Opinion of the European Economic and Social Committee on the ‘Repercussions of the Free Trade Area of the Americas Agreement on EU relations with Latin America and the Caribbean’
Date: 2004-02-25
Institutions: European Economic and Social Committee
Subjects: Caribbean Islands, EU relations, Latin America, United States, free-trade agreement, free-trade area

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Opinion of

the European Economic and Social Committee on the ‘Repercussions of the Free

Trade Area of the Americas Agreement on EU relations with Latin America and the Caribbean’

(2004/C 110/11)

On 21 January 2003, the European Economic and Social Committee, acting under Article 29(2) of its
Rules of Procedure, decided to draw up an opinion on the Repercussions of the Free Trade Area of the
Americas Agreement on EU relations with Latin America and the Caribbean.

The Section for External Relations, which was responsible for preparing the Committee's work on the
subject, adopted its opinion on 15 December 2003. The rapporteur was Mr Soares.

At its 406th plenary session, held on 25 and 26 February 2004 (meeting of 25 February), the Committee
adopted the following opinion by 109 votes to 8, with 15 abstentions.

1. Summary of the opinion

1.1
The process of forging an Agreement on a Free Trade
Area of the Americas (FTAA), launched by the USA, is a wide-
ranging initiative designed to transform the American continent
into one of the largest trade areas in the world, with a popula-
tion of over 800 million, an overall GDP of over EUR 11 tril-
lion and a trade volume of EUR 3.5 trillion.

1.2
Despite numerous setbacks to the process and concerns
expressed over respect for the deadlines set by the agenda, the
fact remains that, as it stands, negotiations are scheduled for
completion in January 2005, with a view to the FTAA entering
into force in December of that year. Moreover, the failure of
the WTO Ministerial Conference held in Cancun from 10 to 14
September 2003 has given new impetus to the FTAA project,
the next extraordinary summit of which was recently set for
January 2004. A breakthrough was achieved in the deadlocked
negotiations at the FTAA ministerial summit held in Miami in
mid-November 2003, and the aim remains to keep to the offi-
cial date for entry into force (December 2005). Nevertheless,
the agreement reached at the meeting provides for a reduced
form of the FTAA.

1.3
One of the features of the FTAA project, and the main
criticism voiced by many sectors of Latin American society, is
that it exclusively concerns trade, which would serve only to
exacerbate existing imbalances in the region where the USA
alone accounts for 77 % of GDP of the Americas and 62 % of
all exports from the continent.

racy and respect for human rights, exploitation of minors and
respect
insufficiently
indigenous
addressed in the project, if, indeed, at all.

communities – are

for

1.5
It is vital for the EU to find a stronger political will to
forge relations with LAC countries, particularly since it is in its
own economic and commercial interests to do so. The EU must
not forget that when NAFTA entered into force, it had signifi-
cant negative repercussions for European businesses, which lost
half their share of the Mexican market. Despite the Association
Agreement rapidly negotiated between the EU and Mexico, the
lost market share has not been fully recovered.

1.6
The current political and social backdrop in Latin
America is conducive to the EU successfully concluding nego-
tiations with its LAC partners, especially MERCOSUR.

1.6.1
The election of Luis Inácio Lula da Silva in Brazil and
Néstor Kirchner in Argentina reflect the call for change in the
region. Besides the strong interest which they share in devel-
oping MERCOSUR, even before concluding the FTAA, they
have also expressed their willingness to promote relations with
the EU.

1.6.2
Now more than ever there is a clear need for Europe
in the troubled Latin-American/Caribbean continent. The EU
continues to be perceived as a social model and political bench-
mark. The great challenge currently faced by LAC countries is
to find an alternative economic and social model
to the
‘Washington consensus’ and to the plans to integrate with the
USA, which is seen as too hegemonic.

1.4
The positions taken by civil society in Latin America
and the Caribbean (LAC) with regard to the FTAA project are
very different. On the one hand, the business community sees
it as a means of gaining access to the large American market,
though some companies fear American and Canadian competi-
tion; on the other hand, some sectors grouped around the
Hemispheric Social Alliance (unions, NGOs, universities) reject
it, especially since their main concerns – respect for the envir-
onment, workers' rights, social exclusion, foreign debt, democ-

Nevertheless, although there does seem to be a call for
1.7
greater European involvement in Latin American society,
in
particular from leading sections of society, the EU must make a
concerted effort to involve civil society more closely in its
strategy. Decisive political commitment, coupled with adequate
and effective information, and the involvement of civil society,
is the only way to show that the project is mutually beneficial.
The EU must not make the same mistake as the FTAA.

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1.8
The EU must also take note of the failure of the WTO
multilateral negotiations in Cancun and bear in mind that its
international partners, like the USA, have decided to use other
means, such as bilateralism or bi-regionalism, to further inter-
national trade. In the eyes of the United States the Cancun
failure is another reason for pressing ahead with the FTAA
negotiations. Against this backdrop, it is clear to the EESC that
the EU and MERCOSUR must show a stronger political will to
conclude an Association Agreement by overcoming the hesita-
tions and obstacles which any negotiations entail. With a view
to achieving the same objective with the Andean Community
(CAN) and the Central American Common Market (CACM), the
Council of the European Union must give a mandate to the
European Commission so that
it can launch negotiations.
Otherwise, the EU will see its hopes of being a strategic partner
of Latin America diminish, potentially weakening its role in the
process of devising new rules for international trade and global
governance. For cultural, political and economic reasons, the
LAC countries are natural allies and Europe needs them if it is
to redefine its role on the world political stage.

1.9
Therefore the EU cannot afford to adopt a reactive
policy to its LAC partners. It should not wait for progress in
the FTAA negotiations before proceeding with the EU/LAC
strategic partnership. The EU must show real leadership in its
approach to this political and international trade issue.

1.10
The EU cannot remain indifferent to the aspirations
and just concerns of the peoples of LAC and should therefore
give a new political impetus to relations with this region and
step up its efforts to fulfil the commitments agreed at the Rio
Summit in 1999 and the Madrid Summit in 2002. The EU
must therefore redefine its strategy based on the following
points:

— the drawing-up of an action plan and an explicit nego-
tiating timetable containing proposals that also respond to
the interests of the LAC countries,

— trade liberalisation beneficial

to the economies of both

regions,

— greater involvement of organised civil society in all stages

of the negotiations,

— swift conclusion of Association Agreements with the other
regional blocs, such as the Andean Community (CAN) and
the Central American Common Market (CACM),

— revitalisation of the inter-regional political dialogue and,
consequently, a strengthening in the presence of European
ministers in inter-regional forums, such as the meetings of
the EU-Rio Group.

2. The Free Trade Agreement of the Americas

2.1 The background to the FTAA project

Although the idea of uniting all the countries of the
2.1.1
Americas is a long-standing one, the lack of consensus between
the countries has hitherto prevented it from coming to fruition.
The Free Trade Agreement of the Americas (FTAA), which is
currently being negotiated, is a serious attempt to achieve this.
The process is now entering its final phase.

2.1.2
The project is based on a North American initiative of
the 1980s. In May 1982 the Reagan administration launched
the Caribbean Basin Initiative, with the aim of setting up an
economic partnership programme oriented towards trade liber-
alisation and private sector initiative. In January 1988 the US
government signed a free trade agreement with Canada. Talks
on extending this agreement to Mexico were initiated by the
Bush (senior) administration and formalised under the Clinton
administration, with the conclusion of the North American
Free Trade Agreement (NAFTA).

In 1990, President Bush (senior) announced his ‘Enter-
2.1.3
prise for the Americas Initiative’ (EAI) project, which aimed to
create a free trade area for the hemisphere and establish an
investment fund to encourage economic reform, attract interna-
investment and alleviate the debt burden of the Latin
tional
American states.

2.1.4
For their part, the governments of the LAC countries
embraced the idea of a broad economic alliance with enthu-
siasm.

2.1.5
On coming to power, the Clinton administration took
up the idea of uniting the Americas via a free trade agreement.
The first Summit of
in
December 1994 and was attended by the continent's 34 heads
of state and government, with the exception of Cuba (1).

the Americas was held in Miami

— pursuit of a policy supporting regional groupings in Latin

America and the Caribbean,

2.2 Guidelines and key principles of the initiative

— defence of a coherent social model in its relations with LAC

aimed at promoting social cohesion,

— a significant increase in financial resources to reflect the

strategic importance of the region,

— breaking the link between the conclusion of an EU-
MERCOSUR Association Agreement and the end of the
Doha negotiation round,

2.2.1
At the Miami Summit, the participants adopted a Plan
of Action and Declaration of Principles setting out the guide-
lines and key principles of the initiative, the primary objective
of which is to establish a free trade area by phasing out barriers
to trade and investment.

(1) The countries involved in the initiative are: Antigua and Barbuda,
Argentina, the Bahamas, Barbados, Belize, Bolivia, Brazil, Canada,
Chile, Colombia, Costa Rica, Dominica, El Salvador, Ecuador, the
United States, Grenada, Guatemala, Guyana, Haïti, Honduras,
Jamaica, Mexico, Nicaragua, Panama, Paraguay,
the Dominican
Republic, St Lucia, St Kitts and Nevis, St Vincent and the Grena-
dines, Surinam, Trinidad and Tobago, Uruguay and Venezuela.

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2.2.2
The Plan of Action, which is intended to promote
trade,
prosperity through economic integration and free
contained three other chapters: preserving and strengthening
democracy; eradicating poverty and discrimination; and sustain-
able development and conserving the natural environment.

2.4 The phases of the negotiations

2.4.1 Pr e p a r a tor y p h a se

2.2.3
Revisions were made to the Plan of Action at the
Second Summit of the Americas held in Santiago in April
1998, but its basic objectives remained unchanged. The four
chapters were now: education; democracy, justice and human
rights; economic integration and free trade; eradication of
poverty and discrimination. Although the initiative continued
to focus on economic issues, at the request of Brazil, in particu-
lar, emphasis was also placed on social issues through educa-
tion and the alleviation of poverty.

the third Summit of

The plan of action subsequently underwent further
2.2.4
changes. The chapter on education, on which no progress was
made in the negotiations, was dropped. However, at Canada's
instigation, at
the Americas, held in
Quebec in April 2001, the theme of communications (access to
new information and communication technologies) was
included
democracy,
of
increasing economic prosperity and developing human poten-
tial.

strengthening

alongside

those

The FTAA initiative has gone through several phases
2.4.1.1
of negotiations since the Miami summit. The basic structure of
the initiative was defined during the preparatory phase, from
1994 to 1998. Four ministerial meetings were held (June 1995
in Denver, March 1996 in Cartagena, May 1997 in Bélo Hori-
zonte and March 1998 in San José).

for

the

The guidelines

2.4.1.2
the FTAA negotiations were
adopted during this preparatory phase. It was decided that deci-
sions would be adopted by consensus, that the FTAA would
represent a single undertaking and that it would comply with
WTO regulations
insistence of
and disciplines. At
MERCOSUR, particularly Brazil, but against the wishes of the
USA, it was ultimately decided that the FTAA could be compa-
tible with other regional or bilateral agreements and that states
could accede to the agreement either individually or as a
regional bloc. Thereafter, several regions spoke with one voice
in the FTAA negotiating bodies, notably the Andean Com-
the Caribbean Community
munity
(CARICOM) and subsequently also four countries from the
Central American Common Market (CACM), known as CA-
4 (2).

(CAN), MERCOSUR,

2.3 The structure of the negotiations

2.3.1
These summits of heads of state and government –
which are held every three or four years and are designed to
lend support to the main policy outlines drawn up at other
levels of negotiation and signal the parties' political commit-
ment – are part of the extremely complex structure of the
negotiation process. The trade ministers, who meet every 18
months or so to set the overall priorities of the FTAA are the
key political element in the negotiating structure.

2.3.2
The deputy trade ministers jointly form the Trade
Negotiation Committee (TNC), which plays a decisive role by
directing the work of
the nine FTAA Negotiating Groups,
taking decisions on the general outline of the future free trade
agreement and institutional matters and guaranteeing the trans-
parency of the negotiation process.

2.3.3
The remaining pillar of the FTAA is a technical one,
comprising the nine Negotiating Groups of negotiators and
experts in the areas of 1) market access, 2)
investment, 3)
services, 4) government procurement, 5) dispute settlement, 6)
agriculture, 7)
intellectual property rights, 8) subsidies, anti-
dumping and countervailing duties, and 9) competition policy.

A Tripartite Committee formed by the Organisation of
2.3.4
American States (OAS),
the UN Economic Commission for
Latin America and the Caribbean (ECLAC) and the Inter Amer-
ican Development Bank (IADB) provides technical and analy-
tical support to the various groups.

2.4.1.3
During the preparatory phase, the parties also took
steps to gather information, acquire knowledge and lay the
foundations for the future negotiations.

2.4.2 T h e se c ond p h a se

At

the Santiago Summit,

the heads of state and
2.4.2.1
government made a commitment to proceed with the Americas
project. The ministers met
twice during the second phase
(November 1999 in Toronto and April 2000 in Buenos Aires)
and announced that measures to facilitate trade would come
into force in January 2001. In addition, the Negotiating Groups
presented a preliminary draft agreement on the FTAA to the
ministers concerned.

Following pressure from civil society, it was decided
2.4.2.2
to make the preliminary draft agreement available to the public
in order to make the process more transparent. The ministers
reaffirmed their commitment to finalise the project by January
2005 so that it could enter into force in December 2005.

2.4.3 T h i r d p h a se

2.4.3.1
The third phase of the negotiations began with the
Third Summit of the Americas in Quebec in April 2001, when
the heads of state and government issued a declaration setting
out wide-ranging social and economic undertakings. A clause
i.e. agreement was reached that
was adopted on democracy:
consultations would be held if a signatory country abandoned
its democratic institutions. No sanctions were specified.

(2) El Salvador, Guatemala, Honduras and Nicaragua. Costa Rica did

not join them.

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the guidelines

2.4.3.2
The aim of the third phase of the negotiations was
to prepare a more detailed version of the future agreement.
Accordingly, at the 7th ministerial meeting held in Quito in
November 2002, a new draft agreement was published setting
out
the coming
18 months. The ministers also agreed to launch a Hemispheric
Cooperation Programme, aimed at strengthening the ability of
the region's smaller economies to participate in the FTAA. The
Quito meeting marked the beginning of the final phase of the
negotiating process, which is being chaired jointly by the USA
and Brazil.

the negotiations over

for

3. Characteristics of the initiative and obstacles to its

realisation

3.1
The FTAA would be one of the largest free trade areas
in the world, with a market of over 800 million people, an
overall GDP of over EUR 11 trillion and trade amounting to
EUR 3.5 trillion.

However, one characteristic feature of this process is
3.2
that it is asymmetrical and polarised towards the USA. For all
but a few of the countries, the USA is the primary trading
partner. The sole exceptions are Argentina, Paraguay and
Uruguay, whose main foreign trading partner is Brazil.

date, the only measure taken to compensate for these asymme-
tries is the introduction of longer deadlines for trade liberalisa-
tion in small economies.

3.6
The effects of the absence of a social clause are likely to
be even more marked in view of the fact that, over the past ten
years, orthodox structural adjustment policies have led to steep
rises in unemployment and increased poverty in the LAC,
where, according to ECLAC,
the number of poor people
amounted to more than 220 million, or 43.4 % of the popula-
tion, in 2002 (5). The continent's social, economic and political
problems have not facilitated the progress of talks since the
Quebec Summit.

3.7
Despite a sustained twenty-year reform programme, the
LAC economies are still finding it difficult to ensure rigorous,
stable and competitive economic growth. A study by the ECLA
shows that for the second year running, there has been nega-
tive growth in GDP, with a figure of -1.9 % for 2002, thus
completing a period which it describes as ‘half a lost decade for
the region as a whole’.

3.3
In 2000, the North American economy alone repre-
sented 77 % of the GDP of the Americas as a whole, and 62 %
of its exports. Brazil, Canada and Mexico represented, respec-
tively, 6 %, 5 % and 4 % of
the
remaining 30 countries produced 8 %. Small countries such as
Nicaragua and Haiti together represented only 1/2000 of the
total. NAFTA and MERCOSUR represented 87 % and 9 % of
total GDP and 90 % and 6 % of hemispheric trade, respectively.

the region's GDP, whilst

3.8
The situation is particularly serious in Argentina, which
has been facing an unprecedented crisis since December 2001.
After the crisis broke, Argentina preferred to move closer to its
MERCOSUR partners in order to strengthen regional integra-
tion, establish closer ties with Europe and distance itself from
the strategy of automatic alignment with Washington. The
President of Brazil, Luiz Inácio Lula da Silva, has also made the
development of MERCOSUR and relations with the EU a
priority.

3.4
The data also point to an asymmetry in per capita GDP:
the USA is in first place, with a per capita GDP of EUR 34,400,
followed by Canada (EUR 21,930), Argentina (EUR 6,950),
Uruguay (EUR 6,000), Mexico (EUR 5,560) and Brazil (EUR
3,060). At the other extreme, the per capita GDP of Nicaragua
and Haiti was EUR 745 and EUR 480 respectively. The project
therefore incorporates very different economies with widely
varying levels of development (3).

for whom no development

These asymmetries and inequalities raise the problem of
3.5
the potentially profound impact of economic integration on
the small economies,
fund or
security net has been provided. The stakes involved in inte-
grating these economies into the FTAA process are consider-
able. These 25 countries (4) face a number of handicaps in the
negotiation process. One major obstacle is the lack of sufficient
financial and human resources to pursue the negotiations. To

(3) The source for all the figures is the European Commission's DG

Trade.

(4) Antigua and Barbuda, Bahamas, Barbados, Belize, Bolivia, Costa
Rica, Dominica, El Salvador, Ecuador, Grenada, Guatemala, Guyana,
Haïti, Honduras, Jamaica, Nicaragua, Panama, Paraguay, the Domin-
ican Republic, St Lucia, St Kitts and Nevis, St. Vincent and the
Grenadines, Surinam, Trinidad and Tobago, Uruguay.

3.9
Brasilia does not intend to make a drastic U-turn in its
position with regard to the FTAA. Its strategy seeks, above all,
to organise negotiations between MERCOSUR,
the CAN
(Andean Community), Chile, the Caribbean countries, Guyana
and Surinam, with a view to establishing a Free Trade Area of
South America (FTASA) that would enable LAC countries to
strengthen their position in the FTAA negotiations.
In
December 2002 the parties involved in the project agreed on a
timescale,
including the abolition of customs barriers by the
end of 2003 and the entry into force of the agreement by
2005. Consistent with this idea of ‘linking the whole of South
America to MERCOSUR’ by the end of 2003, the Lula adminis-
tration succeeded in getting Peru to sign an Association Agree-
ment with MERCOSUR (August 2003) which is very similar to
those concluded with Bolivia in December 1995 and Chile in
June 1996. MERCOSUR also hopes to conclude an Association
Agreement with Venezuela and launch another with Colombia.
In terms of its objectives and timescale, this project offers an
alternative to the FTAA process.

(5) Annual survey by the UN Economic Commission for Latin America
and the Caribbean on the Social Panorama of Latin America 2002-
2003.

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3.10
For its part, the USA has not hesitated to use bilateral
agreements – as demonstrated by the signature of an agreement
with Chile in December 2002 – to push the FTAA forward,
particularly since the adoption of the fast track or TPA (6) in
July 2002. Following the WTO Ministerial Conference in
Cancun,
the trend towards bilateralism is likely to gather
momentum.

3.11
However, the protectionist measures recently adopted
in the USA are having an impact on the TPA. After increasing
the tariffs protecting the US steel and wood product industries,
the USA has adopted a Farm Bill which grants $180 billion of
subsidies to agricultural producers over ten years. These protec-
tionist measures are re-igniting tensions between the USA and
certain Latin American countries, principally Brazil.

3.12
Export subsidies have become one of the main obsta-
cles to the successful completion of the FTAA. Many Latin
American countries are pressuring the USA to lower their agri-
cultural subsidies. However, the Bush administration is pushing
for the issue of agricultural subsidies and use of ‘anti-dumping’
and compensatory duties to be discussed within the WTO. But
the failure of the multilateral negotiations in Cancun illustrates
the difficulties which rich countries, like the USA and the EU,
encounter especially when agricultural issues are addressed in
the context of international negotiations.

that

Recognising the failure of the multilateral trade nego-
3.13
tiations, the USA announced at the closing press conference of
the summit
it was prepared to work at bilateral and
regional level. If the USA follows up these words, it is likely
that the American negotiators will return to the agricultural
negotiating table in connection with the FTAA project. That
would enable
to
surmount one of the most difficult obstacles and, consequently,
to make significant progress.

the pan-American integration process

3.14
Nevertheless, despite the TPA, the executive's nego-
tiating powers are constrained by the Congress. The Trade Act
(establishing the TPA) provides for review procedures, which
may well prove onerous, especially in connection with subsi-
dies and ‘anti-dumping’ and compensatory duties.
It also
provides for a consultation procedure, which gives Congress a
substantial right of supervision over the negotiations.

4. Civil society players and the Americas project

4.1 Institutional involvement

4.1.1
The FTAA's governmental process is followed by citi-
zens' organisations, whose participation in the FTAA is envi-
saged. Going beyond that participation,
these organisations
meet alongside ministerial and presidential meetings in order to
influence the course of the negotiations.

4.1.2
Civil society participation mechanisms are divided
between the initiatives set up by the bodies involved in the

(6) The fast track, recently rebaptised the Trade Promotion Authority
(TPA), is the authorisation given by the US Congress to the execu-
tive to negotiate trade agreements without having to return to
Congress at each stage. Congress only ratifies or rejects the agree-
ment once it has been concluded.

FTAA process and those emanating from social movements. As
part of the FTAA process a mechanism has been set up by the
committee of government representatives on the participation
of civil society, in order to pass on the proposals originating
from employers, workers, environmental groups and academic
circles. This is an indirect form of participation. Indeed, these
groups can write to the committee, which will then forward
their recommendations to the Trade Negotiations Committee
(TNC) or the appropriate negotiation group.

4.1.3
In order to encourage the participation of civil society,
government officials responsible for the Americas project held
a regional symposium on the FTAA at Mérida in Mexico in July
2002. This first regional forum for public discussion attracted
100 members of the public. The aim was also to provide infor-
mation and explanations on the process itself.

taken at

A second initiative was

4.1.4
the ministerial
meeting in Quito in November 2002: the trade ministers sepa-
rately met representatives of the private sector and those of
civil society (environmental groups, trade unions, parliamentar-
ians and indigenous peoples). It was the first time that repre-
sentatives of civil society had been able to address government
ministers directly.

4.2 Stance of civil society on the FTAA project

4.2.1
Business circles in the Americas took an interest in the
FTAA project very early on. Indeed, since the first ministerial
meeting, in Denver in 1995, they have tried to organise meet-
ings in parallel to the official process in order to promote the
private sector's interests. More than 1,500 business people have
been involved in these meetings through the Americas Business
Forum (ABF) which groups together business circles on a
sectoral and national basis.

The Americas Business Forum, which is in favour of
4.2.2
the Americas'
integration project, seeks to contribute to the
debate by making technical and data analyses of the strategic
objectives and the aspirations of the private sector. It also helps
to distribute information on the process and establish personal
and institutional
links between heads of companies and the
organisations of the Americas.

4.2.3
During the annual meetings of the Forum, conferences
and seminars are held on key themes concerning the integra-
tion of the hemisphere. Although the annual meetings planned
by the Forum are not included officially in the negotiating
process, objectively speaking the work the Forum carries out
has a strong influence on the shaping of the project. Indeed,
the recommendations made by the private sector are taken into
account by each of
these
recommendations
rapid implementation of
the
measures to facilitate trade, and the leaders have in fact agreed
that the measures should come into force before the end of the
negotiations.

the negotiation groups. One of

concerns

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4.2.4
As regards the other sectors of civil society, such as
the trade union movement, NGOs and university research
centres, the contribution of trade is much less obvious. The
social organisations have taken their own steps to get their
views across on the integration process. Among the various
initiatives is that of the Hemispheric Social Alliance (HSA),
which is a major network of inter-American social organisa-
tions and movements. It also covers a wide range of positions
which vary from reform to rejection of the FTAA project.
Although this initiative materialised in 1997, civil society
mobilised much earlier than that.

4.2.5
Just like the employers' sector, the trade unions took a
very early interest in the Americas project. They, too, were
present on the occasion of the ministerial meeting in Denver.
The trade union movement, supported by the Inter-American
Regional Organisation – the American branch of the Interna-
tional Confederation of Free Trade Unions (ICFTU) – set up a
the end of which a declaration was
parallel conference at
drawn up setting out the concerns and demands of the partici-
pants.

4.2.6
At the next ministerial meeting in Cartagena, the trade
union movement did not confine itself to drawing up a new
document for consideration: it also sought to exert pressure on
the government representatives. Moreover, in their conclusions
the latter stressed the importance of encouraging better recog-
nition and promotion of workers' rights and the need for their
respective governments to envisage appropriate measures in
this field.

4.2.7
The movement was extended to include other social
groups. Thus, at the third ministerial meeting, in Belo Hori-
zonte in May 1997, delegates of the coalitions opposed to free
trade (NGOs, certain research centres, environmental associa-
tions,
in the
meeting of representatives of the trade union movement of the
American continent, giving rise to the Hemispheric Social Alli-
ance which appeared as such the following year when the
Second Summit of the Americas was held.

feminists and indigenous peoples)

took part

4.2.8
To mark the occasion, the HSA held the first Summit
of the Peoples of the Americas, from which emerged a docu-
ment entitled Alternatives for the Americas. A second Summit
of the Peoples was held to coincide with the Third Summit of
the Americas in April 2001 in Quebec, bringing together more
than 2,000 representatives of movements and organisations
throughout the Americas, including Cuba.

4.2.9 Mindful of the objective influence of business circles
in the context of the FTAA negotiations, the HSA seeks to
promote a different type of project by proposing the inclusion
of social and environmental measures in the future agreement.
In this way it hopes to guarantee employment and the quality
of jobs, and to avoid ‘ecological dumping’ by taking account of
environmental costs in exports. But many of the Latin Amer-
ican and Caribbean (LAC) governments oppose measures of

this type, regarding them as a pretext for protectionism. In
addition, since 2001 the American position has not been
conducive to progress in these areas. In contrast to the develop-
ments with NAFTA, the plan to include clauses on employment
and the environment lost ground in the official FTAA negotia-
tions, with the USA repeatedly signalling its unwillingness to
address these issues in the discussions.

4.2.10
The Hemispheric Social Alliance also made known
its opposition to the systematic liberalisation of government
procurement, health services, education and investment.

The HSA has also condemned the lack of transpar-
4.2.11
ency in the process. It is currently trying to organise a consulta-
tion on the FTAA project,
to be carried out over a year
between 2003 and 2004 and covering the whole Americas
region.

4.2.12
In this movement of opposition to the creation of
the FTAA, as at present negotiated, certain parliamentarians
from the Americas have also sought to draw attention to their
views on the project. Members of more than 164 provincial or
national parliaments, as well as delegates from regional parlia-
ments in 34 countries involved in the FTAA negotiations and
Cuba, have met several times in a forum called the Parliamen-
tary Conference of the Americas (COPA) in order to express
their misgivings with regard to the Americas project.

In the declaration it adopted at its second general
4.2.13
assembly in July 2000, the COPA called on the heads of state
and government to take account of the level of development of
the countries involved in the FTAA project, and to ensure that
parliamentarians from all quarters took part, in order to encou-
rage transparency.

4.2.14
Concurrently with the ministerial meeting in Quito,
there was a continental meeting of parliamentarians who issued
a resolution rejecting the FTAA and proposing that the govern-
ments should opt instead to strengthen the Latin American and
Caribbean integration agreements, such as MERCOSUR,
the
CAN, CARICOM, the CACM etc.

4.3 Concerns and expectations of civil society

4.3.1
The attitudes of civil society groups in the LAC region
towards the FTAA project vary. The groups which oppose the
FTAA regret that key elements of civil society, such as unions
and representative NGOs, have not been effectively involved in
the decision-making process and that only the American Busi-
ness Forum, which, by contrast, supports the FTAA project, has
had direct access to negotiators and a clear influence on
working documents during the negotiations.

4.3.2
The main fear is that the process will continue in a
non-transparent way and that the results of the negotiations
will be presented to civil society as a ‘fait accompli’, leaving
them with little scope for influence.

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4.3.3
The unions and other social players grouped around
the HSA complain that government and big business are conti-
nuing to shape the future agreement to integrate the Americas
without taking into account their main concerns: the environ-
ment, workers' rights, job insecurity, unemployment, poverty,
social exclusion, the widening gap between the various econo-
mies of the continent, agricultural protectionism and American
export subsidies affecting LAC countries, foreign debt, democ-
racy (the call for governments to organise consultation on the
FTAA), as well as respect for human rights, exploitation of
minors and respect for indigenous communities.

opinion,

4.3.4
Although the majority of social movements (NGOs,
trade union organisations, research institutes, etc.) support the
process of regional
integration, they have expressed serious
misgivings on integration agreements such as the FTAA. In
as
their
MERCOSUR) are seen as a potential benchmark for integrating
the Americas, as they include political, social, cultural and stra-
tegic aspects. On the other hand, the FTAA, in its current form,
would only exacerbate the imbalances between the USA and
LAC, especially when the former pursues protectionist policies
affecting the international competitiveness of the latter.

integration

achieve

(such

steps

to

that

they oppose an agreement

4.3.5
The social players are in favour of integration that is
not limited to trade and, in contrast to the great majority of
fails to
LAC governments,
provide any guarantees on social and environmental matters.
They call for respect for human rights to be properly taken
into account. They have stated that they would be less inclined
to support a USA-LAC agreement than an EU-LAC agreement.
They claim to value not only the emphasis that the EU places
on social, environmental and human rights issues, both intern-
level, but also the consistency with
ally and at international
which these
they
are observed. However,
complain of the lack of energy and will demonstrated by the
EU's strategy on Latin America.

requirements

4.3.6
The HSA also calls for governments to make the nego-
tiations transparent and to hold an open debate on the FTAA
with all components of civil society in order to examine the
viability and potential consequences of such an agreement for
the countries of the Americas.

4.3.7
As regards the business sector, many companies in the
LAC countries, headed by agrobusiness, see the FTAA as a way
of penetrating the vast US market. They feel that the FTAA
represents an important means of breaking out of the vicious
circle of debt of the 1980s, consolidating liberal reforms and
emerging from international isolation. Others are less enthu-
siastic, however. This is the case, for example, with the petro-
chemicals sector in Latin America, which reiterated its opposi-

tion to the FTAA at its last meeting, held (on 11 November
2003) in conjunction with the annual petrochemical meeting
of the Latin American Petrochemical and Chemical Association
(APLA).

4.3.8
Some business sectors in Latin America, and particu-
larly in Brazil, are reluctant to move forward in the FTAA
negotiations. This applies particularly to some companies
which are very concerned about the competition from Amer-
ican and Canadian firms which could result from the conclu-
sion of the FTAA. In contrast, a large number of firms in the
secondary and tertiary sectors in the USA and Canada see the
FTAA as an opportunity to penetrate Latin American markets,
particularly the Brazilian market.

4.3.9
Nevertheless, there are signs that the position of the
Brazilian private sector is shifting. Although for a long time the
national business community and the Brazilian foreign ministry
shared the same negative view of the FTTA project, the former
have started to warm to the idea of greater trade liberalisation
and now profess to be willing to face external competition. The
national private sector has begun to put pressure on the Lula
administration to soften its stance in the FTTA negotiations so
that the agreement can be concluded on schedule.

4.4 Views and concerns of the political decision-makers

4.4.1
There is a real gulf between the vision of civil society
and that of government as to the course to be followed
towards integration of the Americas. The LAC governments,
which are predominantly concerned with economic liberalisa-
tion and, in particular, with penetrating the vast US market, are
negotiating a continental
trade agreement with the aim of
encouraging the US to end its protectionist agricultural policy.

4.4.2
Following the example of MERCOSUR members, they
believe the FTAA may encourage the EU to press ahead with
its negotiations with LAC countries and with the WTO multi-
lateral negotiations. In their opinion, the FTAA, the negotia-
tions with the EU and the WTO are three inter-linked and
inter-dependent processes. The firm position adopted by the
developing countries, through the Group of 21 (G21, also
called G20 plus), in the face of the reluctance of the rich coun-
tries to make concessions in the agricultural field during the
Cancun Ministerial Conference and the breakdown of these
negotiations could, to some extent, be interpreted as a setback
for multilateralism. The stalled multilateral negotiations seem to
have opened the way for regional, bilateral and bi-regional stra-
tegies. As was pointed out above, the USA makes no secret of
its desire to push forward with such agreements. Emerging
powers like China and Brazil have also indicated their willing-
ness to move down this road.

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4.4.3
The South American bloc is of the opinion that, in
contrast to the offer made by the USA concerning agriculture,
the EU's offer is far from clear. It feels that simple negotiation
on agricultural products is not enough; export subsidies must
also be tackled. On these issues, the FTAA appears to offer
more hope than the EU negotiations. Nonetheless, the negotia-
tions with the EU appear easier than those on the FTAA: the
former entail bi-regional negotiations while the latter involve a
large number of players and sometimes very different propo-
sals. In the negotiations on the EU-MERCOSUR Association
Agreement, the EU, whose common standpoint is represented
by the European Commission, has consistently encouraged the
MERCOSUR countries, with a measure of success, to establish a
common position of their own. In bi-regional negotiations the
proposals tabled by the parties are, in this way, limited to two,
which makes negotiation easier.

5. Europe-Latin America/Caribbean relations

5.1 Background

(in particular Spain, France,

As a result of various historical factors, certain Euro-
5.1.1
pean countries
the United
Kingdom, Portugal and the Netherlands) have had long-
standing and more or less close bilateral relations with LAC
countries. Despite the cultural diversity and heterogeneity of
LAC countries, their cultural identity is deeply imbued with the
values which shaped the character and history of Europe. The
prevalence in this part of the world of such enlightened philo-
sophical ideals as democracy, the rule of law, the idea of liberty
and human rights are conducive to closer EU-LAC relations.

5.1.2
Despite this, formalising Euro-Latin American relations
is a new development. Since the beginning of the 20th century,
Latin American has developed unequal and almost exclusive
diplomatic relations with the USA. On the other hand, Europe
has always had formal relations with the Caribbean countries
(except for Cuba), under the ACP agreements.

5.1.4
The armed conflicts in Central America during the
1980s and the establishment of European political cooperation
led the EEC to play an important political role as intermediary.
The talks held in San José (Costa Rica)
in September 1984
brought together the foreign affairs ministers from the EEC,
Spain and Portugal alongside representatives
from Central
America. The talks aimed to restore peace and discuss measures
to bring democracy to the continent and marked a renewal of
EEC/Latin America relations (culminating in the ‘San José
process’).

5.1.5 When Spain and Portugal became members of the
European Community, this process of political dialogue was
extended to the rest of the region, with the discussion partner
being the Rio Group. The Rio Group was set up in 1986 by
Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador,
Mexico, Paraguay, Peru, Uruguay and Venezuela as a forum for
the discussion of political problems,
the development of
external relations and regional integration issues. It was subse-
quently joined by other Latin American countries. The Group
was the natural negotiating partner for the EC/EU in Latin
America in the field of political dialogue. Bi-regional dialogue
started in 1987 and was institutionalised in 1990.

5.1.6
Relations between the two continents were further
boosted by the end of bi-polarism, the will shown by Europe to
make the Community a player on the world stage, political
stability, the return to democracy and Latin America's adoption
of a more open economic policy. Historic and cultural factors,
common principles and legal and philosophical values also
played a part in facilitating rapprochement between the two
continents.

5.2 Features of relations

Although Europe's return to Latin America began
5.1.3
almost thirty years ago,
it was not until the 1990s that –
largely as a result of the impetus provided by the accession of
Spain and Portugal – the EC/EU (7) developed a strategy to
forge relations with the entire LAC area. Acting on the Euro-
pean wish to develop preferential relations with Latin American
countries, the EEC signed a series of sectoral, ‘first generation’
followed by ‘second generation’
agreements in the 1960s,
agreements in the 1970s, covering a range of sectors.

(7) The Single Act transformed the European Economic Community
into the European Community, which subsequently became the
European Union with the 1992 Treaty of Maastricht.

5.2.1 Whilst the USA established NAFTA and launched the
FTAA project in 1994, Europe sought to secure a different type
of partnership with the Latin American countries. Mindful of
the diversity of Latin America,
the EU tried to develop a
strategy based on different approaches, according to national
and regional situations. In other words, it tried to take account
of the heterogeneity of the continent, which the FTAA does
not do. Therefore the EU proposed a partnership based on
dialogue organised in sub-groups at regional
level, using a
range of instruments tailored to the specific political and socio-
economic situations of each group.

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5.2.2
The new European strategy drawn up by Commis-
sioner Manuel Marin from the Santer Commission and ratified
by the Council in October 1994 sought to establish a form of
association based on the third-generation and the new, fourth-
generation agreements with Latin America. The former empha-
sise regional integration and cooperation and contain a future
developments clause allowing signatories to step up their level
of cooperation and a democracy clause guaranteeing respect
for basic principles reflecting common values. The fourth
generation agreements include these measures and also provide
for the conclusion of trade agreements.

5.2.3
The austerity measures and privatisations carried out
during the early 1990s in the Latin American countries
attracted private investment from Europe, thereby promoting
rapprochement between the two regions. Between 1996 and
1999, the EU provided the lion's share of inward investment
into Latin America, which became the prime destination for
European investment in emerging markets. Over this period,
European investment grew from $13.289 billion to $42.226
billion. In addition, bi-regional trade doubled between 1990
and 2000. Export of goods from the EU to Latin America grew
from EUR 17 billion to just over EUR 54 billion, and exports
from Latin America to the EU grew from EUR 27 billion to
EUR 49 billion. The EU thereby became the second largest
investor and trading partner of Latin America, and the largest
for MERCOSUR and Chile.

5.2.4
This doubly positive situation, i.e. confirmed political
will on both sides and clear economic rapprochement, gave
rise to the idea of boosting relations in qualitative terms by
holding a summit in Rio de Janeiro in June 1999 bringing
together the 48 heads of state and government of the EU and
LAC, including Cuba.

The summit was a historic milestone. It showed the
5.2.5
EU to be an increasingly mature player on the international
stage and the growing interest of the industrialised countries in
the LAC region. The summit also aimed to provide a response
to the unipolarism of the post-cold war period and instead
favour regionalism as a new force in international relations.
Some were quick to see this as the first step towards the crea-
tion of a multi-polar world, no longer dominated by the USA.

5.2.6
The summit produced two documents: a declaration
and an action plan designed to form the basis of a new stra-
tegic partnership between the two sides of the Atlantic. The
69-point declaration called for the strengthening of relations
on political, economic, scientific, cultural, educational, social
and human issues, with a view to establishing a strategic asso-
ciation. The accompanying action plan contained 55 priorities.

5.2.7
Owing to the number of areas covered and priorities
defined, these documents failed to focus on a clear line of
action. Consequently, the bi-regional follow-up group of high-
level officials identified 11 priorities at its first meeting at
Tuusula (Finland, November 1999) (8). Some progress has been
made regarding priorities 5, 7 and 8. In the case of priority 5
the Bi-regional Coordination Mechanism was established to
combat drugs. The progress made with regard to priority 7 is
due to the signing of Association Agreements with Mexico and
Chile. Finally, in the case of priority 8, a specific bi-regional
dialogue on science and technology was launched. This led to
the Brasilia Ministerial Conference (March 2000) and the adop-
tion of the Brasilia Statement and an EU-LAC Action Plan on
science and technology. The latter, which identified health and
quality of
sustainable development and urbanisation,
cultural heritage and the information society as priority areas
for action, was presented to the Second EU-Latin America/
Caribbean Summit held in May 2002 in Madrid.

life,

5.2.8
Nevertheless, despite the drawing-up of the Tuusula
list of priorities and the achievement of some objectives, the
lack of clear direction in bi-regional
relations was again
apparent at the Madrid Summit.

The Commission budget provides for EUR 323 million
5.2.9
a year, on average, over the period 2000-2006 (9)
for the
whole of Latin America, which is clearly inadequate given the
importance of the project and all that is at stake. Thus Latin
America continues to be one of the regions which benefits least
from Community aid.

(8) 1. Deepen and enhance existing cooperation and consultations in
international forums and extend them to all matters of common
interest; 2. Promote and protect human rights, especially those of
the most vulnerable groups, and prevent and combat xenophobia,
manifestations of racism and other intolerance; 3. Women – adopt
programmes and projects related to priority areas contained in the
Beijing Declaration; 4. Enhance cooperation programmes in the area
of environmental and natural disasters; 5. Drugs – implement the
Panama Global Action Plan, including measures against illicit arms
traffic; 6. Formulate proposals for bi-regional cooperation directed
to establishing mechanisms to promote a stable and dynamic global
financial
economic and financial system, strengthening national
systems and creating specific programmes to help the economically
relatively less developed countries; 7. Promote trade, including SMEs
and business forums; 8: Provide support for bi-regional cooperation
in the fields of education and university studies as well as research
and new technologies; 9. Cultural heritage, EU-Latin America/Carib-
bean cultural forum; 10. Establishment of a joint initiative on par-
ticular aspects of the information society; 11. Support activities
related to research, postgraduate studies and training in the field of
integration processes. Communication from the Commission to the
Council and the European Parliament on the Follow-up to the First
Summit organised between Latin America, the Caribbean and the
European Union, Brussels, 31 October 200, COM(2000) 670 final.
(9) The total budget of EUR 2,264 million is allocated over the period
as follows: 2000 –
EUR 336.25
million; 2002 – EUR 315 million; 2003 – EUR 310 million;
2004 – EUR 310 million; 2005 – EUR 310 million; 2006 – EUR
315 million.

EUR 368.37 million; 2001 –

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5.2.10
Regarding the negotiations themselves, the Madrid
summit, which was held in the political context of post-11
September, produced little in the way of tangible results. Thus
the EU chose to focus on issues of security and terrorism
which dominated discussions, whilst LAC countries were far
more interested in economic and trade aspects. This divergence
of priorities had already been noted at the Rio summit, at
which Europe focused on the themes of governance and
poverty, whilst the LAC countries were more interested in
economic relations and their repercussions on employment. It
is essential that the third summit, which will be held in Mexico
in May 2004, define an agenda that is built around a true
common denominator.

5.3 Current state of relations

5.3.1
The main achievement of Rio was undoubtedly the
launch of trade negotiations between the EU and MERCOSUR.
The agreement concluded between Mexico and the EU entered
into force in 2000 while Chile concluded an agreement with
the EU at
in 2002. These agreements
included the three pillars of the European strategy for Latin
America: political dialogue, cooperation and economic and
commercial integration. Apart from the agreement with Chile,
however, it is hard to say what progress was actually made in
Madrid with regard to this new strategic alliance.

the Madrid summit

the Madrid summit,

5.3.2
Paradoxically, the Latin America regional process, as
advocated by the EU, has so far failed to conclude association
agreements with Europe. At
the EU
proposed launching negotiations with the CAN and the CACM
through political dialogue and cooperation, which came to an
end in October 2003. On the other hand, the start of trade
negotiations depends on the conclusion of the Doha Round of
multilateral trade negotiations, which is scheduled for the end
of 2004, and developments within the CAN and CACM.

5.3.3
For its part, MERCOSUR, which has forged the stron-
gest political and economic ties with Europe, has still not
presented its overall offer for the negotiations on the lowering
customs tariffs, particularly on agricultural products. Should
agriculture prove a major sticking point in the negotiations, it
is up to the EU to ensure that any association agreement does
not clash with the political objectives of the EU, such as public
health, intellectual property and sustainable development.

Given the European strategy of negotiating with these
5.3.4
regional blocs, it is surprising that the EU has given priority to
Mexico and to Chile, both countries being far from the integra-
tionalist model and closer to Washington's plans for hemi-
spheric integration. So, contrary to the Joint Declaration and
Action Plan approved at the Rio summit, which sought to steer

EU-LAC relations towards a new strategic relationship, the EU's
actions to date have been a reaction to the FTAA project.

5.3.5 Most regional groupings in Latin America wish to
develop trade relations with other players on the world stage
besides the United States, first and foremost with the EU. By
diversifying their external relations and especially by developing
political and economic ties with the EU, LAC groups,
like
MERCOSUR, hope to be perceived as much less peripheral in
international affairs. A more active approach by the EU in this
regard could make an important contribution to the continua-
tion and consolidation of these regional groupings, and help to
change the shape of alliances and increase the clout of LAC
countries in the FTAA negotiations. This new strategic partner-
ship could also enable both sides to make their views heard in
multilateral forums, when their views and interests coincide.

5.3.6
However, the EESC takes the view that the preferential
agreements which the EU will conclude with MERCOSUR, the
CAN and the CACM must comply with Article 24 of GATT/
WTO (10).

5.3.7
These future agreements must also take account of the
interests of large and small agricultural undertakings, both in
Europe and LAC, and respect social harmony in the rural com-
munity.

5.4 The role of organised civil society in EU/LAC relations

the

Recognising

5.4.1
to
EU's
strengthening its relations with LAC, the EESC closely monitors
developments in these relations. It has, on many occasions,
expressed its views on the need for greater involvement of
organised civil society in all stages of the process.

commitment

strategic

In various opinions on Latin America (11) the EESC has
5.4.2
highlighted the need, with regard to political and trade issues,
to strengthen the social aspects of relations between the EU
and the regions of Latin America and the Caribbean in terms of
both respect for human and workers' rights and strengthening
social cohesion.

5.4.3 With a view to increasing the involvement of civil
society, the EESC plays an active role in the preparation of
meetings between representatives of organised civil society in
the EU and LAC. Meetings were held in Rio de Janeiro (1999)
and Mexico (2002) in conjunction with the summits of heads
of state and government from the EU, Latin America and the
Caribbean.

5.4.4
To the same end, the EESC is currently preparing a
third meeting of organised civil society, to be held in Mexico in
2004 in conjunction with the next summit of heads of state
and government.

(10) Article 24 allows several contracting parties to discriminate against
others when they enter into arrangements which meet the criteria
for a customs union or free trade area. Specifically, the arrange-
ments must satisfy the following criteria: elimination of customs
duties and other regulations on the main part of the trade between
the participating countries; customs duties and other regulations
applicable to third countries or their incidence must not be higher
of more restrictive than before the formation of the customs union
or free trade area; all agreements providing for the progressive
formation of a customs union or free trade area must contain a
plan and a schedule for its completion within a reasonable length
of time.

(11) OJ C 169 of 16.6.1999 (rapporteur: Mr Zufiaur); OJ C 260 of
17.9.2001 (rapporteur: Mr Zufiaur); OJ C 94 of 18.4.2002 (rappor-
teur: Mr Gafo Fernández). The Committee is currently drawing up
an opinion on Social cohesion in Latin America and the Caribbean
(rapporteur: Mr Zufiaur).

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5.4.5
A good example of this strategy is the meetings held
between the EESC and the MERCOSUR Economic and Social
Consultative Forum (FCES). The purpose of these meetings is to
promote greater involvement of organised civil society in all
areas of the bi-regional negotiations conducted in connection
with the future association agreement between the EU and
MERCOSUR.

5.4.6
At the last meeting between the EESC and the FCES
held on 5 and 6 May 2003, the two institutions called on the
negotiating parties to strengthen the social aspects of the agree-
ment under negotiation by making explicit
reference to
MERCOSUR's Workers' Rights Declaration (the Declaración
socio-laboral), the EU Charter of Fundamental Rights and the
ILO's Declaration of Fundamental Principles and Rights at
Work of 1998.

5.4.7
The two organisations have also called for concrete
forms of participation in the negotiations on the association
agreement, arguing that the success of the process is condi-
tional on the full
involvement of representative civil society
organisations from the two regions in all areas of discussion.

As

regards other

institutional meetings,

those of
5.4.8
sectoral organisations which seek to promote the Transatlantic
Dialogue, such as the EU-MERCOSUR Business Forum and the
newly established EU-MERCOSUR Labour Forum, and to influ-
ence policy decisions that affect their interests are likely to
assume growing importance.

6. The strategic partnership between the EU and LAC in

the post-Cancun world

6.1 The repercussions of the Cancun failure

6.1.1 Many Latin American countries are currently facing
economic difficulties and are desperately seeking economic
opportunities. Some of these countries which are also CAN or
MERCOSUR members would be willing to give up their
regional commitments in favour of accepting the proposals of
the Bush Administration and signing bilateral trade agreements.
Among these countries are Colombia, Costa Rica, Guatemala,
Peru and El Salvador, who are giving serious consideration to
this option in the post-Cancun world. These countries, together
with Chile and Mexico, are now seeking to dissociate them-
selves from G21, following the example of El Salvador, which
left the group shortly before the end of the Cancun summit.

6.1.2
Despite the first cracks in G21, it is must be empha-
sised that, following the fiasco of the Seattle Ministerial Confer-
ence in December 1999, the world's leading trading powers,
the United States, Japan and the EU, now have to rely on coun-
tries in the multilateral negotiations, such as South Africa,
Brazil, China and India (referred to today as emerging powers),
who are in a position to form coalitions, like G21, which are
capable of blocking progress in the negotiations. Group 21 is
supported in an ad hoc manner and for different reasons by a
front of 90 poor, predominantly African, countries, which are
not however members of Group 21.

their agricultural subsidies, which they consider to have a desta-
bilising impact on their economies. Although the EU showed a
willingness to compromise by proposing to isolate the use of
subsidies which have been demonstrated to have a detrimental
effect on farmers in developing countries, it refused to commit
itself to a date for eliminating these subsidies, as provided for
in the agreement which the Europeans and the Americans
signed in mid-August 2003 in preparation for the Cancun
summit.

6.1.4
A second source of contention which has emerged
alongside agriculture is the issue of the ‘Singapore subjects’, so
called because they were first discussed at
the Ministerial
Conference in Singapore in 1996. The Singapore subjects
(investment, competition, transparency of public procurement
markets and trade facilitation) are of great importance for the
rich countries but problematic for the developing countries.

At Cancun some developing countries reiterated their
6.1.5
opposition to the launch of negotiations on the Singapore
subjects and the liberalisation of services. Faced with the
dogged determination of the rich countries, the poorest coun-
tries, which up till then had always been marginalised in the
negotiations because of their minor importance in world trade
(less than 1 %), stood their ground on this issue.

The poor handling of the cotton issue reinforced this
6.1.6
alliance, which had been formed in Geneva a few months
before the Cancun summit. The final
text offered nothing
concrete on a subject of vital importance for the Sahel coun-
tries (Mali, Burkina Faso, Benin, Chad), which are among the
world's poorest nations, while the negotiations that opened in
Doha were made a ‘development round’, at the initiative of the
EU. The United States refused to make any reduction in the $4
billion worth of subsidies which it grants to its producers every
year. Against this backdrop, the developing countries refused to
fall into line.

6.1.7
the multilateral negotiations in Cancun was inevitable.

Given such firmly entrenched positions, the fiasco of

to global governance. Since the end of

6.1.8
The Cancun failure highlights not only the growing
capacity of the countries of the South to organise to defend
their interests but also a lack of judgement, particularly by the
EU with regard to the G21 alliance. The failure of the talks is a
further threat
the
Second World War, international relations have been regulated
by a framework of rules and international treaties. This body of
rules, often perceived as a spider's web which, as far as is
possible, helps to bring the countries of
the world closer
together, was built around the UN. Despite its weaknesses and
alleged failures, this organisation has succeeded in establishing
a minimal degree of international order. From the start, the EU
has made multilateralism the keystone of its external relations.
The multilateral framework provides, insofar as is possible, a
platform for the collective management of the planet.

6.1.3
One of the main reasons for setting up a coalition of
this kind is the difficulty developing countries have in gaining
access to rich countries' markets. The developing countries
demand that the Americans, Europeans and Japanese abolish

6.1.9
Today, a shadow of doubt hangs over the global legal
architecture and recently there has been a clear trend towards
unilateralism, particularly in the USA, which is a serious blow
against the international legal order patiently constructed over
the last five decades.

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6.1.10
The Cancun failure has added fuel to the crisis of
global governance. At present, the USA is trying to circumvent
the WTO by favouring bilateral alliances with its neighbours.
Bilateralism is one of the methods the USA uses to push ahead
with the FTAA project. Moreover, the Bush Administration has
recently made it clear that, although the war in Iraq had
distracted the USA from the LAC region, it would be resuming
efforts to pursue the Americas project, a statement that was
repeated shortly after the Cancun Ministerial Conference. As
was noted in point 6.1, some Latin-American countries would
be prepared to conclude bilateral agreements with the USA,
thus abandoning their own regional commitments and under-
mining the Latin-American integrationist efforts supported by
the EU.

6.2 Regional strategies in the Americas

6.2.1
The USA perceives the FTAA as a way of boosting its
own global leadership in comparison with major world trade
blocs such as Japan and the EU. The many dimensions of the
FTAA project are proof of its scale. It commits countries to
going well beyond a simple free trade agreement designed to
stimulate trade in goods and services by dismantling customs
barriers. It also aims to encompass issues such as investment
and investor protection, financial markets, intellectual property,
government procurement and competition policy in the discus-
sions.

6.2.2
In reality, an institutional framework is being estab-
lished, based on law and promoting a profound market-driven
economic integration. This means that the plan for integrating
the Americas involves both a process of opening up markets
and the establishment of new laws, standards and regulations
to govern world trade. Given the political and economic power
of the United States, it is highly likely that these rules will be
based upon American law and practice.

6.2.3
If this scenario were to become a reality, it would only
accelerate Europe's loss of influence and complicate matters for
European businesses operating in LAC countries.

6.2.4
The entry into force of NAFTA has already had very
negative consequences for the EU as it has caused a shift in
trade, with European businesses losing half their market share
in Mexico.
In 1990 Europe still accounted for 14.3 % of
Mexican imports, but by 1997 its market share had fallen to
8.5 %. At the same time, the EU only accounted for 3.6 % of
Mexican exports, compared to 12.6 % in the early 1990s. By
contrast, the USA now accounts for 90 % of Mexican exports
and has become the country's main trading partner. Despite the
Association Agreement which the EU rapidly negotiated with

Mexico, the lost market share has not been fully recovered. Too
accustomed to trading with the United States, Mexico is taking
a long time to forge trade links with Europe. The great poten-
tial offered by the EU-Mexico agreement has not yet been
exploited to the full by the two parties.

6.2.5
The NAFTA experience has shown the extent to which
trading patterns can be shifted by such means. This is precisely
the type of trade and investment shift which the FTAA could
cause.

6.2.6
Even though the FTAA project is behind schedule, the
trend to regionalise/continentalise trade in the Americas is
already clear, as a result of the various free trade agreements
negotiated on the continent. At present, 60 % of exports and
50 % of the total imports of 34 countries are carried out within
the Americas, compared to 48 % and 41 % ten years ago. With
the exception of MERCOSUR, whose main trading partner is
the EU, the rest of the LAC region is strongly dependent on
trade with the north of the continent. Almost 50 % of CAN
exports, 45 % of CACM exports and 41 % of CARICOM
exports go to NAFTA. The FTAA would reinforce this trend.

6.3 The EU/LAC strategic partnership

6.3.1
The EU must take due note of the United States' inter-
national strategy in seeking to build its own strategy. This does
not mean that it should set itself up in opposition to the
United States on the international scene but rather that
it
should pursue the European way of promoting the European
model of regional governance to the rest of the world, whilst
respecting existing international rules, with a view to ultimately
building a multi-regional, and hence more balanced, world. The
conclusion of preferential agreements with the various regional
groupings in Latin America would enable them to strengthen
their internal structures and be integrated as individual players
on the international stage.

6.3.2
The EU cannot afford to neglect this world region
since it needs partners to redefine its role in world politics.
LAC is a natural ally for cultural, political and economic
reasons, especially as there is a real desire for closer links with
Europe. As the European Parliament report of October 2001
proposes, the EU must no longer make the conclusion of a free
trade agreement with MERCOSUR dependent on the finalisa-
tion of WTO negotiations (12). This is especially so as the date
set for the conclusion of the Doha Round seems doubtful
because of the difficulty the parties are having in finding a
consensus for moving forward with the multilateral trade nego-
tiations, as evidenced by the failure at Cancun.

(12) European Parliament A global partnership and a common strategy
for relations between the European Union and Latin America,
Committee on Foreign Affairs, Human Rights, Common Security
and Defence Policy (rapporteur: José Ignacio Salafranca Sánchez-
Neyra), 11 October 2001, A5-0336/2001 final.

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6.3.3
It is important for the EU to get to grips with the
Americas project. If it wants to retain its position on the conti-
nent and play a part in developing new rules for international
trade, the EU must as a matter of urgency find the political will
and the financial resources to match its international ambitions
and act as a single voice within international economic institu-
tions (IMF, World Bank, etc.) in order to make its influence felt.

social clause – as well as a clause on the environment – in the
strategic partnership to ensure that the trade agreements signed
with Europe help reduce poverty and the extreme inequalities
which mark the region, as well as mitigating the potential
collateral social risks of trade liberalisation. The purpose of the
social clause would be to enable LAC governments to use EU
funds for income redistribution and thus combat the social
disparities that are a scourge in this part of the world.

Now more than ever there is a clear need for Europe
6.3.4
in the troubled Latin-American/Caribbean continent. The EU
continues to be perceived as a social model and political bench-
mark. Europe must not lose sight of the fact that the great chal-
lenge currently faced by LAC countries is to find an alternative
economic and social model to the ‘Washington consensus’ and
to the plans to integrate with the USA.

It is clear that multilateral negotiations, eastward enlar-
6.3.5
gement, developments on the international stage since 11
September 2001 and the crisis faced by Latin America have all
contributed to a slowdown in relations between the two sides
of the Atlantic. However, the EU does not have only economic
interests in the region, it is a global player. It cannot therefore
do without a consistent overall policy towards this region.

6.3.6
There is a strong demand for change in Latin America,
witness for example the many demonstrations and expressions
of popular discontent in Andean and South American countries
in recent years as well as the election of Luis Inácio Lula da
Silva in Brazil and Néstor Kirchner in Argentina, who have
expressed their willingness to strengthen the region, even
before concluding the FTAA, and to promote relations with the
EU, as shown by the visits the two presidents made to various
European capitals in July 2003.

the next EU-LAC summit

6.3.10 Moreover, as was pointed out above, the EU and
LAC have so far found it difficult to define a real common
agenda. There is a danger that the differences in agendas will
continue at
in Mexico. While
Commissioner Patten wants to put the spotlight on social cohe-
sion at this third summit, so as to help eliminate social inequal-
ities and poverty in the LAC region, the latter believe that it is
through better access to international trade that they can return
to growth and thus fight poverty. As long as the Europeans
and Latin Americans are unable to agree on a common agenda,
or at least reduce the differences in priorities, they will experi-
ence many difficulties in trying to move forward in the ambi-
tious strategic partnership initiative proposed at Rio. Although
the EESC strongly endorses the social cohesion initiative, the
EU must also pay due regard to the priorities of its partners so
as to ensure the success of the Mexico summit. Mindful of the
post-Cancun situation, the EU must not only devote itself to
social issues, which enable it to make its mark on the interna-
tional scene, but also respond to the expectations of LAC,
which are to conclude preferential agreements with the EU.
Europe must seize the opportunity offered by the Mexico
summit to give much-needed impetus to the EU-LAC strategic
partnership, some months before the completion of the FTAA
negotiations.

This need for Europe has yet to be acted upon, which
6.3.7
In fact,
has provoked expressions of regret within Europe.
some MEPs have been quick to point out that, although Europe
has the necessary means to offer LAC an alternative to the
FTAA, the political will has not been forthcoming. This was
reiterated at the Sixteenth EU-Latin America Inter-parliamen-
tary Conference in May 2003.

7. The EESC's proposals

6.3.8 More emphasis must be placed on social and environ-
mental aspects of relations. The EESC endorses Commissioner
Patten's initiative, proposing that social cohesion (13) be one of
the main themes of the discussions at the next EU-LAC summit
(Mexico, 2004).

6.3.9
Given the rise in unemployment, accelerating impov-
erishment and social injustices that LAC societies have experi-
enced over the last ten years, it would be useful to include a

7.1
The Cotonou Agreement, which was concluded between
the EU and the African, Pacific and Caribbean States in June
2000, requires dialogue to be conducted between the institu-
tions and NGOs in a manner whereby the State and civil
society have a complementary role in action taken in the devel-
opment
field. The White Paper on European Governance,
presented in 2001, also underlines the importance of civil
society for defining policies with an international dimension.

(13) Patten C.,

‘Latin America: what has gone wrong? An EU policy
proposal focused on social cohesion’, Communication presented at
the EU-Rio Group Interministerial Forum, Vouliagmeni
(Greece),
28 May 2003.

7.2
Therefore it is within a framework of participation by
civil society that LAC must conduct its relations with the EU,
both in the cooperation programmes and in the negotiations
on agreements under preparation.

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7.3
Up till now, there has been no real, basic strategy for
involving civil society in the negotiations between the EU and
LAC; participation has been largely symbolic. Apart from meet-
ings between the EESC and organised civil society in LAC coun-
tries, most notably at the summit of heads of state and govern-
ment, very little has been done in this regard.

7.4
Given that active citizenship is a key aspect of consoli-
dating democracy and an essential basis for sustainable devel-
opment, and that it is therefore vital to be able to rely on civil
society to provide legitimacy to the EU-LAC strategic partner-
ship and avoid the mistakes made in the FTAA project, so
heavily criticised by the societies of the Americas, the EESC
makes the following proposals:

7.4.1 De fi ni ng a c le a r str a te g y

7.4.1.1
In a more complex world where there are an
increasing number of risks, the European Union must have a
global strategy based on the following values: peace, sustainable
development and human rights, while seeking to build a fairer,
more balanced world.

7.4.1.2
These values and this objective must be borne in
mind in relations with Latin America and the Caribbean so that
the people of this region understand that agreements with the
EU can be a key factor in promoting their own development
and their place on the world stage.

7.4.1.3
tant that the EU increase its financial resources accordingly.

To give practical effect to this strategy, it is impor-

the

Thus,

in
the CAN,

under way with
7.4.1.4
MERCOSUR,
the EU
must, over and above trade and customs-related issues, take the
above-mentioned global strategy into consideration.

the CACM and CARICOM,

negotiations

7.4.1.5
The EU must also provide new impetus to the EU-
LAC dialogue, not only because it represents one of the three
pillars of the association agreements it has signed, or is in the
process of signing, with LAC countries or regions, amongst
others, but also, and above all, because it is the component
which differentiates the association project which the EU is
putting together with LAC from the FTAA. To achieve this, it
is vital for the European ministerial presence at EU-LAC inter-
ministerial fora, along the lines of the EU-Rio Group meetings,
to be equal to the task in hand: bringing about a strategic bi-
regional partnership.

7.4.2 E sta b li sh i ng a n a c ti on p la n a nd ti me ta b le

7.4.2.2
In particular, the European Union must consider the
need for a new negotiating mandate which is not dependent on
the conclusion of the Doha Round.

7.4.2.3
The EESC would like to see the Association Agree-
ment with MERCOSUR signed (or at least announced) during
the May 2004 summit of heads of state and government to be
held in Guadalajara, Mexico.

7.4.3 Pr omoti ng g r e a t e r t r a nsp a r e ncy a n d i nfor ma -

ti on

7.4.3.1
Transparency in the negotiations and information
about successes and obstacles encountered are essential for civil
society to be involved in all stages of the negotiation process.

7.4.3.2
Europe must take initiatives with all sectors of civil
society, explaining the thinking behind its proposals and the
concessions it is ready to make to reach an agreement with the
parties involved.

7.4.4 Su p p or t i ng ste p s
or g a ni sa t i ons

to str e ng t h e n c i vi l

soc i e t y

The European Union has broad experience in civil
7.4.4.1
dialogue, the EESC being one of the most notable examples of
this.

7.4.4.2 Without any intention of exporting its own models,
the EU must support the establishment of similar institutions in
regions which do not already have them or where they are less
effective.

Likewise, support for more or less institutionalised
7.4.4.3
contacts and relations with organisations on both sides of the
Atlantic seems to offer a way of bringing the two sides together
which is very positive for the European strategy.

7.4.5 Comp i li ng i mp a c t st u di e s a nd foste r i ng p oli -
c i e s t o c omb a t p ove r ty a nd p r omot e e mp loy-
me n t

All

7.4.5.1
repercussions
affecting people's everyday life, particularly those who are the
most vulnerable.

integration

processes

have

7.4.5.2 With this in mind, the EU must carry out studies
into the effects of integration and the opening up of markets
and, consequently, provide financial support for policies to
counter poverty and social exclusion and promote employ-
ment.

Given the failure of

the WTO negotiations at
7.4.2.1
Cancun and the North American decision to carry out negotia-
tions aimed at achieving the timetable envisaged for the FTAA,
the European Union must as soon as possible draw up a new
action plan and timetable which are more in line with the new
circumstances.

7.4.6 Pr omoti ng a soci a l c oh e si on p oli cy

7.4.6.1
The European Union should not only view the
agreements with LAC as a chance to gain access to new
markets, but also as an opportunity for the economic and
social development of the populations concerned.

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7.4.6.2
The whole population must benefit
from these
It
agreements, not only those who are already benefiting.
would be a strategic error with the most damaging repercus-
sions if the EU were to be linked to a policy which aggravated
economic and social inequalities in LAC.

The

for a

requirement

cohesion policy
7.4.6.3
backing up the whole process of agreements already negotiated,
or in the process of being so, must be the component which
differentiates the association project which the EU is putting
together with LAC from the FTAA.

social

The EESC welcomes

7.4.6.4
the Commission's initiative
proposing that social cohesion be the topic for discussion at
the Mexico summit.

Nice Treaty, the EESC is recognised as the leading body for
dialogue between the European institutions and civil society
not only in Europe, but also with regard to organised civil
society in non-Member States.

7.4.7.2
The EESC has made use of every opportunity to
carry out this role, but acknowledges that it can – and must –
go further in the dialogue with similar bodies in LAC and seek
other ways of cooperating more closely and effectively.

7.4.7.3
and LAC, the EESC must:

So, at a key moment in relations between the EU

— step up its links with MERCOSUR's ESCF (Economic and

Social Consultative Forum);

7.4.7 Ste p p i ng u p t h e E E SC's r ole i n t r a nsa tla nti c

— gain a better picture of the situation of organised civil

c i v i l di a log u e

society in other LAC regions; and

7.4.7.1
signed between the European
Commission and the EESC in 2001, and in the wake of the

In the protocol

— involve civil society in LAC in its opinions on Latin Amer-

ican and Caribbean issues.

Brussels, 25 February 2004.

The President

of the European Economic and Social
Committee

Roger BRIESCH