Economy & Trade, Europe, Headlines, Human Rights, Latin America & the Caribbean

LATAM-EU: Vienna Summit, at the Service of European Corporations

Julio Godoy

VIENNA, May 9 2006 (IPS) - As the final preparations are underway for the fourth EU-Latin America/Caribbean summit, to take place Friday in the capital of Austria, the European Union is using its trade and investment policies in Latin America as aggressive instruments of economic domination, at the service of Europe’s multinational corporations, according to independent analysts.

“The EU is working hard to send out the image of a global power that professes world peace and promotes development for the countries of the South, and that is an alternative to the United States,” said Stephen Schmalz, a political scientist at the University of Marburg in Germany.

But “the EU has actually put into practice a Latin America strategy that consists of pressing hard for free trade and investment agreements with the different subregional groupings, that are favourable to Europe’s multinational corporations,” Schmalz, who specialises in the relations between the EU and Latin America, told IPS.

These free trade treaties will be a key focus at the summit, he added.

The heads of state and government of nearly 60 EU, Latin American and Caribbean nations will meet in Vienna on Friday. The earlier EU-LAC summits were held in Rio de Janeiro, Brazil in 1999, Madrid, Spain in 2002, and Guadalajara, Mexico in 2004.

The EU, which has signed free trade deals with Mexico and Chile, is seeking similar agreements with Central America, the Andean Community (Bolivia, Colombia, Ecuador, Peru and Venezuela) and Mercosur (Southern Common Market – Argentina, Brazil, Paraguay and Uruguay).

These agreements are modeled after the North American Free Trade Agreement (NAFTA), which has linked Canada, Mexico and the United States since January 1994, especially with respect to the limitations imposed on member states in terms of adopting legislation aimed at protecting the environment and workers’ rights, according to Schmalz.

Such curbs on national sovereignty in Latin America benefit European transnational corporations, said the analyst. In addition, the free trade agreements foresee the gradual phasing out of Latin American import tariffs on farm and industrial products, to the detriment of small and medium farmers and manufacturers in Latin America.

European Commissioner for Foreign Affairs and European Neighbourhood Policy Benita Ferrero-Waldner said the EU hopes to make progress in Vienna in the negotiations with Mercosur and to reach agreements with the Andean Community and Central America. She also referred to strengthening the free trade accords with Mexico and Chile.

In a strategy document produced ahead of the Vienna Summit, the EU also underlined the importance granted to bilateral free trade agreements with Latin American countries.

The document, published in December 2005, says that over the next few years, the European Commission will work towards establishing a “strategic partnership” with Latin America and the Caribbean, reinforced by a network of free trade accords eventually encompassing all of the countries in the region, while deepening the agreements signed with Mexico and Chile.

According to official European statistics, trade between the EU and Latin America rose 13 percent between 2004 and 2005, to a new record of nearly 150 billion dollars.

At first glance, Latin America would appear to be the winner in these trade flows, with an annual trade surplus of nearly 10 billion dollars, even though the EU continues resisting international pressure to open up its markets not only to farm products but also to industrial goods from developing countries.

However, from 2004 to 2005, European exports to Latin America increased 13.7 percent, while imports of products from Latin America only grew 12.4 percent.

Other aspects to be discussed in Vienna are cooperation in the fight against drugs, organised crime and terrorism, and in areas like migration, science and technology, and energy.

Besides the meeting of heads of state and government, a gathering of foreign ministers will take place Thursday, and summit meetings of subregional leaders will be held on Saturday, while a business forum will bring together executives from Latin America and the EU on Friday.

For Olivier Hoedeman, with the Amsterdam-based Corporate Europe Observatory (CEO), a possible debate between representatives of Latin American governments like that of Bolivia and European authorities and business executives on the nationalisation of public services could be one of the high points of the business forum.

CEO describes itself as “a research and campaign group targeting the threats to democracy, equity, social justice and the environment posed by the economic and political power of corporations and their lobby groups.”

“The nationalisation of Bolivia’s natural gas (announced on May 1) dealt a major blow to several of Europe’s most powerful and influential multinationals,” Hoedeman told IPS. The firms affected by the move include the French oil company Total, the Spanish-Argentine oil company Repsol YPF, British Gas and British Petroleum.

Hoedeman also pointed out that Bolivia has been at the forefront of the debate on keeping public services like water in state hands in Latin America.

The activist said the EU continues to use trade and investment policies designed in the 1990s, without taking into account the radical political changes that have occurred in Latin America over the past 10 years, spurred by popular discontent with governments that defend privatisation and free-market, neoliberal economic policies in general, which are focused on downsizing the state.

The EU is the main pillar of support for the privatisation of public services in developing countries, as outlined in the General Agreement on Trade in Services, which the World Trade Organisation (WTO) has been discussing for six years.

“This EU-backed model is based on the logic of European corporations, conceived of more than 15 years ago, which has failed in developing countries, as in the case of water in Argentina and Bolivia,” said Hoedeman.

Last year, the Bolivian government cancelled the concession that had been granted to the French water company Suez Lyonnaise des Eaux, after Bolivians took to the streets en masse to protest the rate hikes and poor service that followed on the heels of privatisation.

And Aguas Argentinas, which was also controlled by the French firm, was caught up since 2002 in a lawsuit against the Argentine state for rate increases and breach of contract in water and sanitation services, until the government rescinded the company’s concession this year.

“But it would seem that the EU has failed to notice this failure and the political changes that have occurred in Latin America, as it continues to defend privatisation and neoliberal policies,” said Hoedeman.