Opinion of the economic and social committee on "Relations between the European Union, Latin America and the Caribbean: socio-economic interregional dialogue"

(1999/C 169/16)

On 3 December 1998, the Economic and Social Committee, acting under the third paragraph of Rule 23 of its Rules of Procedure, decided tot draw up an Opinion on Relations between the European Union, Latin America and the Caribbean: socio-economic interregional dialogue.

At its plenary session on 24 and 25 February 1999, the Committee decided, in accordance with Rule 23(3) of the Rules of Procedure, to draw up an own-initiative opinion. The Section for External Relations, responsible for carrying out work on the subject, drew up its opinion on 14 April 1999. The rapporteur was Mr Zufiaur.

At its 363rd plenary session on 28 and 29 April 1999 (meeting of 28 April) the Committee adopted the following opinion unanimously.

1. Introduction

1.1. Over the last decade, the Economic and Social Committee (ESC) has been actively involved in developing relations between the European Union and the countries and sub-regions of Latin America and the Caribbean. By preparing a number of information reports and opinions, the Committee has expressed its views on the most significant initiatives introduced by the regions. By the same token, through regular contact with its Latin American counterparts, primarily the Economic and Social Consultative Forum (FCES) of the Southern Common Market (MERCOSUR), the ESC has contributed to the marked rapprochement between the two regions during this period. This opinion follows this whole range of initiatives.

1.2. The forthcoming first Summit of Heads of State and Government between the countries of the EU, Latin America and the Caribbean, to be held in Rio de Janeiro on 28 and 29 June 1999, will constitute a watershed in a process which has seen the two regions draw ever closer together throughout the nineties. The main features of this process have been the expansion of institutionalised dialogue and cooperation mechanisms and, more recently, the opening of negotiations with Mexico on the reciprocal liberalisation of trade and the European Commission's recommendation for similar negotiations to be opened with MERCOSUR and Chile. The timing of the Summit also coincides with an event of particular importance for future relations between the EU and the Caribbean, namely the negotiations for the next Lomé Convention which were launched on 30 September 1998.

1.3. The Summit - and the process of preparing its agenda - will not simply take stock of the progress made in the past in terms of relations between the regions, since the political declarations and guidelines on cooperation which should emerge from it will also largely define the areas that will dominate dialogue and cooperation between the EU, Latin America and the Caribbean in the early years of the new millennium.

1.4. Against the backdrop of this gradual rapprochement between the two regions, based on joint adherence to thevalues of democracy and international cooperation and on centuries of shared history and deep cultural, political, economic and human ties, this opinion assesses the current state-of-play and the outlook for intra-regional relations, with the emphasis on the outlook for dialogue and cooperation between the representatives of civil society, on socio-economic issues in particular. The issues addressed in this opinion are examined in greater detail in the information report on Relations between the European Union, Latin America and the Caribbean: socio-economic interregional dialogue, adopted on 14 April 1999.

2. State-of-play and outlook for relations between the EU, Latin America and the Caribbean

2.1. The EU, with the adoption of the basic document on EU relations with Latin America and the Caribbean by the Council of Ministers on 31 October 1994, and the declarations issued at the Madrid European Council held on 15/16 December 1995, expressed the EU's wish for closer political ties with Latin America and deeper institutionalised dialogue with its partners in the region. The aim was to bolster democracy, to advance towards trade liberalisation, support regional integration processes and target its cooperation more effectively. Since then, ties between the regions have become much stronger, and this has been reflected in the setting up of various bodies for institutionalised political dialogue and cooperation mechanisms at different levels. The new "fourth generation" framework agreements signed with MERCOSUR, Chile and Mexico have broadened and diversified the areas of cooperation and have incorporated the objective of reciprocal and gradual trade liberalisation. By the same token, the new EU Member States have swelled the ranks of European countries jointly and unanimously agreeing on the importance of consolidating links between Europe and Latin America.

2.2. In the political sphere, regular ministerial meetings, also attended by Bolivia and Chile, have been launched withMercosur. The EU has initiated institutionalised political dialogue on bi-regional and interregional issues of common interest with the Andean Community (AC), and regular dialogue with Chile and Mexico on such issues in meetings at various levels, going right up to the top level. These new dialogue forums reinforce the institutionalised meetings between EU Foreign Ministers and the Rio Group held every year on the basis of the 1990 Rome Declaration and the San José dialogue between the EU and Central American countries launched in 1984.

2.3. Adherence to democratic principles and respect for human rights form the cornerstone of EU/Latin American political dialogue. The foundations of this vision, which has been substantiated in a wide agenda of cooperation and practical achievements, differ vastly from any other permanent dialogue which the two regions maintain with other regions or countries of the world. In step with Latin America's progress in consolidating democracy, the nature of this commitment has changed in some respects, with growing emphasis placed on establishing a climate guaranteeing good governance and the definitive consolidation of democracy in the long term. In addition to the importance of "good public management" and strengthening institutions supporting the rule of law, the focus is on acknowledging the crucial role which civil societies play in consolidating democracy in the long term. However, issues such as safeguarding the rights of indigenous populations, continued violation of basic human rights and workers' rights in some countries, including the persecution of trade unions and their representatives, hinder the definitive consolidation of democracy and the rule-of-law.

2.4. With regard to relations with Caribbean countries covered by the Lomé Convention, the revised Lomé IV Convention, signed on 4 November 1995, reinforced political dialogue between the EU and African, Caribbean and Pacific countries (ACP) on issues such as democratisation and consolidation of the rule of law. This has also meant greater emphasis on developing the ACP's foreign trade and its international competitiveness, as well as greater flexibility in allocating cooperation resources. The considerations relating to the new Lomé Convention, which comes into force in the year 2000, reflect the aim of strengthening the political dimension of EU/ACP relations and of expanding and diversifying their political dialogue, with greater emphasis on fostering "good governance", and on developing the institutions and political participation of civil society.

2.5. In pursuing and consolidating political dialogue, the EU, Latin America and the Caribbean are responding to several shared strategic concerns. Insofar as cooperation between the two regions and converging views on the main items on the international agenda will help to strengthen the overall position of the two regions and increase their profile and influencein international forums, these will be crucial to the goal of achieving peace and stability in a multipolar world. The many challenges posed by globalisation make it particularly important for the two regions to adopt policies and strategies based on mutual benefit and shared responsibility. Progress on integrating markets and reducing the regulatory capacity of national authorities heightens the need to strengthen international and multilateral cooperation so as to foster the democratic monitoring of globalisation at political level. Where imbalances triggered by globalisation reveal a lack of international cooperation, the two regions must help to strengthen governability at regional, interregional and international level.

2.6. The expansion and strengthening of trading relations and reciprocal investment is an objective shared by the EU, Latin America and the Caribbean. Generally speaking, the development of trade between the two regions during the nineties has been particularly dynamic. Trade between the two regions has grown by more than 75 % in absolute terms and EU exports to Latin America have risen by more than 150 %. Growth in imports from Latin America has been more modest at around 25 %. For Latin America as a whole, the EU is its second global trade partner after the United States, accounting for 15 % of the region's trade with the rest of the world in 1997. As for MERCOSUR and Chile, the EU has long been their main trading partner. With regard to investment, EU Foreign Direct Investment (FDI) to Latin America and the Caribbean has grown rapidly in recent years and accounts for some 30 % of the region's total FDI in the nineties.

2.7. Although the development of trade between the EU and Latin America has generally been satisfactory, there are some structural problems. Despite the growth in EU exports to Latin America, there has been a drop in the EU's relative share of Latin American foreign trade, due to the fact that the region's trade with its other main trading partners, the United States and Japan, has grown more rapidly, just as trade between the countries of the region doubled between 1990 and 1997. From the Latin America perspective, the persistence of a growing trade deficit with the EU since 1993 is a cause for concern, and this has prompted demands for better access to European markets, mainly for agricultural products.

2.8. Dynamic and balanced economic relations between the EU and Latin America provide the requisite framework for developing dialogue and cooperation in other areas. In addition to the fundamental importance of European trading and investment relations for the growth and diversification of Latin American and Caribbean economies, EU objectives in this area should be focused on the stabilisation of markets, international financial flows, and the promotion of direct investment as a stable source of financing for technological innovation and development of production. The introduction of the euro as the single currency for 11 of the 15 EU Member States hasopened up new possibilities in this area. The opening of negotiations on reciprocal trade liberalisation with Mexico, the scheduled launch of similar negotiations with MERCOSUR and Chile, and the launch of negotiations on agricultural trade within the World Trade Organisation (WTO) at the end of 1999, all provide opportunities for progress on the reciprocal opening-up of markets. Any further progress towards trade liberalisation between the EU and Latin America needs to take account of the sensitive nature of certain products, and, in general, the legitimate interests of the different sectors of production in the two regions.

2.9. While trade between the EU and the Caribbean is limited in terms of value, exports to European markets are crucial to several of the small Caribbean economies, particularly for products such as bananas and sugar. Looking towards the renewal of the Lomé Convention and possible changes in some of the preferential trade mechanisms in the coming years, EU/ACP negotiations need to make greater trade liberalisation consistent with consideration for the particular vulnerability of Caribbean economies and their dependence, in many cases, on exports of a single product.

2.10. For the last decade, the EU and its Member States have been Latin America's main source of external cooperation. Between 1990 and 1997, the 15 EU Member States and the European Commission together provided almost 55 % of Latin America's bilateral cooperation resources. Moreover, the growth in EU cooperation flows to Latin America up to 1996 is in stark contrast with the dramatic reduction in US aid to Latin America during the same period. Community funds for Latin America grew considerably between 1991 and 1996, and despite a slight drop in the Commission's commitments in Latin America as of 1996, Community cooperation has steadied at a significantly higher level than at the beginning of the decade.

2.11. Following a strategy of tailoring cooperation to match the various levels of relative development reached, Central America, the Caribbean and the Andean countries are the main recipients of development aid, whose main components are technical and financial assistance and humanitarian aid, while other partners, that is, Mexico, MERCOSUR and Chile, primarily benefit from economic and trade cooperation.

2.12. A most worrying trend is the cut-back in Official Development Assistance (ODA) provided by industrialised countries - in 1997 the OECD (Organisation for Economic Cooperation and Development) countries reduced their bilateral cooperation to developing countries by 5,8 %, while total ODA to Latin America dropped by 16 %. Even considering the constraints on Community and EU national budgets, real needs suggest that flows of financial resources to Latin America and the Caribbean should be maintained at the pre-1997 level or even increased. In any case, efforts to optimise the effectiveness of European cooperation are significant. In addition to improving coordination between the donors, focusing cooperation onmutually agreed priority areas, and boosting global and multiannual programmes in key areas, the decentralisation of cooperation is a prime mechanism for enhancing the effectiveness and management of cooperation. The participation of civil society in the design and implementation of cooperation should not simply be regarded as a means of bringing cooperation closer to grassroots level, but also as a means of boosting and maximising the benefits of cooperation and of consolidating the democratic process. In recent years, across-the-board EU cooperation programmes have played an increasingly important role in establishing direct cooperation ties between various players in the socio-economic sphere and in civil society as a whole.

3. The social dimension in European and Latin American integration

3.1. Both the integration model of the EU and that of MERCOSUR and other sub-regional groups, such as the Andean Community, the Central American Integration System (SICA) and the Caribbean Community (CARICOM), share the vision of integration as an integral process whose objectives extend beyond purely trade-related and economic aspects. This model differs from that of initiatives such as the Free Trade Area of the Americas (FTAA) - even though this is enshrined in the Action Plan launched at the First Inter-American Summit which covers objectives and initiatives for strengthening democracy and sustainable development - and the North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico, which are basically restricted to the establishment of a free trade area, and are devoid of objectives or instruments in the political or cooperation spheres. Closely linked to this perception of integration is the notion that one of the basic pre-requisites for political democracy is the existence of a dynamic and diversified civil society. The establishment of mechanisms to represent the interests of the various socio-economic groups and for negotiation and mediation between these is, therefore, of primary importance for democratic consolidation. Similarly, against a backdrop of increasingly globalised production and keener world competition, the labour relations model, relations between the socio-economic groups and their level of participation in economic policy-making at national level, are all crucial to promoting economic growth and development. Consequently, incorporating a social dimension into the processes of integration and ensuring the active participation of the social partners in these are necessary for achieving the aims pursued by the integration processes in both regions.

3.2. The EU Member States enjoy a solid tradition of social dialogue, both directly between employers' organisations and trade unions and in the form of tri-partite agreements. While in some countries there is a long-standing tradition of institutionalised relations between the economic and socialplayers as well as mechanisms for social dialogue and resolution of labour disputes, other countries have since the 70s carried out valuable experiments in social dialogue. Similarly, the social dimension has been part of the European integration process since its inception. Within the sphere of Community social policy, of particular note are initiatives such as the establishment in 1960 of the European Social Fund (ESF); the launch in 1985 of European Social Dialogue; the adoption in 1989 of the Community Charter of Fundamental Social Rights for Workers, subsequently incorporated into the Amsterdam Treaty of 1997; and the Agreement on Social Policy, signed by the European social partners in October 1991, incorporated as an appendix to the Social Protocol of the Maastricht Treaty in 1992, and, lastly, incorporated into the Amsterdam Treaty.

3.3. With regard to the participation of organisations representing economic and social spheres, the Economic and Social Committee (ESC), established by the Treaty of Rome, plays a crucial role in European integration. The ESC, comprised of representatives of the different economic and social spheres, is a consultative body of the Council, Commission and, since the Amsterdam Treaty, of the European Parliament. The ESC may also issue own-initiative opinions. In addition, throughout the years other more specific consultation bodies have been established in various fields.

3.4. In Latin America, relations between players in the socio-occupational sphere have to a large extent been marred by conflict and the failure to establish proper institutionalised dialogue or coordination. Nevertheless, in recent decades, and linked to democratisation and the greater openness of economies towards world competition, efforts to promote dialogue between the economic and social players and between these and the State have been stepped up. In some cases, the purpose of dialogue has been to tackle a situation of economic recession, while in others the main objective has been to provide a framework of social and political stability for processes of democratic transition.

3.5. Similarly, in recent years significant progress has been made in incorporating the social dimension into the different regional integration structures in Latin America and the Caribbean. Notable examples of this progress are provided by the adoption of the 1997 MERCOSUR Multilateral Social Security Agreement, and, above all, the adoption of the 1998 MERCOSUR Socio-occupational Declaration, which establishes a range of individual and collective rights in the workplace. Initiatives taken by the other sub-regional groups include the Andean Community decision to adopt a common range of social policies promoting employment, a reduction in poverty, boosting education, health and human rights. The statement of intent drawn up by the representatives of the various social sectors meeting at the Second Andean Community Social Summit held from 24-26 February 1999, is another step forward towards the joint promotion of social policies. With regard to the SICA, the social dimension of integration has above all been substantiated by the Central American SocialIntegration Treaty of 1995. In the Caribbean, CARICOM has adopted an agreement on social security in force since 1997, and in February 1997, the Caribbean Heads of State and Government concluded the CARICOM Civil Society Charter pledging to uphold fundamental freedoms and rights in the workplace.

3.6. There has also been significant progress in involving the social partners and socio-occupational spheres more closely in the processes of regional integration. In MERCOSUR, the interests and views of the employers' associations and trade unions of the four member countries are represented in the Economic and Social Consultative Forum (FCES), which since 1994 has formed part of the group's institutional structure as a consultative body. In the same way, the Andean consultative employers' council and the Andean consultative workers' council respectively fulfil consultative and advisory roles in the Andean integration process. Following the decision to fully reactivate the work of both councils, the Andean Community has specified the objective of ensuring effective participation of employers and workers in the integration process, just as these have expressed their wish to establish a forum for permanent dialogue. In Central America, the SICA consultative committee, established in 1991, advises the SICA general secretariat.

3.7. The deepening regional integration in Latin America and the prospect of growing integration between existing groupings - in particular, between MERCOSUR and the Andean Community - calls for greater emphasis on the development of a social dimension as part of integration and for greater participation of social spheres in this process. In this respect, preserving a certain balance between areas and social groups in terms of integration may be considered a pre-requisite for achieving the harmonious expansion of the wider markets. Consequently, progress in the reciprocal opening-up of markets needs to be accompanied by mechanisms to preserve economic and social cohesion by supporting less developed areas and ironing out the differences within the regional blocs, and by consultation of the social partners.

3.8. The importance of strengthening the social dimension of Latin American integration is underscored by the Latin American economic and social situation, whose main feature is persistent widespread poverty. The political progress and economic recovery achieved by many countries during the 90s is at odds with the scant reduction in poverty levels. As fundamental pre-requisites for achieving stable economic growth, social cohesion, the definitive consolidation of democracy and political stability, reducing poverty and satisfying basic needs are probably the most significant challenges facing Latin American countries on the eve of the 21st century. The world financial crisis which has beset Latin America since the second half of 1998, and which has once again damaged the immediate prospects for economic growth, highlights the need to implement structural policies designed to reduce poverty.In this respect, the persistence of poverty and other related problems, particularly the unequal distribution of income, is closely linked to the weakness of the social partners, the particular problems besetting the region's labour markets, inadequate job-creation, the expansion of the informal sector, and the lack of a skilled workforce. Strengthening the organisations representing the social partners, their effectiveness, and dialogue and coordination between such organisations, is crucial to solving these problems.

4. The social dimension in future interregional relations

4.1. The first EU/Latin American-Caribbean summit will herald the beginning of a new phase in the consolidation and expansion of links between the regions. In this new phase, maintaining dynamic interregional relations which help both regions to face the challenges of the new millennium means that dialogue and cooperation need to be based on the principles of a model for society advocating close interconnection between political democracy, an active and organised civil society, respect for human rights, free market economy with social justice, ecologically sustainable development and regional integration.

4.2. Given the fundamental role which the organisations of civil society play in strengthening democracy, upholding human rights, and in the economic and social spheres, their participation in dialogue between the two regions should be considered essential. The ESC, therefore, supports the active participation of civil societies in the various bodies for political dialogue and cooperation. The establishment of permanent contact and institutionalised relations between employers' associations, trade unions, consumer and trade associations, among others, will help to achieve the objectives defined by political bodies in both regions and to construct interregional relations on the basis of solid links between civil societies.

4.3. In this respect, the ESC considers it necessary to define appropriate machinery for ensuring that organised economic and social players participate in the various forums for interregional dialogue, with regard to both relations between the EU and the Rio Group and contacts between the EU and the various sub-regional integration structures and individual countries. It is important that negotiations on new interregional agreements, with Mexico, Chile and MERCOSUR, explore possible ways of ensuring the participation of representatives of trade unions, employers and other sectors in the various interregional bodies. The ESC considers that one way of boosting the participation of civil society representatives in bi-regional dialogue should be to establish consultative committees under the cooperation agreements with the sub-regions and countries of Latin America and the Caribbean,similar to those established under the agreements with the countries of the Maghreb and central and eastern Europe, and within the European Economic Area (EEA). Other ways could be to incorporate these sectors into various sectoral committees and commissions, give them an advisory and assessment role, and enable them to attend ministerial meetings as observers.

4.4. Strengthening socio-occupational associations in Latin America and the Caribbean should be a core objective of EU dialogue and cooperation with the region. The EU could thus help to boost the active participation of the socio-economic groups in the framing and implementation of economic and social policies, providing the key to an effective campaign against poverty and social exclusion, with the emphasis on promoting employment. All types of assistance, including technical and financial, for the most representative associations would help these to fulfil such tasks. Similarly, as part of EU support for sub-regional and regional integration, the exchange of information and experiences regarding the participation of organisations representing the different economic and social spheres should be an area of priority cooperation.

4.5. The ESC takes the view that strengthening ties between the players in civil society in the EU, Latin America and the Caribbean should ease the development of the social dimension of Latin American regional integration, an area in which Europe has a long-established tradition. In addition to a more general exchange of experiences, EU socio-occupational representatives could make a valuable contribution to Latin American and Caribbean discussions on the pros and cons of various aspects of integration. The European experience in designing mechanisms for reinforcing economic and social cohesion, both in general terms and in relation to restructuring specific sectors of production, may also be of significance to Latin America and the Caribbean, particularly as regional integration progresses and expands beyond the sphere of trade. Lastly, the establishment of contact and permanent cooperation bodies involving players in the social and economic spheres could help to solve specific problems in other areas of interregional relations, for example in the area of trade where "social dumping" could arise as a result of failure to uphold fundamental human rights and basic international labour standards, as defined by the International Labour Organisation (ILO).

4.6. The higher profile for the socio-economic groups in interregional relations should mean that socio-economic organisations and others representing social interests, will play a significant role in implementing the various cooperation programmes and measures. To this end, the ESC recommends that ways be found to incorporate organisations representing civil society into development and economic cooperation programmes and to give them a more active role in channelling these programmes. It is worth noting that several EU cooperation agreements with countries in Latin America and theCaribbean in recent years embrace measures in areas such as vocational training, job creation, and the administration of social services, where the activities of socio-economic players would be of particular relevance. Moreover, following the success of programmes such as ECIP, AL-INVEST, ALFA and URB-AL, it would be worth considering greater use of decentralised cooperation programmes as a means of furthering the objective of boosting the effectiveness of cooperation.

4.7. Besides support for the implementation of policies promoting productive economic growth, investment and job-creation, the European experience shows that the "third sector", or the "social economy", comprised of some types of cooperatives, mutual societies and non-profit associations and foundations, are potentially a considerable source of jobs. The participation of representatives of these sectors in bi-regional cooperation measures could, therefore, provide innovating impetus for job-creation policies in Latin America and the Caribbean. Similarly, as part of the fight against poverty and social exclusion, cooperation in the field of job-creation should give priority to measures specifically designed to support small and medium-sized enterprises (SMEs) and micro-businesses. Moreover, given the fundamental importance of education as a basis for development, the consolidation of cooperation in this area, including cooperation between universities in the two regions, should be high up the bi-regional agenda.

4.8. As part of its effort to support economic stability and sustainable development in the countries of Latin America and the Caribbean, the ESC considers measures that will help these countries meet their foreign debt obligations to be useful and necessary.

4.9. As part of cooperation, the ESC sees it as a priority to establish legal, programme-based and financial instruments directly linking together the representatives of civil society, and thereby facilitating mutual familiarity and direct contact. Across-the-board cooperation establishing measures to encourage initiatives carried out directly by economic and social players has proved a valuable complement to traditional inter-governmental cooperation. Encouraging this type of initiative is one way of fostering more direct cooperation, which is less hide-bound by administrative structures, between organisations representing the grassroots in EU, Latin America and Caribbean countries.

Brussels, 28 April 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI