EU-Latin America trade deals in troubled water

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The European Commission has hailed an EU trade agreement signed Tuesday (26 June) with Colombia and Peru as an exciting investment opportunity but NGOs and trade unions have expressed concerns over social and human rights record of the Latin American countries.

EU Trade Commissioner Karel De Gucht signed the deal on Tuesday (26 June) together with Danish Ambassador Jonas Bering Liisberg representing the Presidency of the Council of the EU, the Colombian Minister for Trade Sergio Díaz-Granados and the Peruvian Minister for Foreign Trade José Luis Silva Martinot.

Once fully implemented, the European Commission estimates that the trade deal will relieve EU exporters of €270 million in duties annually.

But the trade deal has got trade unions worried about social dumping and human rights abuses in those countries.

"In Colombia, union leaders and labour activists continue to be assassinated, threatened, and intimidated, and the perpetrators enjoy almost complete impunity," the European Trade Union Confederation (ETUC) said in a statement.

"The appalling levels of violence negate in reality any promises for the free exercise of fundamental labour rights, including freedom of association,” it added.

Although the European Parliament has called for a binding action plan on the improvement of labour and other human rights, ETUC calls for “this to be undertaken before further hasty steps are taken.”

In February, the ETUC sent a letter to Members of the European Parliament urging them not to support the agreement at this time, saying that a vote for the EU-Colombia Free Trade Agreement (FTA) would “disregard the terrible human rights record in Colombia and would damage the EU’s reputation as a leading force in the promotion of human rights and basic freedoms.”

A group of Central American, Andean and European organisations and social movements has released a manifesto criticising the trade deal after negotiations were concluded in May last year.

The manifesto, signed by the International Office on Human Rights and Oxfam among others, said the current FTA model could “negatively affect the existing inequalities between the EU and Central American countries together with Colombia and Peru,” adding that the results would “favour interests in Europe while diminishing development programmes and the regional growth of those regions.”

Commission: Benefits outweigh costs

The European Commission contends that the agreement does not favour European interests, saying, “Given the relative size of our economies the economic and social impact in Colombia and Peru of the proposed Trade Agreement will by far outweigh – in relative terms – the benefits it will generate for the EU.”

The European Parliament tried addressing concerns by putting forth a resolution on 13 June asking Colombia and Peru to define a “roadmap” to guarantee the protection of labour rights, the environment, and human rights in the FTA ratification process.

The Commission says that civil society organisations will monitor the implementation of the human and labour rights commitments included in the deal.

The trade agreement, which will eliminate tariffs between the two regions and increase market access, will provisionally take effect once the European Parliament has given its consent and the ratification process is concluded in Peru and Colombia.

Businesses will hope that the newly signed agreement will open trade markets on both sides and will hope to build on the trade relationship that was worth €21.1 billion in 2011.

Brazil businessmen eye separate trade track

Frustrated by slowing trade negotiations within the Mercosur multilateral track (Argentina, Brazil, Paraguay and Uruguay), EU and Brazilian businessmen vowed to move ahead without an FTA.

“Business has a different timing than politics,” said Eurochambres’ Arnaldo Abruzzini, who also lamented the lack of progress of the EU-Mercosur dialogue towards a free trade agreement.

Speaking at an EU-Brazil conference organised by the Brazilian Trade and Investment promotion agency,  Abruzzini stressed that companies need a business-friendly environment for boosting trade and cannot wait for an FTA.

“We need a forum with an institutional side to take advantage of the potential that business can bring to the table,” he underlined, noting that both Brazilian and EU business communities are committed to provide suggestions to move ahead without an FTA.

His comments were echoed by Rui Faria de Cunha, from the Brazilian Business Affairs, who said yearly EU-Brazil summits are not enough to advance a mutual understanding.  “We need more forums to develop cooperation as the EU is a very important market for Brazil,” he said.

Positions: 

Giles Merritt, secretary-general of think tank Friends of Europe, said Latin America has been viewed as a sure thing for investment, with European businesses continuing to be attracted by the continent’s fast-growing economy.

During a seminar on EU-Latin America relations held yesterday (26 June), Merritt hailed the region's “recession proof” levels of growth – up 4% this year, while Europe continues to record little or no growth. Merritt, however, pointed out Latin America’s high levels of social inequality, saying that it had a “long way to go before they can even aspire to enjoy the same living standards” as EU countries.

Pierre Vimont, executive secretary-general at the European External Action Service, echoed this sentiment. Referring to the continent’s “strong social divisions”, he said many Latin American countries have “a long way to go". This, Vimont said, is “one of the challenges” to be addressed by both sides.

A representative of the Danish EU presidency, Vibeke Rovsing Lauritzen, said that she saw potential for joint growth between the two continents, expressing the need for the EU to build networks with smaller Latin American businesses.

A senior advisor at the EuroChile Business Foundation, Carlos Eduardo Mena, highlighted the importance of social responsibility and accountancy in business dealings between the two continents. Mena said that entrepreneurs should not only be looking for “clever investment” but agreements “based on common values,” in a way that could “combat corruption.”

In May 2012 European Commissioner for Trade Karel De Gucht said in a speech on the EU-Colombia-Peru trade agreement that the “protection of human rights is already central to our relationship with Colombia and Peru,” adding that the EU was “working to support the right to join and form trade unions” in the region, among other actions.

After the signing of the trade agreement yesterday, De Gucht said “The agreement establishes a foothold for European business in this rapidly growing area and an anchor for further structural reforms in both countries.”

Danish Minister for Trade Pia Olsen Dyhr said the signed agreement “promotes trade liberalisation through partnership and it is based solidly on the respect of democratic principles and human rights.”

Eurochambres and BusinessEurope issued a joint press release on 27 June welcoming the signing of the FTA calling on the European Parliament to ratify them “as soon as possible”. They said that business sectors would see “not only a reduction in tariffs, but additional benefits will come from a reduction in behind the border obstacles and the creation of a more favourable business environment,” adding that the FTA with Latin America will “serve as an example of the benefits of trade liberalisation.”

BusinessEurope Director General Philippe de Buck described the Peru and Colombia as “markets with great potential”, commenting in a statement that both sides would “see important benefits from this agreement.”

Eurochambres Secretary General Arnaldo Abruzzini commented “We certainly welcome the opportunities this creates for EU businesses.” He said his organisation was ready to play an “active role” in the implementation and enforcement of the FTA.

Timeline: 
  • 2012: The trade agreement will provisionally take effect once the European Parliament has given its consent and the ratification process is concluded in Peru and Colombia. Full entry into force will be pending ratification by the 27 EU member states.
  • By end 2012: The conclusion of the ratification process for a trade deal with Central America is expected to follow.
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