The EU’s relations with Latin America and the Caribbean (LAC)
Sugar Loaf Mountain
© picture-alliance / Eibner - Pressefoto
The Strategic Partnership between the European Union (EU) and Latin America and the Caribbean (LAC) was initiated in June 1999 at the first EU-LAC Summit in Rio de Janeiro. It includes all countries in the EU, Latin America and the Caribbean – around one billion people. The partnership builds on a common cultural inheritance as well as shared values and encompasses close cooperation in the fields of politics, economics, culture and science and technology.
In its 2009 Communication “The European Union and Latin America: global players in partnership”, the Commission formulated the following key recommendations for cooperation:
- Strengthen and focus the objectives of the bi‑regional dialogue
- Increase regional integration and interconnectivity
- Strengthen bilateral relations and pay more attention to differing circumstances
- Focus objectives of cooperation programmes and adapt them
The most important steering instrument for cooperation among the governments are the summits of the Heads of State and Government of all 60 countries, which take place every two years alternating between Latin America and Europe. The summits offer a forum for political dialogue on key global issues while also providing a catalyst for shaping bi-regional relations in concrete terms.
Seventh EU-LAC Summit in 2013
The Seventh EU‑LAC Summit took place in Santiago de Chile on 26/27 January 2013. As well as the Heads of State and Government, Foreign Ministers, parliamentarians, representatives of supreme courts, business communities, academia and civil societies also came together.
The theme of the EU-LAC Summit was: Alliance for Sustainable Development to Promote Investments of Social and Environmental Quality. Under this motto, issues connected to growth and equal opportunities, among other things, are to be discussed. Furthermore, two summit documents will be adopted: a summit declaration and an updated Action Plan which specifies the projects for the bi-regional partnership in the coming years.
Following the establishment of the Community of Latin American and Caribbean States (CELAC) in Caracas on 3 December 2011, this was the EU’s first summit with this new regional organization. Immediately afterwards, Chile handed over the CELAC presidency to Cuba.
The EU-LAC Foundation began operations in the Hanseatic City of Hamburg on 1 November 2011. This is the first joint organization endorsed by all 60 countries involved in the partnership and to which all of them feel they belong. The Foundation’s mission is to step up bi‑regional relations at all levels and to make them more visible to the world.
Germany is playing an active role in breathing new life into the EU-LAC framework. It has initiated a series of events directly relevant to these fields, joining with various partners to deliver them: an expert seminar on small arms in 2007, EU-LAC Fora on fiscal policy – March 2008 and May 2009 in Berlin and Montevideo respectively –, an EU-LAC Forum on corporate social responsibility held in Buenos Aires in October 2009 and one in April 2010 on energy policy at the Federal Foreign Office. The Sixth EU-LAC Seminar on fiscal policy and climate change took place in Berlin on 10/11 November 2010.
EU-Mercosur-summit in Rio de Janeiro, 1999, family photo
© BPA / Stutterheim
The EU is LAC’s second-largest trading partner after the United States. The LAC countries account for 6.3 per cent of the EU’s external trade, a volume which more than doubled between 2000 and 2011. LAC exports primarily agricultural products and raw materials to the EU while the EU exports machines, transport equipment and chemical products to LAC. At 28 per cent (2009), Germany has the lion’s share of the EU’s external trade with LAC countries.
The EU is the largest source of foreign direct investment in LAC (315.5 billion euros in 2009 and 385 billion euros in 2010). That corresponds to around 43 per cent of foreign investment in the region. EU investments in LAC are highly diverse and encompass almost all sectors.
General EU development policy tools
Within the framework of the Generalized System of Preferences (GSP), the EU currently grants tariff advantages to 176 developing countries worldwide. Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Colombia, Ecuador, Peru, Bolivia and Paraguay are currently taking advantage of the special preferences provided by GSP Plus, which enables them to import most of their products into the EU tariff-free. The granting of tariff reductions and exemptions within GSP Plus is tied to compliance with specific international conventions on the observance of human and labour rights, environmental protection and good governance.
In addition, from 2014 under the new GSP the partner countries must have a scarcely diversified export base and their share in overall imports to the EU from GSP countries must not amount to more than 2 per cent. In order to continue enjoying GSP Plus preferences, all of the current recipient countries must submit a new application to the EU. In future, trade between the Central American countries Colombia and Peru and the EU will be regulated by bilateral free trade agreements, as a result of which these countries will no longer able to take advantage of GSP Plus preferences.
The EU is the largest development cooperation donor in LAC. Development cooperation with Latin America is outlined in the EU Development Cooperation Instrument (DCI) and amounts to 2.69 billion euros for the period from 2007 to 2013. Cooperation focuses above all on promoting social cohesion and regional integration. Governance, higher education and sustainable development are further areas included in the cooperation. Development cooperation is implemented in the form of programmes for 17 individual Latin American countries and three regional groups (Mercosur, Andean Community, Central America), as well as an overarching Latin America programme. Special development cooperation programmes with Latin America include: EuroSocial (promoting social inclusion), UrbAL (promoting cooperation at the local level), AL‑Invest (promoting the internationalization of Latin American SMEs), Alpha III (modernizing higher education systems), Erasmus Mundus (scholarships) and @LIS (integrating Latin America into the global information society).
Development cooperation with the Caribbean is carried out within the framework of the European Development Fund (because it belongs to the African, Caribbean, Pacific states).
For the period 2007‑2013, the European Investment Bank (EIB) has earmarked 2.8 billion euros for Latin America. The funds will be made available primarily for projects in the fields of environmental protection (including mitigating the effects of climate change) and energy security. EIB loans are available to the Caribbean within the ACP framework, and are used mainly in the fields of infrastructure and microfinance.
At the EU-LAC Summit in Madrid in 2010, the Latin America Investment Facility (LIAF), modelled on the Neighbourhood Investment Facility (NIF) for the EU’s neighbouring countries, was established. LAIF is intended to mobilize a total of 100 million euros by 2013 through financial investments for the funding of investment projects in the spheres of energy infrastructure – including energy efficiency and renewable energy systems – transport and social cohesion.
Overview of EU agreements in the region
Since the summit in Rio de Janeiro in 1999, special attention has been given to developing relations in the form of agreements between the states of the European Union, Latin America and the Caribbean. Association agreements with individual regional groups or countries play a key role in relations. They are based on the three pillars of political dialogue, trade and cooperation:
- At the first EU-Brazil Summit, held on 4 July 2007 in Lisbon, Brazil joined the group of countries with which the EU maintains a strategic partnership.
- The free trade agreement between the EU and Mexico entered into force in July 2000, followed by the related Economic Partnership, Political Coordination and Cooperation Agreement (Global Agreement) in October 2000.
- In November 2002 the EU signed a comprehensive Association Agreement with Chile, which entered into force on 1 March 2005. The core component of this agreement is the establishment of an EU-Chile free trade area.
- Relations between the European Union and Mercosur are based on the Framework Cooperation Agreement, which entered into force on 1 July 1999. Since the end of 1999 the EU has been negotiating the conclusion of a bi‑regional Association Agreement with Mercosur.
- In March 2011, the EU initialled a free trade agreement with Peru and Colombia which is to be signed and enter into force in 2013.
- An association agreement with Central America was signed in Tegucigalpa on 29 June 2012 and it was adopted by the European Parliament on 11 December 2012. The free trade part should, in so far as it falls under the EU’s competence, be applied provisionally straightaway.
- On 15 October 2008 the EU signed an Economic Partnership Agreement (EPA) with the Caribbean countries that are members of CARIFORUM. Furthermore, a EU‑CARIFORUM partnership strategy is being drafted at present.
Further information on bilateral relations between Germany and Latin America may be found in the Regional Focus on Latin America under the heading Foreign Policy.
Last updated 06.02.2013