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Trade Policy Crucial To LatAm, EU Partnership

by Mike Godfrey,, Washington

26 May 2011

A successful trade policy is one of the key tools with which a continuing bi-regional partnership is to be achieved, the Euro-Latin Parliamentary Assembly has argued, setting out what it sees as the prospects for trade relations between the European Union and Latin America.

A resolution, titled "Prospects for trade relations between the European Union and Latin America", emphasizes the importance of multilateral trade, and makes several recommendations for the future.

As the document notes, the EU is the Latin American region's second most important trading partner, with EU countries constituting the largest source of foreign direct investment (FDI), and the EU receiving considerable levels of FDI from Brazil, Chile and Venezuela, in particular.

According to the preamble, Latin America and the EU have "committed themselves to forming a strategic partnership reinforced by a series of bilateral and regional agreements and the possibility of making further progress in this direction and concluding new agreements". Together, they must "play their part in reducing trade barriers".

Among the important points raised in the resolution are the following observations and arguments:

  • Regional integration has great significance for the power of Latin American countries to adjust to new global challenges;
  • Latin America must diversify its trade, which is currently based on raw materials. In particular, the move towards sustainable trade in products and services with greater added value is crucial if the region is to compete globally. Trade agreements should secure this, with technological cooperation and other measures necessary to help such countries maintain and develop their own food, goods and processing industries;
  • Substantial reform of agricultural export subsidies, in line with the Doha Round, should be completed as soon as possible;
  • Greater cooperation between the EU and Latin America is needed, to jointly push for the conclusion of a "fair, ambitious and comprehensive" Doha agreement, in accordance with the principle of special and differential treatment for developing countries;
  • The conclusion of World Trade Organization agreements on the banana trade has put an end to long running disputes between the EU and Latin America. This, in turn, could aid the settlement of the Doha Round, and has led to the conclusion of agreements with Central America, Colombia and Peru;
  • The need for a strategy on the establishment of effective regulation in capital markets. Ideally, multinationals would be penalized for transferring production, and financial transactions would be taxed;
  • The EU is open to negotiations with Bolivia and Ecuador;
  • The conclusion of the multi-party Trade Agreement between the EU, Colombia and Peru is welcomed; and
  • The resumption of negotiations on the EU-Mercosur Association Agreement is supported. When concluded, such a deal would allegedly "be one of the world's most ambitious biregional agreements", and a balanced agreement is needed.

The resolution has been forwarded to all of the major regional and governing institutions of the parties involved, including the parliaments of individual states, the EU's Council and the European Commission.

TAGS: tax | business | Chile | capital markets | World Trade Organisation (WTO) | Colombia | Ecuador | agreements | multinationals | trade disputes | Bolivia | Brazil | Peru | regulation | trade | European Union (EU) | Europe

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