Editorial: EU Trade - Up Against the Deadline
Update 137. December 2009 / January 2010
At the end of January, Peruvian, Colombian and European negotiators failed to reach agreements in negotiations to create a Free Trade Agreement. With the May deadline set to sign agreements at the European Union (EU)-Latin America and Caribbean summit in Madrid fast approaching, some fancy footwork will be required to seal the deal.
In all probability this will mean concessions on the Peruvian side in their attempt to negotiate a bilateral agreement that will cover trade and investment rules. A further meeting will now probably be arranged for late this month or in March.
So far as Peru is concerned, the outstanding issues include a deal over sources of origin for fishery products caught by European boats in waters more than twelve miles from the Peruvian coast.
The agreement will apparently no longer include additional protection periods for patents on European pharmaceutical products sold in Peru. This had been a bone of contention since it would have made it more difficult for Peruvians to access cheaper generic products. Instead negotiators have settled on something similar to the FTA with the United States in which some intellectual property provisions were amended to provide greater flexibility for Peru on the issue of medicines.
Other points that could not be adequately resolved in the latest negotiating round included access into the EU market for organic bananas, rice and sugar. The agriculturalists' grouping Conveagro is concerned that the deal will damage Peruvian producers of coffee, dairy products and olive oil.
Under the Toledo and García governments, Peru has pursued an aggressive policy of trade liberalisation deals, so far mainly with Asian and North American countries. The FTA with the United States is held partly responsible for the legislation on land ownership in the Amazon region that provoked the violent confrontation between police and indigenous protestors in Bagua last year in which at least 30 people lost their lives. This appears not to have deterred the Peruvian government, since an FTA with China has been signed which is due to come into force in March in which no mention is made of environmental or labour standards.
Originally the EU-Peru FTA was supposed to be bloc-to-bloc between the EU and the Andean Community (CAN), but it proved impossible to achieve unity between the Andean countries. First, the Bolivians were reluctant to sign up to what was a purely trade liberalisation agreement. Then Ecuador withdrew from the negotiations, primarily because of disagreements with the EU over bananas, one of its key agricultural exports.
As was the case with the FTA with the United States, the FTA with the EU is partly about trade, but it is also about investment. Just as one of the attractions for American companies was the safeguards for US investors in Peru, the same is true of the EU agreement. Companies registered in EU countries have been in the vanguard in investing in Peru over the last 20 years, in the forefront those from Spain and the United Kingdom.
While framework agreements with the EU include clauses that help protect human and political rights, the trade liberalisation agreement will make it more difficult for future governments to amend investment conditions conceded to European companies. This is of particular concern in the case of extractive industries in the Amazon and highlands of Peru, many of which have trampled on the rights of peoples living in their vicinity. Future governments will find it harder to change the conditions under which extractive companies are allowed to operate.