Global Insider: EU-Latin America Summit

The EU-Latin America summit will convene next week in Madrid, but only after the Spanish government, currently holding the EU presidency, rescinded an invitation to the president of Honduras, after some UNASUR leaders threatened to boycott the meeting. In an e-mail interview, Brookings Institution senior fellow and former Vice President of Costa Rica Kevin Casas-Zamora explains the significance of the dispute in the context of EU-Latin American relations.

WPR: How would you characterize broader Spain-Latin America and EU-Latin America relations?

Kevin Casas-Zamora: Relations between Spain and Latin America are very strong. Besides the historical closeness, there are very powerful economic drivers. Over the past two decades, Spanish investment in Latin America has grown massively, ranking second only to that of the U.S. — in many cases taking advantage of the privatization of state assets. Other than for Spain and Portugal, however, relations with Latin America remain a peripheral concern for the EU. Political relations between the regions are good, while trade flows are significant — $280 billion in bi-regional trade in 2008. These flows are, however, merely a fraction of those between Latin America and the U.S. (Trade between Mexico and the U.S. alone reached more than $350 billion in 2008).

Commercial links have been hampered by simmering disputes, for instance with regards to restrictive access to the European market for Latin American banana-producing countries. Outside Mexico and Chile, no country has signed a FTA with the EU, although the Central American countries are very close to finalizing a bi-regional agreement — one which also incorporates a component of political dialogue and development cooperation. The chances that MERCOSUR and Andean countries will wrap up bi-regional agreements with the EU look remote at the moment, despite similar negotiations having been launched before those with Central America.

WPR: What are some of the priorities on the broader agendas?

Casas-Zamora: Trade and investment remain the crucial drivers of bi-regional links. In that sense, for Latin American countries it is vital to secure easy access to the European market, particularly when it comes to agricultural produce. The thorny issue of the EU’s agricultural subsidies remains a stumbling block in any negotiation with MERCOSUR. From the European perspective, it is essential to secure adequate protection for European investments in Latin America, often threatened by legal uncertainty and, in some cases — like Venezuela and Bolivia — government takeover. Politically speaking, the EU has been reluctant to play a significant role in Latin America, generally refusing to denounce ominous trends against democracy in countries like Venezuela and Nicaragua, or to play a constructive, democracy-enhancing role in Cuba.

WPR: Does this episode reflect a shift in the power balance between the UNASUR countries and the EU, and if so, how will that impact relations between the two regional blocs?

Casas-Zamora: I don’t think so. This is simply symptomatic of an internal dispute within the Western Hemisphere, which has spilled over in ways that affect relations with other regions. The assertiveness of the ALBA and other South American countries with regards to Honduras is a message more directed to the U.S. than to the EU. Europe will simply steer clear of this dispute.