Latin America, the Caribbean, Central and Eastern Europe: Lights and shades of a friendly but a distant relationship

The relationship between Latin America, the Caribbean and the countries of Central and Eastern Europe has intensified during the last years, but it still remains well below the desirable potential of exchange between regions that share values, political experiences and pursue growth for attenuating social inequalities.

That is the conclusion of the study “Latin America, the Caribbean and Central and Eastern Europe: Potential for Economic Exchange”, presented on the 12th of May in Warsaw, followed by a seminar on the 13th, where the possibilities for cooperation, which, according to the president of the Foundation, Benita Ferrero–Waldner, should be “strategic”, were discussed.

“There are countries in Europe that do not perceive the fascinating dynamics that Latin America lives and the economic and political benefits to be derived from a closer relationship”, regretted Ms Ferrero–Waldner, for whom that lack of interest is, in the majority of the cases, result of ignorance about the region.

In this regard, she highlighted that the developed countries of Latin America have already emerged, that the progress of the Latin-American middle classes opens the opportunity for expanding the model of European social welfare and that the countries that used only to export now import, thus becoming new markets.

“In Latin America and the Caribbean many possibilities are opening up, take advantage of them, because the partnership between Europe and Latin America and the Caribbean is natural”, insisted Ms Ferrero-Walder to an audience of experts, scholars, diplomats and entrepreneurs who attended the seminar, including the general director of Inglot Cosmetics, Zbigniew.

According to this study, trade between the sub-regions multiplied fivefold in 2012 in comparison to the year 2000, up to 13.620 million of US dollars, a “very low” figure in the global context and which, once disaggregated, yields national data insignificant.

In the case of Brazil, its trade with Central and Eastern Europe scraped 1,03 percent of the total in 2000-12, while the one of Poland with Latin America and the Caribbean accounted for 1,08 percent.

 “The relations with Latin America and the Caribbean are friendly but distant” confirmed the director of the Polish Institute for International Relations (PISM), Marcin Zaborowski and added that the lack of interest for that relation is “mutual” as it is demonstrated by the few if none visits of Latin American leaders to Central and Eastern Europe and vice versa.

Latin America must solve some problems in order to perform in a block 

The president of the Brazilian Centre of International Relations (CEBRI), Luíz Augusto de Castro Neves, said that the relations with Latin America and the Caribbean cannot be measured in global terms as long as the region does not solve the problems that keep them from actively performing as a block.

“Latin America and the Caribbean is not a homogenous region and does not agree on how to integrate the region into a global market. Each country has its own agenda, although China is in the agenda of all them”, he argued.

The diplomat and academic Alberto van Klaveren Stork, from the Institute of International Relations at the University of Chile agreed that the main barrier of Latin America and the Caribbean is its “heterogeneity and its understanding of integration processes, different from the European one.”

He cited MERCOSUR as an example, a trading block that acts as a political group, as evidenced by the fact that the “entry of Venezuela or Bolivia would not fundamentally alter the market conditions”.

“In terms of integration, Latin America and the Caribbean, with the big challenge represented by Pacific Alliance, which, if it aims for a trading block, is more like the Association Southeast Asian Nations (ASEAN)”, said Stork and added: “Twenty years ago Latin America used to look towards the European Union, today it looks towards Asia”.

Break down the bureaucracy and lower costs 

The authors of the study dedicate a chapter to direct investments between the two regions and argue that they are in a phase of “exploration and with enormous potentialities for growth and development”.

That potential is already being explored by Latin American companies such as CEMEX, a construction company from Mexico with more than 800 employees in Hungary; or NEMK, global leader in production of aluminum injections with production plants in Czech Republic, Poland and Hungary.

In the reverse direction, the report quoted Selena, the Polish chemical, with a production plant in Panama; the Hungarian pharmaceutical, Richter Gedeon; the Romanian Astra Asiguari, the Slovenian Hidria Perles and KGHM Polska Miedz, which invested three billion dollars in Chile in 2012.

Despite the examples mentioned in the study, the authors stressed the need to foster economic exchanges between both regions and in taking advantage of all their potential, taking initiatives that would allow them to break down bureaucracy and to lower costs.

“Updating the Association Agreements between the EU and LAC, signing new ones and re- starting negotiations is an opportunity to dissolve the great majority of obstacles that slow down the economic exchange. Trade liberalization is essential to strengthen large companies‘ production chains and facilitate exchange between SMEs”, recommend the authors.

Carried out by a consortium comprising CiDOB, IWE and ECSA, with the participation of PISM researchers, the study was an initiative of, and was commissioned by, the EU–LAC Foundation.