Select Committee on European Union Fortieth Report


Letter from the Chairman to Rt Hon Douglas Alexander MP, Minister for Europe, Foreign and Commonwealth Office

  Thank you for your Explanatory Memorandum dated 19 January 2006 which Sub-Committee C considered at its meeting on 2 February. The Sub-Committee agreed to hold the document under scrutiny.

  The Explanatory Memorandum is wholly inadequate in its analysis of the policy implications of the document. Merely stating that you welcome the Commission decision to update the Strategy does not enable us to perform satisfactory parliamentary scrutiny of the document nor, in particular, the Government's position.

  We would like to know whether you agree with the Commission's proposals to build a stronger partnership with Latin America and how you propose to take this issue forward in Council. Although you state in paragraph 11 of the Explanatory Memorandum that you have "commented that it will be important to ensure that the EU's dialogues with the region are focused and help build a stronger partnership" there is no indication of where this earlier commentary appears. More detailed commentary such as this ought to have been contained with the explanatory memorandum.

  We also wish to raise a number of substantive points arising out of the document.

  Do you agree with the Commission's conclusion (p 5) that "Some consideration ought to be given to joint action to improve the political dialogue between the two regions with a view to eventually expanding their world influence"?

  How do you believe that the economic policies of the governments of Bolivia and Venezuela will impact on the relationship between the EU and Latin America?

  The EU has supported Mercosur since its creation in 1991. However, this Communication makes little reference to relations with Mercosur, other than to treat it as another example of sub-regional organisation. Does the document reflect a changing relationship with Mercosur and, if not, how does that relationship accord with the proposals made in the Communication?

  The document states (p 6) that 44.4% of the population live in poverty and that "these inequalities are a contributory factor in undermining democracy and fragmenting societies. They jeopardise growth and economic development." Will this, and other challenges detailed in the document, be fully taken into account in preparation for the next EU-Latin America Summit in May 2006?

  It has always been the case that the European Union has tried to be even-handed in its relations with both SE Asia and Latin America. Does this Commission Communication mark a departure from this?

  Finally, we would like some clarification over the status of the document. To what extent will it be necessary for the Council to endorse the Commission's proposals for increased political dialogue, and what part will the High Representative, Javier Solana, play in carrying out this dialogue?

3 February 2006

Letter from Rt Hon Douglas Alexander MP to the Chairman

  Thank you for your letter of 3 February concerning the Explanatory Memorandum on the Commission Communication on Latin America dated 19 January. I am sorry that Sub-Committee C found the memorandum inadequate. Now that the Commission has formally presented the Communication to the GAERC, I am better placed to comment. I hope that this letter, taken together with the information already sent, will provide you with the clarification that you seek.

  Perhaps I should start by explaining the status of this Communication and how we see it being taken forward over the coming weeks.

  The Communication is a Commission policy document, which is presented to the European Council and Parliament. We have an opportunity to contribute our views on the Communication at the GAERC on 27 February, when the Council will agree conclusions.

  The EU already has a strategic partnership with Latin America. This Communication is essentially an update of the Commission's last strategy paper on Latin America, produced in 1995. The Commission's overall objective is twofold: to improve dialogue and to make clear that Latin America matters to Europe at a time when there is a perception in the region that the EU has lost interest. A similar Communication on the Caribbean will follow in the next few months. There is no umbilical link between either Communication and the EU-Latin America Caribbean Summit in Vienna in May 2006 (EU-LAC Summits take place every two to three years). But it makes sense for the European Union to signal its commitment to the region in the lead-up to the Summit.

  Much of what is in the Commission Communication is intended to improve on the existing arrangements; some of it is new. But it is in general intended to give more substance to the EU-LAC relationship. The main points are:

    —  The EU has formal political dialogues with relatively few countries in the region. It has, for example, no dialogue with Brazil, the emerging regional power. The Commission want to plug that gap and also intend to create sectoral dialogues with Latin American countries on two key areas: on social cohesion (at senior official level) and on the environment (at Ministerial level).

    —  The Commission considers that current political dialogues (eg the Rio Group) are not working very well: agenda are too long and meetings are too declaratory. They intend to try to focus these meetings to concentrate on a limited number of topics in order to have a genuine dialogue. Javier Solana is involved in existing dialogues and would presumably be involved in any new dialogues.

    —  The Commission want to promote a more favourable climate for EU trade and investment by working with Latin American countries to identify obstacles to foreign investment and by promoting EU norms and standards.

    —  The Commission have taken up a European Parliament proposal to create a Euro-Latin America Transatlantic Assembly (similar to those that already exist with ACP and EuroMed countries) with the aim of promoting the democratic process in a region where democratic institutions are weak.

    —  The Commission are stepping up programmes of higher education co-operation.

    —  In addition, the Commission hope that a decision will shortly be reached on a Latin America Facility for the European Investment Bank, and that this can be presented at the Vienna EU-LAC Summit.

  We believe that the Commission's proposals to build a stronger partnership with Latin America are positive. We are generally satisfied that in this Communication the Commission has focused on the most important challenges facing the region today and identified the areas in which the EU's partnership with Latin America can help to make a difference. The UK has commented on the Communication during discussions at the EU-Latin America Working Group and in the form of textual amendments to the draft Council Conclusions. Our comments have focused on the following points:

    —  we welcome more focused dialogue and agree there is a case for creating new dialogues, especially with major emerging powers like Brazil and on issues of critical importance to the UK, EU and Latin America such as the environment, but we should avoid where possible creating new burdensome structures;

    —  all development co-operation must be consistent with the principles and commitments contained in the recently agreed Joint Council, Commission and European Parliament Statement on the European Consensus on Development and the European Community Development Policy Statement;

    —  in line with the European Consensus on Development, and in view of the pronounced levels of inequality across Latin America, poverty eradication in the context of sustainable development [including pursuit of the Millennium Development Goals] must remain the primary and overarching objective of EU development co-operation. Similarly community co-operation with Latin American countries should have poverty eradication as its main objective.

  You raised a number of other specific points in your letter:

  The economic policies pursued by the government of Venezuela are based on President Chavez's "Bolivarian revolution and 21st century socialism". There is high government spending on social projects, principally funded by oil revenue. The price of oil is crucial to the sustainability of this project. The Venezuelan government has recently re-negotiated the contracts it holds with the international energy companies operating in the country. We understand that some negotiations are still going on. It is therefore a little early to judge whether, and if so to what extent, this will effect the participation of European companies in Venezuela.

  Venezuela is also reaching out economically and politically within the region. It has started accession negotiations to join Mercosur. It is unclear how long these negotiations will last. The implications of Venezuelan membership of Mercosur on EU-Mercosur relations is a subject that we continue to assess within the EU. It should be noted that the EU also has regular contact with the Andean Community, of which Venezuela is a member.

  The direction that the new Bolivian government will take on economic policy is not yet clear. It is likely that President Morales' stated intention of "nationalising" the country's hydrocarbons industry will have implications for British, other EU and foreign investors, including Brazilian companies. But it is too early to speculate exactly what form government policies will take. Morales has made clear his wish to maintain good relations with the EU, and his willingness to work with foreign investors as "partners" not "owners" of Bolivia's natural resources. His strong commitment to tackle poverty and exclusion is welcome, and the EU has made clear its support for Bolivia's efforts in these areas. It will be important for EU donors to be supportive and open to dialogue with the new Government.

  I do not think that the Communication reflects a changing relationship with Mercosur, which is mentioned in several sections of the paper (eg "Creating a climate favourable to trade and investment", "Contributing together to stability and prosperity" and "Co-operating more effectively and increased mutual understanding"), as well as in the final section on the Summit. As you know, an EU-Mercosur Association Agreement is currently under negotiation. Engaging with Mercosur remains an important aspect of the EU strategy in Latin America.

  As stated previously, tackling poverty and inequality represents the most pressing challenge for most Latin American countries. They should remain the focus of Community co-operation, and I can confirm that they are being taken into account in preparations for the forthcoming EU-LAC Summit in Vienna in May.

  Finally, I do not see the Commission's Communication as signalling an alteration in the balance of the EU's relations with Latin America and SE Asia. For both regions the EU has a committed dialogue. The EU's partnership with SE Asia contains similar priorities, including regional stability, human rights, trade and investment and development. For both Latin America and SE Asia the essence of our relations rests on effective dialogue, which in the case of Latin America the Commission's Communication rightly underlines.

  I hope that the additional information in this letter addresses your concerns—and that you will be able to complete the scrutiny process in advance of the GAERC on 27 February.

13 February 2006

Letter from the Chairman to Rt Hon Douglas Alexander MP

  Thank you for your letter dated 13 February which Sub-Committee C considered at its meeting on 2 March. The Sub-Committee has now agreed to clear the Commission Communication from scrutiny.

  We would like to thank you for providing such full information on the policy implications of the Commission Communication in your letter, but stress that in future such information should be contained within Explanatory Memoranda.

7 March 2006

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