European Union

Written by Gisela Grieger and Roderick Harte,

© Itan1409 / Fotolia

Growing geopolitical rivalry, escalating trade tensions between the United States and China (both big players in Latin America and the Caribbean – LAC) and a US trade policy shifting away from a multilateral towards a bilateral approach based on ‘America First’, have created uncertainty in this part of the world. The ongoing commitment and shift of LAC countries towards multilateralism and free and fair trade provides the EU with a window of opportunity to strengthen its footprint in a region with which it maintains close cooperation and political dialogue on account of its historical, cultural and economic ties. Although the 33 countries forming the Community of Latin American and Caribbean States (CELAC) are together currently the EU’s fifth largest trading partner, the EU has in the past two decades lost market share to the USA and China.

Since the 1990s, the EU has pursued a strategy of promoting sub-regional integration initiatives within LAC and bi-regional integration between the EU and the then existing four sub-regional LAC groupings (the Andean Community of Nations (CAN), Cariforum, the Central America group, and Mercosur) as well as bilateral integration with Chile and Mexico. This has resulted in a number of agreements governing trade relations, including fully fledged agreements with two sub-regional groupings (Cariforum and Central America), a multiparty free trade agreement with three countries of the Andean Community (Colombia, Ecuador, and Peru; Bolivia may join at a later stage) and bilateral agreements with Mexico and Chile. Since November 2017, a new agreement with Cuba, governing trade relations (the EU-Cuba Political Dialogue and Cooperation Agreement (PDCA)), has also been provisionally applied (although it is not very comprehensive). In addition, the EU has an inter-regional framework agreement with Mercosur as well as bilateral framework agreements with its founding members (Argentina, Brazil, Paraguay, and Uruguay). Since 1999, the EU and Mercosur (excluding Venezuela) have been negotiating a fully fledged bi-regional agreement governing trade relations. Negotiations have gained momentum since 2016, with both parties aiming at a political agreement in 2018 (after earlier expectations for such an agreement by the end of 2017 were not met).

Alongside the ongoing EU-Mercosur negotiations, the EU is also in the process of modernising its 2000 Global Agreement with Mexico (negotiations are currently being concluded after an ‘agreement in principle’ was reached in April 2018) as well as its 2003 association agreement with Chile (for which negotiations are ongoing). The trade pillars of both of these existing agreements are less comprehensive and advanced in terms of liberalisation compared with recently negotiated trade agreements such as the EU-Canada Comprehensive Economic and Trade Agreement (CETA). They lack, among other things, specific provisions on sustainable development (which are covered in softer political dialogue frameworks) and have limited World Trade Organisation plus (WTO+) provisions on intellectual property rights (IPR), services, investment, public procurement and regulatory cooperation.

Overall, the EU’s agreements governing trade relations with Latin America and the Caribbean differ considerably in terms of coverage and methodology, depending on the time at which they were concluded and the context of the negotiations.

Read the complete in-depth analysis on “EU trade with Latin America and the Caribbean: Overview and figures“.

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