This document, published by the ECLAC and carried out in collaboration with regional governments, the EU, IDB and various other political, academic, and research institutions, summarizes the aggregate economic impact of climate change in Latin America and the Caribbean. On the basis of national and regional studies, the report offers important economic considerations concerning climate change, including an estimated 1% loss of annual GDP in the region’s countries between 2010 and 2100 unless a consensus on mitigation actions is reached.
On the 2nd February, Mexico’s President Felipe Calderón Hinojosa gave the 16th U Thant Distinguished Lecture entitled, ‘Preserving Our Common Heritage: Promoting a Fair Agreement on Climate Change’, hosted by the UN University. The event was convened in collaboration with Asahi Shimbun and the Institute for Global Environmental Strategies (IGES). The link to the speech can be found here.
In hosting this December’s climate change conference, Mexico has an advantage over the previous hosts, the Danes. A key player in a region often branded as a land of missed opportunities while simultaneously sitting on the OECD and G20 respectively, Mexico can potentially bridge the seemingly unassailable void between rich and developing countries. This situation may help to smooth over the colossal trust deficit which pervades UN talks on global warming.
Mexico is also a regional and global leader on climate change demonstrated by its ambitious Special Program on Climate Change and emissions reduction target of 50% below 2000 levels by 2050. It has also won international respect for its progressive Green Fund proposal which seeks to improve the international climate finance regime.
The international community is in dire need of a global climate change champion with the political clout to push the debate forward. President Obama perhaps had his shot in Copenhagen. The EU is still recovering from a massive COP15 hangover while other contenders seem to be in short supply. Mexico could prove to be the guacamole missing from the climate change burrito.
The European Commission funded a study which would ascertain the problems related to climate change within Latin America. The study aims to identify the extent of climate change effects, the question of vulnerability and the ecological footprint of the region, taking into consideration the institutional framework of this multidisciplinary challenge both on regional and national levels.
In May 2010, while Spain holds the Presidency of the EU, the Sixth EU and Latin America and the Caribbean (LAC) Summit takes place in Madrid. The EU-LAC Strategic Partnership has achieved little and risks becoming obsolete. Spain and the European Commission (EC) may have led the EU’s policy in LAC, but given existing and emerging challenges, the entire EU needs to invest its energies into reviving the relationship.
A revitalised EU-LAC partnership has vital strategic potential for reforming multilateral organisations, forging a new climate change agreement, fighting narco-trafficking, reasserting economic interdependence and advancing the Doha Round.
The relationship between both regions did not remerge significantly until the 1990s as interest in political dialogue, cooperation, and trade gathered momentum. Attempts to complete Association Agreements between the EU and LAC sub-regional bodies were the key focus of the EU. Yet, slow progress in Latin America and more urgent issues in Asia, Africa and the Middle East, have challenged Europe’s commitment. The absence of the French, Italian and the UK’s leaders at the 2008 Summit in Peru did not go unnoticed by Latin Americans.
Will 2010 mark a turning point?
The presence of Argentina, Brazil and Mexico at the G20 Summits in addition to the EU-LAC and Ibero-American Summits, Euro-Latin American Parliamentary Assembly and the EU’s strategic partnerships with Chile, Brazil and Mexico demonstrates not only the complexity of the relationship and its potential, but also the stronger presence of Latin American on the world stage.
European countries constitute the largest source of Foreign Direct Investment (FDI) in Latin America. Latin American corporations have increasingly turned their sights on Europe such as Mexico’s CEMEX acquisition of the UK’s RMC.
The EU is the largest trading partner of the Mercosur and the second largest for Central America, the Caribbean and the Andean Community. The current negotiations between the EU and three Andean Community members (excluding Bolivia), and Central America and the Dominican Republic reflect the priority awarded by all sides to strengthening commercial ties.
Migration flows and remittances are a major factor affecting both regions. Spain is expected soon to surpass the US as the main source of remittances for the Andean Region, not least as Latin Americans in Spain benefit from policies like the Double Nationality Law. However, in the midst of rampant unemployment, Spain has become less receptive to migrants demonstrated by a controversial bid to reform immigration law and an insensitively executed Voluntary Repatriation Initiative.
The EU and its member states constitute the main source of development cooperation in the region; and play an important role at two emblematic institutions: the Inter-American Development Bank (IDB) and the Caribbean Development Bank.
The partnership between the EU and Latin America is beset by confusion and conflicting messages. On the one hand it is regarded as a threat to competition and on the other essential for cooperation and multilateral reform
The negotiation of Association Agreements between the EU and Latin American sub-regional blocs have either stalled or broken down. Europe has been slow to acknowledge the asymmetries and disagreements within the Latin American blocs and their reluctance to complete Association Agreements.
The expansion of the EU has further complicated matters. Not only do the new Member States have less interest in Latin America, but the expansion of Europe’s borders has brought new emphasis on Russia, while the rise of Asia and the volatile security situation in the Middle East continue to hold Europe’s attention.
The inability to reform the Common Agricultural Policy is also a sticking point. There have also been clear differences between EU member states over aid: while Spain has increased its aid to the region, the UK has closed all its international development offices, preferring to disburse funds to multilateral organisations including the EC. And as new pressures are placed on Europe’s aid commitments towards the least developed regions, Latin America may lose out the most.
The process also suffers from an absence of sustained dialogue. A Permanent Euro-Latin American Secretariat with the task of directing work between the Summits is yet to materialize; and there is currently no significant non-governmental forum for debating the EU-LAC partnership since the demise of the Instituto de Relaciones Europeo-LatinoAmericanas (IRELA).
Before the Madrid Summit, a formal and explicit review of the EU-LAC relationship is necessary. The Spanish Prime Minister, José Luis Rodríguez Zapatero, says Europe should promote relations with Latin America and wishes to secure the completion of Free Trade Agreements at the Summit. However, the fall out from the financial crisis, and issues surrounding the implementation of the Lisbon Treaty if it is ratified, the aftermath of the 2009 climate change conference, revitalising the Doha Round, migration and other security concerns, could threaten to brush aside interest in the EU-LAC strategic partnership.
For their part, Latin America is predicted to be in the middle of an early economic recovery and eager to engage with Europe on new terms. But for this to happen, a new discourse on why the partnership is vital for both regions is needed.
Priority should be given to the completion of Association Agreements between the EU and Mercosur, Andean Community and Central America given the rising competition from Asia; and the effort already invested by Latin America. Europe should bolster the services component of the trade agreements to take into account how Latin Americans are more likely to successfully integrate into European societies as economic migrants.
The EU and LAC both have a strong interest in reforming the international system, with the EU supporting Brazil’s bid for a permanent seat at the UN Security Council. There is also mutual interest in expanding security cooperation. Poverty reduction strategies in Latin America have been very successful and the EU should extrapolate these experiences for use elsewhere.
Climate change remains a top EU priority with LAC also demonstrating an increasingly proactive stance in securing an agreement in December. To secure a treaty, greater effort is required immediately to iron out differences. The significance of EU-LAC trade and the carbon intensive portfolio of LAC exports to the EU suggest it is essential that both work together to mitigate the potentially negative ramifications of a treaty on their trade relations, notably in the forestry, agricultural and hydrocarbon sectors.
Waiting until 2010 will be too late to avoid a further haemorrhaging of interest in the partnership. It is therefore encouraging that the European Commission has begun to reaffirm its importance in a rapidly changing world by offering fresh policy recommendations to be considered before th
e Madrid Summit. This is a tentative but crucial first step, for not only resuscitating EU-LAC relations, but also for the EU to secure some of its most important international goals.
* Enrique Mendizabal leads the Partnerships and Capacity Development Programme in the Research and Policy in Development Group at the Overseas Development Institute, London.
The authors would like to thank Dr. Geoffrey R. Edwards, University of Cambridge, for his helpful comments.
del Arenal, Celestino (2009) Relations between the EU and Latin America: Abandoning Regionalism in Favour of a New Bilateral Strategy? Working Paper, Real Instituto Elcano
ECLAC (2008) Latin America and the Caribbean in the World Economy 2007. Trends 2008, UN ECLAC
European Commission (2008) The strategic partnership between the European Union, Latin America and the Caribbean: a joint commitment
Malamud, Carlos (2008) ‘Outside Players in Latin America (III): Relations with the European Union’, Real Instituto Elcano
Santiso, Javier (2008) The emergence of Latin multinationals. CEPAL Review 95, August, 2008
Smith, Karen E. (2008) European Union Foreign Policy in a Changing World, Polity Press, Second Edition
Whitehead, Laurence (1999) ‘The European Union and the Americas’ in The United States and Latin America: The New Agenda (eds) Victor Bulmer-Thomas and James Dunkerley, Institute for the Study of the Americas and David Rockefeller Center for Latin America Studies.
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