisis.” Juan Pablo de Laiglesia y González de Peredo, State Secretary for Latin America at the Ministry of Foreign Affairs of Spain Spain’s attempt to move forward relations took place on four levels, he added. Firstly, it wanted to deepen bi-regional relations because “we both face global 8 After the Spanish EU Presidency: Towards a new Latin America-EU partnership? Summer 2010 issues”. As a result, the recent Madrid summit focused on just two items on the global agenda – “the financial crisis and the global financial architecture that will allow us to get through this crisis.” The summit established a a3bn Latin America investment facility and concluded negotiations on an agreement with Central America, the EU’s first such regional deal. Despite a boycott of an agreement with the Andean Community by Bolivia and Venezuela, Madrid also managed to seal a deal with Peru and Colombia, with Ecuador now in talks to get involved as well. The summit also came up with a new strategy for relationships with the Caribbean countries, “which have a level of needs that the EU can help to address.” The EU and Latin America have a long-standing relationship based on strong economic, political and cultural ties that stretch back centuries, pointed out Karel De Gucht, EU Commissioner for Trade. The Madrid Summit was a significant step in upgrading the framework of relationships between the two blocs. “The goal is to move from a lack of stability to an environment of predictability and legal certainty; from one-sided dependence to true partnerships.” “The goal is to move from a lack of stability to an environment of predictability and legal certainty; from one-sided dependence to true partnerships.” Karel De Gucht, EU Commissioner for Trade As well as the bilateral agreements, the Spanish EU Presidency also saw the resumption of negotiations for an association agreement with Mercosur that have lain dormant for six years, he said.