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Towards a Symmetric EU-Latin America Trade Relationship?

Mexico 11% Central America 3%

From 2001 to 2011, primary exports from Latin American and the Caribbean (LAC) increased from 44% to 52%, this illustrates how the continent still cannot move from its status as a primary goods exporter.
Crude Oil 1st Refined Copper 3rd Coffee 1st Motor Vehicles 2nd Wood Pulp 1st

Motor Vehicles 1st

Venezuela 6%

Iron 1st

Andean Community 12% Brazil 38% exports to the EU
Banana 1st

Soybeans 1st

Copper 2nd

Soybean Cakes 1st

Crude Oil 2nd

Copper Concentrate 3rd Motor Vehicles 3rd Soybeans 3rd Soybean Cakes 2nd

Copper Concentrate 1st Refined Copper 1st

Wood Pulp 2nd

Chile 13%

Iron 3rd

The EU has sharply reduced its imports from LAC in the last 50 years: 35% of LAC exports in 60s, falling to 13% in 2010s. 75% of these imports come from 4 countries (Brazil, Mexico, Argentina, Chile).

Argentina 11%
Legend: % of exports to the EU (2009). Ranking as main LAC exporter per goods.

MAIN TRADED GOODS LAC to EU
Soybeans Cake Bananas Coffee Refined Copper Motor Vehicles Crude Oil Soybeans Copper Concentrate Iron Wood Pulp % of total trade 7.1 5.7 5.2 4.6 4.1 3.9 3.6 3.4 3.4 2.9 5.4 3.6 3.0 2.9 2.8 1.8 1.7 1.6 1.3 1.2

EU to LAC
Motor Vehicles Medicines Passenger Vehicles Ships and Boat Aircraft > 15000 Kg Machines Glucocidos : Vaccines Nucleic Acids Dishwashers Telecom Parts
Source ECLAC 2013

Sustainable Mining ‘Extractivism’?
44% world reserve 43% world export 44% world reserve 43% world export 49% world reserve 30% world export 26% world reserve 19% world export

LAC minerals are now of key relevance for the EU economy. The problem is that these resources are scarce and non-renewable. 65% world reserve
world export: no-data

22% world reserve 23% world export

23% world reserve 13% world export

FDI revenues per sector
Iron

180 billion US$

Fe

26% Minerals 10% Oil 6% Shoes 7% Cars 10% Media 8% Telecom 8% Chemicals

The mining sector provides the highest average FDI income (26%). This is two to three times more than in other sectors. Six of the top 25 EU TNCs were directly linked to the mining industry in 2010. 42% FDI in primary sector

crisis

56% FDI in primary sector

100
113 b. US$ in 2011

Inflow FDI to LAC Profits made by TNCs in LAC

20 b. US$ in 2002 The EU remains the main source of FDI for LAC, with about 40% of total FDI (2010), and TNCs continue to receive huge profits. However, is the FDI boom in non-renewable natural resources leading to a "Green Economy"?

60

20

1990

2002

2006

2008

2011
Source ECLAC 2013

What's Wrong?

The current EU - LAC relationship fuels an unequal redistribution of wealth; depletion of non-renewable natural resources; global warming, and social conflicts.

Still more, massive-scale extractivism, is expected as the LAC mining exploration budget has increased 60-fold in the last 20 years.
2011

US$
2001

US$
1991

US$

Millions

200

2000
Millions

12.000
Millions

Miniscule job creation: only four jobs are created in LAC for every one million US$ of FDI between 2003 and 2013. Yet, in the mining sector, which is the most profitable, this figure drops to 0,5 jobs. Although FDI inflows and TNC revenues jumped, 167 million people (29% of LAC population) still live under extreme poverty in 2011. The GDP/capita gap between LAC and the EU has increased from 14,000 US$ in 2000 to 20,000 US$ in 2011.

0,5

2000: LAC GDP/capita : 7,500 US$ EU GDP/capita: 21,500 US$ 2011: LAC GDP/capita: 11,000 US$ EU GDP /capita: 31,000 US$

29%

The EU-Andean Trade Sustainability Impact Assessment, commissioned by DG Trade, reported that FTA would create even more problems: Restriction on workers’ rights Damaging effects on small family shops Reduced acccess of poor people to essential services Increased damages to the environment
Source ECLAC 2013 — European Commission Directorate General for Trade 2009

SOME ALTERNATIVES Towards a Win-Win EU-LAC Relationship

“When the currently huge investment opportunities will be saturated, there will be a world-wide political reframing of growth in terms of its quality rather than simply its quantity. (…) This reframing will be necessary to support ‘good global governance’” in “Europe 2050” by the European Commission (2012)

In such a context, the “Buen Vivir” narrative ("Good life/Living Well") is emerging in LAC as an alternative to the 35 year-long TINA discourse. The “Buen Vivir” paradigm questions the rationality of the current development paradigm, its emphasis on economic aspects and the market, its obsession with consumption, or the myth of continued progress. New strategies of regional integration and environmental sustainability are also materializing as a concrete solution to move away from the current asymmetric EU-LAC relationship. Regional integration is growing fast and will help the LAC countries to “disengage” from their primary export profile vis-à-vis the industrialized nations.

In Europe, over 50 civil society groups are currently demanding a paradigm shift in EU trade and investment policies: “support sustainable farming practices in Europe and the Global South that protect biodiversity, enhance the fertility of soils, reduce the use of fossil fuels and help prevent climate change”. http://www.alternativetrademandate.org/

The EU can play a strong leadership role in supporting a win-win relationship with LAC countries!

www.alop.org.mx www.cifca.org

www.aprodev.eu www.gruposur.org

in cooperation with Not So Crazy.eu