EU vows 'no protectionism' as it seals LatAm trade deals

18th May 2010, Comments 0 comments

The European Union and countries of Latin America and the Caribbean pledged to "avoid protectionism in all its forms", as the bloc announced free trade deals with the region at a summit.

"We remain determined to favour an open non-discriminatory, rules-based multilateral trade system and fully respect its disciplines," the government leaders and representatives said in a final communique at the Madrid meeting.

"We are committed to avoid protectionism in all its forms."

Spain had billed the summit as a high point of its six-month EU presidency, and has pushed for closer EU ties with its former colonies in Latin America, a priority spelled out by Spanish Prime Minister Jose Luis Rodriguez Zapatero in an inaugural speech.

"In an increasingly globalised world where the source of prosperity lies in uniting efforts, the capacity for economic growth lies in openness and liberalisation" and not in protectionism and closed borders, he said.

As the conference formally opened, the EU and Central American nations of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama announced their first ever trade deal after three years of negotiations.

The deal "will result in an ambitious, comprehensive and balanced trade pillar of the Association Agreement," both sides said in a statement.

It envisages "100 percent market opening for industrial products on both sides" and export quotas for milk powder and cheese from Europe and for bananas, beef and rice from Central America, according to the European Commission.

European motor vehicles will also be given "free access to the Central American market over a period of 10 years."

El Salvador's cabinet secretary Alexander Segovia said "flexibility by the European Union" led to the deal.

The EU also reached separate trade and cooperation deals with Colombia and with Peru, 10 years after a similar accord with Mexico.

The announcements follows an agreement late Monday between the EU and the South American trading bloc Mercosur to resume talks aimed at reaching a free trade deal, despite opposition from a number of European nations led by France.

The EU and Mercosur, which is made up of Argentina, Brazil, Uruguay and Paraguay, began free trade talks in 1999 but they stalled in 2004 due to disagreement over tariffs and subsidies paid to European farmers.

Zapatero said the deal would lead to an extra five billion euros (6.2 billion dollars) in exports per year.

But last week, 10 EU nations issued a statement opposing the resumption of the talks with Mercosur because "the strategic agricultural interests of the European Union are clearly at stake."

The statement was backed by Austria, Cyprus, Finland, France, Greece, Hungary, Ireland, Luxembourg, Poland and Romania.

France is the main beneficiary of the EU's Common Agricultural Policy, which pays billions of euros each year in subsidies for food production.

European Commission president Jose Manuel Barroso Tuesday sought to ease the their concerns by explaining that "a good part of (economic) growth in the future will come from foreign demand."

Peruvian President Alan Garcia, whose country hosted the last EU-Latin America summit in 2008, welcomed "the opening of a difficult dialogue" between the EU and Mercosur at a time when "the world and Europe is being shaken by crisis."

Argentine President Cristina Kirchner also warned the negotiations would be "difficult" due to "protectionist" tendencies of some European nations.

Other leaders attending the summit include French President Nicolas Sarkozy, Brazilian President Luiz Inacio Lula da Silva, Bolivia's Evo Morales and Chile's Sebastian Pinera, whose country will host the next summit in 2012.

© 2010 AFP

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