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EU - CELAC Economic Forum - Channels for a joint future

On 11 October Bruegel together with GIGA and Real Instituto Elcano will organise a conference on relations between the EU and the Community of Latin A

Speakers

Bert Hoffmann

Head of Berlin Office, German Institute of Global and Area Studies (GIGA),

Eduardo Levy Yeyati

Dean, Universidad Torcuato Di Tella (UTDT) School of Government and Coordinating Director of the Argentina 2030 Program of the Presidency of the Nation,

Mario Pezzini

Director, OECD Development Centre and Special Advisor to the OECD Secretary-General on Development,

Luicy Pedroza

Research Fellow and Speaker Research Team, GIGA Institute of Latin American Studies,

Mario Soares

Member of the European Economic and Social Committee - EESC,

Edita Hrdá

Managing Director Americas, European External Action Service (EEAS),

Gonzalo Gutiérrez

Ambassador of Peru to the Kingdom of Belgium, Grand-Duchy of Luxembourg and to the EU,

VIDEO & AUDIO RECORDINGS

Summary

Welcome Remarks and Keynote Speech 

Paola Amadei, Bert Hoffmann, Emilio Lamo de Espinosa, and Guntram Wolff expressed pleasure in joining forces for the forum, welcomed participants and wished fruitful discussions, and put forward some reflections. They pointed out the high intensity of EU-CELAC connections, not only in terms of trade and investment, but also from a broader historical and geopolitical perspective. Thus, in consideration of the changing global environment, there are solid foundations and profound incentives to work more closely together.
Edita Hrdá was thankful for the organization of the event, and followed with a keynote speech, which listed recent developments in EU-CELAC relations, and evaluated possible avenues for increased cooperation.
About investment, it was highlighted the importance of providing legal certainty for investors, which suggests that bi-regional cooperation should also focus on a more stable, transparent and predictable regulatory framework. Supporting economic growth was also pointed out in many different aspects (e.g., investment in infrastructure and logistics). However, growth alone was deemed not enough to maintain social gains and reduce inequalities. Therefore, cooperation should also aim at social cohesion.
Moreover, since Latin America is the most urbanized region in the world, it was suggested that there is scope for further collaboration on sharing knowledge and experiences on the topic. A final look was also given at the influence of the US and China, given the growing importance of the latter and the steps back from trade agreements of the former. In particular, this was seen as a good opportunity to think about the future of EU-CELAC relations.
Finally, the discussion stressed once more that relations between countries and regions are ultimately based on relations between people, so it is indeed important to approach local communities in other countries, for example in the US and Canada.

The Geopolitical Channel 

This session pointed out that CELAC countries face an external sector trap, as they are mostly commodity exporters and manufacturing importers. The implicit problems, given high import elasticity to income, are the imbalances that would be created by more openness, which would be difficult to reverse by devaluation because of the quite inelastic nature of CELAC exports; historically, trends have been reversed via economic contractions. Therefore, there is a need for CELAC countries to find new exports and markets. This move would mitigate negative effects of trade, and provide more flexibility to adapt to new trends of commerce.
This is also why it is important to compensate, in trade agreements, more openness with more commodity exports, which is indeed a delicate point in the negotiations between the EU and MERCOSUR. Another possible solution would be to direct investment towards new businesses. More openness might also hurt existing manufacturing industries in CELAC, especially in terms of labor. This suggests that collaboration might also focus on education system that would build skills and competences to be competitive at the global level.
In general, a need to specify incentives and directions for trade and investment was highlighted, especially considering the current window of opportunity for the EU and CELAC to strengthen their partnership and make a stronger case for multilateralism at the global level. Finally, the discussion also identified various topical issues, including, among others:
• Brexit, which would affect EU-CELAC relations, especially those with English-speaking Caribbean countries;
• the emergence of China as an investor in CELAC. However, it was noted that China’s investments are different from those of the EU, which are more sophisticated and mainly brought by private businesses;
• higher political determination, which is necessary to set better incentives for investors

The People Channel 

In the spirit of cooperation, this session was held in Spanish, and recognized that migration matters for the EU, especially for its labour force. Thus, a long-term plan to foster integration is needed, as it is becoming more difficult to cope with the increasing discontent at the social and political levels. Given the structural nature of this phenomenon, international policy was deemed more capable of producing results. This in turn should focus on new rules and mechanisms in agreements between origin and destination countries, keeping in mind that most migrants are not refugees, are coming to stay, and seek rights and opportunities.
From the side of origin countries, the discussion pointed out the importance of a correct balance between brain drain and remittances, and that policy tools should create the right incentives for circular migration. In particular, considering the transfer of knowledge, the traditional model of scholarships and return might not be appropriate anymore, as there are high risks of people staying abroad, or not being able to enter the labour market, especially in sectors not as well developed as in the host country. Therefore, there is a need to better foster circularity of flows, for example through transnational networks of research institutes and post-graduate programs, as well as promoting development and opening migration offices locally.
The discussion stressed that the ultimate goal should be the integration of migrants in labour markets and social life, in a way that population can see the benefits. To do so and make migration a two-way street, more dialogue is advisable to share best practices and expertise, as well as a more organized legislation. Finally, it was highlighted that migration also concerns North America and intra-CELAC integration, implying that efforts should be made in different directions.

The Technological Channel 

The main subject of the dialog was the discussion of challenges we face in the digital world and solutions we can offer. Connectivity, cybersecurity, privacy issues were covered. To cope with the challenges imposed by the digital world, one needs, first of all, to get the description of landscape situation of the Latin American region.
We have recently seen a substantial growth in the mobile broadband average, where Costa Rica is the leader. But while mobile telephony revolution took place and there was a significant rise in the number of the Internet users, 53% of Latin American people do not use Internet and 66% of households do not have Internet connection. Therefore the effective use of the Internet is instrumental as despite the reduction in prices it is still not fully accessible and ICT services are not universally available. When it comes to cybersecurity issues, Brazil is the most impacted country in Latin America. This brings our attention to the fact that regulatory and legal measures are not harmonized. All Latin American countries have privacy or data protection framework, not all of them consider new services and technologies.
Clearly measures are needed. We should support the growth of technology and ensure that we benefit from it. To achieve this target, we need to take the following steps, to mention a few:
- close the digital divide in Latin American countries, which is a work in progress,
- apply appropriate public policies,
- construct a new reasonable taxation scheme,
- cooperate internationally with unions, governments and companies,
- achieve higher transparency in data usage both by individuals and governments,
- make technology more democratic,
- shift a focus of trade agreements to the whole ecosystem rather than just Telecom regulation.

Event Report

Research_Report_EU_CELAC_where_do_we_stand

EVENT MATERIALS

Presentation by Maryleana Méndez Jiménez

Presentation by Levy Yeyati