Prospects for the EU–Latin America strategic partnership
Brussels, in search of trade opportunities, access to critical minerals and partners in environmental diplomacy, is pursuing closer relations with Latin America, and the upcoming EU–CELAC summit will offer clues about the direction of this bi-regional relationship.
The European Union and the Community of Latin American and Caribbean States (CELAC), a regional coordination forum, will hold a summit on 17–18 July in Brussels after an eight-year hiatus. The event will be the culmination of a recent diplomatic push by the EU that has included repeated visits by dignitaries to Latin America, multiple statements from Brussels on the region’s ‘strategic priority’, and the adoption of roadmaps for strengthening ties, most recently including ‘a new agenda’ for bi-regional relations, released in June by the European Commission and Josep Borrell, the EU’s high representative for foreign affairs. Last year, Borrell stated that 2023 should be ‘the year of Latin America in Europe and of Europe in Latin America’.
The EU and the countries of Latin America and the Caribbean held an initial summit in 1999 in Brazil and established a ‘strategic partnership’, but it was never fully operationalised. Recent global shocks, including the coronavirus pandemic, the war in Ukraine and the acceleration of the climate crisis have made more urgent the need to do so. The EU’s renewed interest in engaging with Latin America stems from its desire to diversify trade flows, secure access to critical minerals for the energy transition and to align on climate mitigation and other global issues. Brussels is also interested in greater cooperation over the global narcotics trade, given that cocaine shipments from Latin America to the EU have increased in recent years alongside a surge in European use of the drug.
Additionally, Latin America’s experience of the coronavirus pandemic was disastrous, leaving it poorer and more unequal, with decreased fiscal space to respond to challenges and anaemic growth prospects. Thus, countries in the region should be eager to draw closer to economic partners willing to support their efforts to boost national productivity and diversify their economies. China has invested significantly in the region in recent years, but the EU is probably a better partner for supporting technology transfer and job creation.
Latin America’s lithium reserves are a case in point: enacting a long-term strategy focusing on supply-chain development rather than resource extraction would significantly improve the region’s economic prospects. German Chancellor Olaf Scholz, in a trip to Argentina, Brazil and Chile that began in late January, highlighted his country’s willingness to partner on mining and green hydrogen, using high environmental, social and corporate-governance standards and creating local jobs.
A window of opportunity will open in July, with Spain and Brazil taking charge of the Council of the EU and Mercosur, respectively. Spain has been among the strongest advocates of EU engagement with Latin America and will assign high priority to operationalising the bi-regional strategic partnership. Brazil has the most economic weight in the Mercosur bloc, and its leader, President Luiz Inácio ‘Lula’ da Silva, is an apt negotiator and a credible interlocutor for the EU on deforestation issues, given his strong environmental credentials.
These issues add to the mechanical difficulty of negotiations involving two regional blocs comprising 60 countries in total. CELAC, as a coordination forum with no legal personality, has no authority to speak on behalf of Latin America. In addition, EU law regards any agreement that extends beyond trade or monetary policy to be ‘mixed’, meaning that it must be approved both by both Brussels and all member states individually. This means that talks have featured multiple tracks and at multiple levels – national, subregional and regional – which is slowing progress.
Lastly, domestic factors could intercede. In May, Spain’s government unexpectedly called snap general elections to occur in July, roughly three weeks after Madrid is set to assume the rotational presidency of the Council of the EU. Argentina, meanwhile, will hold general elections in October. These elections could prove significant, particularly if the incumbents lose. And in Brazil, the opposition-dominated Congress is attempting to water down Lula’s green policies in the Amazon and will probably oppose any attempt to agree to extra environmental guarantees demanded by the EU as part of the Mercosur negotiations.
Europe’s growing cocaine problem means that finding durable solutions to international drug trafficking has moved up on the EU’s agenda. The EU’s nuanced approach to the issue – which addresses the demand for drugs and the root causes of addiction and features a willingness to experiment with drug legalisation – resonates in Latin America, where there is widespread frustration with the hardline ‘war on drug’ paradigm advanced by the US. Latin American countries may thus come to see the EU as an important ally in exploring alternative approaches and for lobbying for changes on how drug trafficking is handled in international fora.
It is unclear whether the upcoming EU–CELAC summit will deliver clear results to operationalise a strategic partnership that is now almost 25 years old, or whether notable progress will be made towards finalising the EU–Mercosur agreement. In the medium term, however, deeper bi-regional cooperation appears inevitable, given existing complementarities related to trade and economic security, and the desire on both sides to develop geopolitical and geo-economic links sidestepping the US–China rivalry.
The EU and the countries of Latin America and the Caribbean held an initial summit in 1999 in Brazil and established a ‘strategic partnership’, but it was never fully operationalised. Recent global shocks, including the coronavirus pandemic, the war in Ukraine and the acceleration of the climate crisis have made more urgent the need to do so. The EU’s renewed interest in engaging with Latin America stems from its desire to diversify trade flows, secure access to critical minerals for the energy transition and to align on climate mitigation and other global issues. Brussels is also interested in greater cooperation over the global narcotics trade, given that cocaine shipments from Latin America to the EU have increased in recent years alongside a surge in European use of the drug.
Opportunities
The EU–CELAC summit is in many ways well-timed. Brussels is interested in finalising key trade deals with Latin America, including modernised economic agreements with Chile and Mexico, as well as the long-debated and strategically important EU–Mercosur association agreement (including Argentina, Brazil, Paraguay and Uruguay). The EU is already a significant geo-economic actor in the region – in recent years it has been the largest provider of development assistance, the third-largest trading partner and the largest source of foreign direct investment in the region – which provides leverage in negotiations and a solid foundation for future engagement.Additionally, Latin America’s experience of the coronavirus pandemic was disastrous, leaving it poorer and more unequal, with decreased fiscal space to respond to challenges and anaemic growth prospects. Thus, countries in the region should be eager to draw closer to economic partners willing to support their efforts to boost national productivity and diversify their economies. China has invested significantly in the region in recent years, but the EU is probably a better partner for supporting technology transfer and job creation.
Latin America’s lithium reserves are a case in point: enacting a long-term strategy focusing on supply-chain development rather than resource extraction would significantly improve the region’s economic prospects. German Chancellor Olaf Scholz, in a trip to Argentina, Brazil and Chile that began in late January, highlighted his country’s willingness to partner on mining and green hydrogen, using high environmental, social and corporate-governance standards and creating local jobs.
A window of opportunity will open in July, with Spain and Brazil taking charge of the Council of the EU and Mercosur, respectively. Spain has been among the strongest advocates of EU engagement with Latin America and will assign high priority to operationalising the bi-regional strategic partnership. Brazil has the most economic weight in the Mercosur bloc, and its leader, President Luiz Inácio ‘Lula’ da Silva, is an apt negotiator and a credible interlocutor for the EU on deforestation issues, given his strong environmental credentials.
Bottlenecks
The EU faces several obstacles to deepening cooperation with Latin America. The EU–Mercosur association agreement remains hostage to disparate environmental and protectionist concerns. While Lula’s election in Brazil seemed to have assuaged some European reservations, the Mercosur bloc opposed the recent request by Brussels for a joint interpretative instrument to be signed alongside the trade deal that would have included agreements and binding measures on deforestation. Lula delivered this message and also raised the prospect of reopening negotiations on matters related to industrial policy and procurement. This dispute could delay or prevent finalisation of the deal, which, in turn, would deal a fatal blow to the budding strategic partnership. This would open the door to China’s overtures to Mercosur (through Uruguay) and make the Chinese partnership model – featuring few if any strings attached – look more attractive.These issues add to the mechanical difficulty of negotiations involving two regional blocs comprising 60 countries in total. CELAC, as a coordination forum with no legal personality, has no authority to speak on behalf of Latin America. In addition, EU law regards any agreement that extends beyond trade or monetary policy to be ‘mixed’, meaning that it must be approved both by both Brussels and all member states individually. This means that talks have featured multiple tracks and at multiple levels – national, subregional and regional – which is slowing progress.
Lastly, domestic factors could intercede. In May, Spain’s government unexpectedly called snap general elections to occur in July, roughly three weeks after Madrid is set to assume the rotational presidency of the Council of the EU. Argentina, meanwhile, will hold general elections in October. These elections could prove significant, particularly if the incumbents lose. And in Brazil, the opposition-dominated Congress is attempting to water down Lula’s green policies in the Amazon and will probably oppose any attempt to agree to extra environmental guarantees demanded by the EU as part of the Mercosur negotiations.
Reasons for optimism
The EU can argue that despite the obstacles to closer cooperation, it has proven a reliable partner in the past in terms of investment, trade and development assistance. Its trade-led diplomacy is also appealing in a region wary of external meddling and resistant to siding with the United States against China. EU engagement with the region, relative to Washington, has been traditionally more inclusive and constructive, notably with respect to Cuba and Venezuela.Europe’s growing cocaine problem means that finding durable solutions to international drug trafficking has moved up on the EU’s agenda. The EU’s nuanced approach to the issue – which addresses the demand for drugs and the root causes of addiction and features a willingness to experiment with drug legalisation – resonates in Latin America, where there is widespread frustration with the hardline ‘war on drug’ paradigm advanced by the US. Latin American countries may thus come to see the EU as an important ally in exploring alternative approaches and for lobbying for changes on how drug trafficking is handled in international fora.
It is unclear whether the upcoming EU–CELAC summit will deliver clear results to operationalise a strategic partnership that is now almost 25 years old, or whether notable progress will be made towards finalising the EU–Mercosur agreement. In the medium term, however, deeper bi-regional cooperation appears inevitable, given existing complementarities related to trade and economic security, and the desire on both sides to develop geopolitical and geo-economic links sidestepping the US–China rivalry.
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