Summary of Case Studies of the Brochure "Acuerdos de Asociación Europa-América Latina" (Ed. Birgit Daiber, 2010)

 

El Savador: The Salvadoran Economy and the Exclusion of Micro and Small Enterprises from the Association Agreement with the European Union

 

The author emphasises the asymmetries of FTAs between a major economic block with 27 member states (EU) and a small and weak block like Central America, and the difficulties to overcome these asymmetries that already now are generating tensions as shown by the Honduran coup.

The study focuses on the effects of FTAs on small and micro enterprises on the national economy. In El Salvador, small and micro enterprises represent almost 98% of the entrepreneurial activities; big companies represent less than 1%. Rather than focusing on the small and micro enterprises, the EU only highlights the possibilities to improve medium and small enterprises and therefore does not touch the major sources of income and jobs in El Salvador.

The author gives a good overview on the entrepreneurial structure in the country and anticipates from there the effects of the implementation of any FTA. He further analyses the Global Europe strategy in the light of the Salvadorian reality and shows how Fair Trade initiatives during the application of EEUU-FTA has been useful for the development of cooperatives and the social economy in El Salvador. The study also applies a historical approach for the detailed analysis of the impacts of different agreements on various sectors of the Salvadorian economy.

The main points of the paper are that the asymmetries between the EU and Central America is ever more increasing; he identifies for the Central American region a lack of possibilities and declining encouragement for a customs union, which would be a pre-requisite to negotiate in a coherent manner. He indicates that the profiteers of the current way of negotiating are the big transnational corporations that in El Salvador are a tiny minority in terms of wealth creation. He claims that there is the need to involve small and micro enterprises in order to distribute the gains of trade. Finally he makes proposals about regional integration and common strategies to abandon the endemic foreign debt blocking the development of growth.

 

Joel Thomas Boekle, El Salvador: Represents an European NGO in El Salvador; consultant for political themes and development.

 

Liliana Romero, El Salvador: Senior consultant for micro and small enterprises, local development etc.; member of the Iberoamerican Network of Proveedores de Servicios de Desarrollo empresarial No Financieros.

 

Nicaragua and the Association Agreement with the European Union: Access to Markets and the Case of Agro-fuels

The author makes – like others – at the beginning of the text references to the concept of open regionalism which is the theory that allowed Latin and Central American countries to open their economies to the USA while creating internal trade blocks at the same time. The author shows that the proposals of the EU become more and more similar to what US proposed for NAFTA. Historically, the trade balance of Central America towards Europe is negative but there are important historic links, especially in the political and aid field.
Nicaraguan export concentrates on few agrarian products: coffee, corn, alcohols, meat, etc. They represent 90% of the total export in 2008.

 

Historically, the trade balance with the EU is negative. However, this has changed in 2008 due to the crisis. Foreign direct investment concentrates on duty free industrial states and telecommunication. For Nicaragua, Spain is the leading country with 85% of the total EU investment. The move towards a FTA is basically departing from the existing GSP+ type of relations that is more beneficial to the developing country. The problem in Nicaragua is that the most competitive products are not covered by the GSP+. This argument is used by the exporting industry to demand a FTA, and this demand was support by the previous government and is contemporarily supported by a section of the current government. The counter argument is that the duties are helpful to the state but not all industries will benefit from a FTA. The author shows in the text, which products will benefit from an FTA (beef, sugar, banana, etc.) and which doesn’t (or will even suffer from the FTA) (like pork, coffee, etc.).

A general problem for the Central American region is the issue of agrofuels. The EU has a clear interest in opening the Central American markets to access a cheap source of agrofuels (and so it is the case in Nicaragua). The author shows that despite the possibility of generating economic growth, agro-fuels are extremely dangerous to biodiversity, negative for a more equality in land distribution and provoke dependence on foreign markets in terms of food sovereignty. In the case of Nicaragua, hardly any legal frameworks exist to regulate agro-fuels. The author argues, that the large scale production of ethanol will additionally have a negative effect in terms of deforestation and it will reduce the possibilities of reacting to climate change. Further research that urgently needs to be done in this area are a study on water use and water access and a study on the use of agrotoxics its effects for the environment.

Claudia Torrelli, Nicaragua: Candidate of a Master at Fletcher School of Law and Diplomacy, TUFTS, University, Boston M.A.; Collaborates with the Transnational Institute (TNI). http://fletcher.tufts.edu/ | http://www.tni.org/

 

Costa Rica: Transnational and National Pressures on the Energy Sector in Costa Rica

The generation, transmission and distribution of electricity in Costa Rica are based on a partnership model with universal access – with 98.3% of electrification. This high degree of electrification is not common in the region and transnational corporations have laid an eye on a market which could be made profitable. Until now, the energy is distributed in a regulated market on very low rates (for the end-consumer they are the lowest in the region – with average prices below 10 cents in the residential, commercial and industrial sector). The rates are low due to large public investments in renewable and traditional energy sources (in other countries, power production relies on private investment and thermal energy generation).

The “Plan Puebla-Panama” is the name of the project to create a common market for this economic sector, however, a common market under the auspices of liberalization and deregulation would be to the detriment of smaller and poorer consumers. Since years, European energy corporations are entering the region with mostly disastrous consequences for communities and their service (Union Fenosa in Nicaragua is an example). In Costa Rica, the privatization of the energy market has still not taken place. There exists a de facto monopoly of some companies in the transmission and distribution per area.

Details of the current negotiations are not known but the author assumes or foresees that a flat rate in the FTA would imply a high asymmetric model and will reduce the chances to set conditions for these resources in the negotiations. An FTA would also erode the Costa Rican system that guarantees equality between unequals, allows providing identical treatment to public actors, social economy and private actors, and does not discriminate between the pursuits of profit and cost of service provision. The defence of this system is strategic for rural electrification, cooperatives and municipal public companies.

Currently, since the coup in Honduras and vis-à-vis the inability of international pressure to deter Micheletti from power, the negotiations are in a stand-by situation. Two rounds of negotiations still have to be done and none of the three key axes of the deal have so far been closed.

The author argues that the openness of the power sector is linked to the need for cheap power to for the high-consuming sectors that is to say for the agrofuels sectors.

Against this model some local communities have been organizing to stop their developments through local democracy, struggle and referendums over water and land sovereignty. They are calling themselves “green guardians”. Indigenous and local community organisations also link to these movements to defend their rights over their territories.

Costa Rica has signed an agreement with China to exploit their natural resources with less conditionalities. Although the agreement has been abandoned over political pressure, it can be retaken at any time. Civil Society organizations have to survey the agreements, knowing that FTAs tend to be pernicious to local communities and environment. The author argues that Costa Rica needs more productive investments to reduce its dependence of refinery and improve its sovereignty.

 

Juan Carlos Mendoza, Costa Rica: Jefe de bancada de la fracción del Partido de Acción Ciudadana (PAC) en la Asamblea Legislativa. http://pac.cr/

 

Gustavo Oreamuno, Costa Rica: Presidente de la Junta Directiva de la Asociación de Iniciativas Populares (DITSÖ).

 

Guatemala: The Impact of the Association Agreement European Union – Central America: The Case of Biodiversity and Agrofuels in Guatemala

Although the paper focuses on Guatemala, it highlights convincingly issues that are also pressing in other countries in the region (e.g. the San José Agreements, the long periods of civil war, etc.).

The paper starts highlighting the historic role of the EU in the Guatemalan peace process and the reputation that Europe enjoys in some Central American countries. Given this background, the breakdown of the Central American – EU negotiations in the context of the coup d’état in Honduras appears in a different light.

To understand the development and impact of the negotiations he uses the example of new geopolitics, climate and combustibles. Central America has become a new and interesting producer of agrofuels, particularly in the context of climate and economic crisis. Central America has become one of the main suppliers of sugar cane for ethanol production and Guatemala the key country for the production of agrofuels.

The effects of this transformation are fundamental to understand the contemporary challenges for the Guatemalan society and its government. In Guatemala, the property of land is concentrated in the hands of few. This division of land endangers a sustainable development of the Guatemalan society and the consolidation of its democratic structures, shown for the example of the use of public water and other.

Giving this background, the author presents in detail the range of social and environmental effects of the expansion of monocultures. Social effects: evictions, stopping the poverty reduction process, etc.; and environmental effects: the loss of biodiversity, the endangering of local fauna and flora by plagues, and poverty of the national diet.

The author considers it as a major problem that the EU uses FTAs to access cheap sources of raw materials downplaying development clauses. At the local level, the new agrofuel plantations generate conflicts and severely limit the food sovereignty of the largely rural population. The text ends up with a series of proposals for the negotiations in order to stick to the principles of national and food sovereignty.

 

Mario Rodriguez, Guatemala: Economista, Integrante del Consejo de Investigaciones e Información den Desarrollo (CIID). http://www.ciidgt.org/

 

Comparative Paper/Colombia: Integration and Free Trade Agreements

This text is highly political and takes a clear pro-integration and South to South position. The author focuses on the issue of possibilities of regional integration in the context of FTAs.

He shows how the signing of FTAs in the Latin American regions stops the attempts to engage in new types of regional integration. He gives the example of Mexico, being the promoter for FTAs in the region – FTAs with USA and with EU. As a result, Mexico is isolated from other existing integration processes and one of the slowest countries recovering from the crisis. As a consequence from being excluded from ongoing integration processes in Latin America, Mexico is pursuing an agenda of integration with those countries, whose economy is openly linked to the globalised market, like Colombia, Peru and Chile, on detriment of the regional integration. This phenomenon goes back to the NAFTA negotiations in the early 1990’s is often called “open regionalism”. The author calls upon the countries to engage in processes on regional integration and shows ways to do so with FTAs in the Latin American context (and balances these out with the possibilities of FTAs).

 

Enrique Daza, Colombia: Director del Centro de Estudios del Trabajo, Director de la revista Deslinde, Coordinador de la Red Colombiana de Acción frente al Libre Comercio (RECALCA), Secretario de la Alianza Social Continental. http://deslinde.org.co/ | http://www.recalca.org.co/ | http://www.asc-hsa.org/

 

Bolivia: Considerations and Proposals for the Association Agreement: The Case of Bolivia

The author explains the three pillars of the Association Agreement – political dialogue, cooperation, and trade – and develops from there the case of Bolivia. For Bolivia, agriculture and food sovereignty were the major issues in the negotiations between EU and the Andean Communities. Bolivia claimed that agriculture should be negotiated differently from other economic activities as life in Bolivia is mainly linked to rural agriculture.

The author highlights the important role of the civil society in the negotiations in Bolivia – in difference to the other three countries of the Andean Community (Colombia, Ecuador, and Peru). The author states, that it was the highly active Bolivian civil society which turned the negotiations into a transparent process. Particularly peasant organisations made their stake and the author evaluates this as essential in a country largely dependent on agriculture.

The text further analyses the Association Agreement in the context of the particular Bolivian land tenure system and shows how this challenged the agreement. He finally gives several reasons why Bolivia decided to restrain from opening its market to European products and shows ways how economic integration can work.

Primo Nina Huaynahuayna, Bolivia: Presidente de la Coordinadora de Integración de Organizaciones Económicas Campesinas de Bolivia (CIOEC). http://www.cioecbolivia.org/

 

Peru: Change of Strategy? From Association Agreement to Free Trade Agreements with the Andean Nations – a Peruvian Perspective

The bi-regional cooperation with Association Agreements started with the third EU-Latin American Summit in Mexico in 2004. The outcomes of the agreements today are different to their initial aims.

The background of the negotiations EU and Andean Community is comparable to the background of the negotiations of FTAs with the USA. The electoral ticket of the Ecuadorian and Bolivian president was not to sign an FTA with USA. In difference to that, Peru and Colombia considered the agreement with USA as a necessity.

The negotiations between the Andean Community and EU were characterised by the same differences; they marked the evolution of the entire process. Bolivia demanded more internal unity within the block; the other countries did not consider this as a priority. As a consequence of these internal differences, the Andean Community needed to and was able to reach an agreement of that was based on differentiation. Different levels of negotiations with the EU were then accepted. This internal agreement among the countries of the Andean Community can be considered as the formal way out to the dilemma of different outlooks on the negotiations.

After this, the negotiations with the EU went ahead. In July 2007, both parties signed the general framework for negotiations. The agreement within the Andean region foresaw that negotiations had to advance through consensus.

However, when the negotiations started, it became obvious that the different requirements on “sensitive” issues were not fully respected, e.g. for the case of Bolivia that was not ready to open all sectors to the market. This created a conflict situation and showed several limitations:

* The limitations of the consensus system would create a conflict situation between Peru and Colombia.

* The weak system of expressing difference and the limits to reach consensus

* The limited level of flexibility of the EU to accept different proposals.

The author shows that other structural limitations had been at stake, e.g. the fact that the trade aspect of the agreements easily covered the other three pillars: political dialogue and cooperation.

There are two visions existing among the countries of the Andean Community of how to negotiate that can be summoned as such: A two-speed agreement and a new architecture for the agreement; the first being in line with the previously existing views on FTAs, and the second taking into consideration the Bolivian and Ecuadorian perspective. But the EU showed little flexibility on the modalities proposed by Bolivia due to the mandate of the EU officials.

In the three rounds of negotiations a certain pattern emerged: Negotiations usually took place first within the region and then between EU and CAN. As a result of this pattern, the process was slowing down the process and rivalries arose among the countries of the Andean Community. The issues of biodiversity and intellectual property rights made the negotiations extremely complicated, particularly in a context of very difficult political relations among the four partners. At that point, the EU proposed a new type of FTA. Bolivia decided to exclude itself from these negotiation processes and later, also Ecuador pulled out.

The author summarises, that the result of three years of EU-CAN negotiations leaves the Andean Community heavily damaged (more damaged than it was before). She suggests, that this model of negotiation – first with a region and then with individual partners – might be a strategy that the EU is willing to apply in other regions as well, particularly in regions with “unreliable” partners and difficulties among members.

Alejandra Alayza Moncloa, Peru: Perú: Red Peruana por una Globalización con Equidad (RedGE). http://www.redge.org.pe/

 

Chile: The Unaccomplished Promise of the Contract between Chile and the European Union: The Major Economic Growth

The text deals with the entire negotiation process in Chile. The author describes a changing attitude in Chile towards FTAs. Whereas in 2003 the agreement EU-Chile was signed with a lot of enthusiasm, this enthusiasm has vanished.

Chile is one of the countries with most FTAs signed. The agreement had the effect of an increase in exports and foreign investments. The author actually provides a whole range of figures that proves this central point of neoliberal argumentation. However, the author shows the other side of the medal of increasing foreign direct investments, which is increasing dependence on the European region. The reason for this: the flux of European capital to Chile is hundred times larger than Chilean investments in Europe.

The author shows also, that economic growth – the promise of the “neoliberal agreement – did not happen. Despite the great openness of the Chilean economy, economic growth in Chile remains below international average – even in periods of global economic growth. Chile is top listed in economic openness but only takes place number 100 in terms of economic growth.

The author argues that these results can be generalised and explains why in Chile economic growth could not happen to the degree desired by those that promoted FTAs. One of his hypotheses is that the dependence on export can undermine national demand. In Chile, reasons for this can be found in the concentration and centralization of the export sector and increasing prices of raw materials. The author even generalises that FTAs facilitate a development towards more dependence on the export of raw materials, and he calls this “hyper-raw materialization”. This process contributes to an increase of imports from the dollar region, which not a bad affect per se, but is in the Chilean case where this changes went to the detriment of the national production (due to a lack of governmental initiative) and therewith to a higher dependence. The author also shows that particularly in the world crisis the growth model showed its weaknesses, as it does not automatically go along with development.

Finally the author makes a reflection about the “curse” of raw materials, meaning the dependence on theses, and the lack of internal demand that could sustain a development that would be based on more than one central product.

 

Claudio Lara Cortés, Chile: Economista, Coordinador del Capítulo Chile de la Alianza Social Continental. Director Magíster en Economía de la Escuela Latinoamericana de Estudios de Postgrado y Políticas Públicas de la Universidad ARCIS. Investigador de CLACSO. Miembro de la Junta Directiva de la Sociedad Latinoamericana de Economía Política y Pensamiento Crítico (SEPLA). Director de la Revista Economía Crítica y Desarrollo. http://www.asc-hsa.org/ | http://www.uarcis.cl/

 

Mexico: The Impact of the Rules of Investment and Services of the Free Trade Agreement Mexico – European Union: Sixteen Years of Experience in Mexico

FTAs are commonly seen as linked to free trade but they have a wider scope, e.g. intellectual property rights and the liberalisation of services and political responsibilities of the State. In the same light, entering capital is usually linked to deregulation and the limitation of governments to establish conditions to those fluxes.

The author takes the case of Mexico, but makes a point about a phenomenon that can be generalised for countries that (might) follow the same or similar patterns.

He convincingly shows how a country – in this case Mexico – be-comes a target for European banks once it is signing an FTA with the EU. European lobbyists, especially British and Spanish banks, imposed tremendous pressure on Mexican authorities to strike a deal. As a consequence of the FTA, networks of local and national small and medium banks and savings institutions were destroyed; and in contrast to this, foreign banks gained. Further, increasing speculative transactions had a strongly decimating effect on the local economy (the author provides interesting data about the local banking industry and the precarious situation of the employees in the newly established banks).

The author touches several myths. He shows that the private in-ternational banks do not support the local and national development of a country, particularly in the time of an economic crisis. He also shows that foreign direct investment is not linked to na-tional development. Finally he compares the national income on the basis of its natural resources (Mexico is an oil producing country) and losses due to forced liberalisation of the main national industries (oil, electricity).

The author concludes that FTAs can have a very negative effect for the social tissue but can also have an even worse effect if those who are negotiating adopt the views of the powerful partners of negotiation.

Alejandro Villamar, Mexico: Red Mexicana de Acción frente al Libre Comercio (RMALC). http://www.rmalc.org.mx/

 

Ecuador: Democracy, Constitution and Social Struggles: The Case of Ecuador

The text gives background information on the struggles of the Ecuadorian people against the imposition of the neoliberal model, including the struggles against policies of economic liberalisation during dictatorship and in the democratic era. She argues that 30 years of liberal economic policies are responsible of the 75% destruction of the public banking system, a huge public debt, and three million emigrants. The upcoming of new and powerful social movements against this agenda created the political conditions for a new Constitution and a political context in which the withdrawal from the negotiations between the EU and the Andean Community became possible.

The text presents several parts of the new Ecuadorian Constitution which provide the conditions to prevent the country to again undergo liberalisation processes as happened in the last 30 years. The author however also argues that social movements in Ecuador are aware of the fact that the new Constitution is not a guarantee per se. For that reasons, they continue being vigilant to all ongoing negotiation processes and trade agreements of the country.

The presentation focuses on how the perspective of the social movements on the negotiation process and how it came about that Ecuador, like Bolivia, pulled out from the EU-CAN Agreement

Paulina Muñoz, Ecuador: Spokesperson of Ecuador Decide No TLC (the organisation publishes their documents on the website of Hemispheric Social Alliance). http://www.asc-hsa.org/

 

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