Stalled EU–MERCOSUR relations
With many Latin American economies growing rapidly, it could be expected for increased EU-Latin American relations to look promising. However, the EU and MERCOSUR summit, which took place last week in Santiago, Chile along with CELAC (the community of Latin American and Caribbean nations) showed negative results. Latin American countries seemed to display their internal divisions, and continued to demonstrate their tradition of gesture politics rather than showing a desire for significant change.
Despite hopeful public rhetoric from both the EU and Latin American nations, the reality proved different: of Europe’s important leaders, only Germany’s Angela Merkel and Spain’s Mariano Rajoy attended the summit. While the main potential issue to be addressed were stalled trade talks between the EU and MERCOSUR (Latin American’s largest trade bloc led by Brazil and Argentina), not much progress was made. Argentina and Brazil promised the EU that they would restart the talks, but with little enthusiasm. Argentina’s President Christina Fernandez claimed she was not in favor of signing deals with what she sees as unfair competition from Europe. The Falkland Islands/Maldavinas dispute further impeded positive progress. With a lack of political will and limitations to effective EU- MERCOSUR negotiations, there has been increased interest on the part of the EU with trade with the Pacific Alliance, whose member states include the rapidly-growing economies of Chile, Colombia, Mexcio and Peru. The Pacific Alliance is gaining global popularity as a strong Latin American economic bloc, thus increasingly challenging MERCOSUR’s dominance as the leading face of the Latin American economy.
Facilitating trade relations between member states of the Pacific Alliance
During the latest CELAC-EU summit that took place in Santiago, Chile, a new agreement was signed between the member states of the Pacific Alliance, which includes Chile, Peru, Mexico and Colombia. The agreement aims to facilitate internal trade between the member countries, by removing taxes on at least 90% of the member country’s products. During the summit, Chilean president Sebastian Pinera said the remaining 10% of products will be gradually incorporated over time, following a set schedule. The agreement is to be put into action before March 31, 2013.
Another highlight of the summit was that Japan and Guatemala were added as observer countries to the bloc. By extending the Pacific Alliance’s trade relationship to include Japan, it is hoping to expand its economic involvement with Asia. This way, it aims to show its increasing economic importance in relation to Latin America’s leading economic bloc, MERCOSUR, which is currently experiencing moments of economic crisis.