Press conference: Commissioner Patten and President Iglesias at III EU-LAC Summit

Guadalajara, Mexico

27 May 2004

It is my great pleasure to talk to you this morning and an even greater pleasure and honour to share this press conference with Enrique Iglesias, who has proven a model of dedication, wisdom and efficiency as president of the Inter American Development Bank.

Why are we holding this press conference jointly? Because the Commission and the Bank have been working together on an important project dedicated to increasing social cohesion in our regions, a top priority of tomorrow’s Summit.

But before I come to this, perhaps you will allow me to say a few words about the Summit more generally. Tomorrow fifty-eight Heads of State and Government – a third of the world’s governments – will meet in Guadalajara. The summit will be the first ever involving the enlarged European Union, which since the first of May has twenty-five Member States and 455 million citizens, and it is thus a chance to look afresh at all aspects – political, economic and commercial – of our two regions’ relationship.

For the EU, relations with Latin America and the Caribbean are enormously important. They are founded on common values, agreement on many issues, a readiness to discuss amicably when our views differ, and strong cultural links. We also have a mutual interest in a strong economic and commercial relationship. The EU is Latin America’s second most important trading partner, its largest source of foreign direct investment (FDI) and the leading donor of development assistance.

This summit will address all these issues, focusing in particular on the three themes of social cohesion, regional integration and multilateralism. I would like to say a few words about each of these, and in particular on social cohesion as it is in this area that the EU and the Inter American Development Bank are today announcing a joint initiative.

Of course, the three themes are intrinsically linked. Addressing the high level of social exclusion throughout the LAC region would contribute greatly to the consolidation of democratic institutions and to sustainable economic development. Further steps towards regional and sub-regional integration will accelerate economic growth, as well as facilitate further progress in the EU-LAC partnership and towards an effective international multilateral system. A rules-based multilateral system, with the UN at its centre, is essential for confronting the formidable challenges facing the world today and enabling free trade and economic development.

Taking each theme separately let me start with the question of how to improve social cohesion. This is a challenge faced by both the EU (especially after enlargement) and Latin American countries. Indeed, the EU has made progress on this a top priority both at home and in its relations with this region. There are moral, economic and political reasons for this.

Morally, because we believe misery and social exclusion are contrary to human dignity and rights. These values shape our domestic policies and influence our relations with other regions. In almost all Latin American countries, only 9-15% of total income goes to the poorest 40% of households. Despite a decade of reforms, the gap between rich and poor is widening. Economically, social inequalities act as a brake on economic growth as large sections of society are unable to contribute. And politically there is a danger that people’s faith in democracy will be eroded if they consider that institutional and market reforms have failed to deliver a better quality of life. The Inter-American Development Bank (IADB) very accurately pointed out in its excellent report

"Facing up to inequality in Latin America" that inequality contributes not only to high rates of poverty but also to social tension and political disaffection. This is not a problem faced by Latin America alone. It is something that we all – including the enlarged EU – have to face. Inequalities in wealth create a sense of dislocation and are a potential risk to security, wherever they occur.

I am delighted that, following a seminar on social cohesion that President Iglesias and I organised last June, a working group of experts from both regions and international institutions presented recommendations for reform aimed at promoting more efficient administrations and policies as well as sound tax reform to generate significant public revenues to support social reform.

It is clear that while the international donor community can help, the development and implementation of social policies to improve social cohesion in Latin America is the responsibility of Latin American countries. However, this is not just a priority for Latin America: it is one for the EU as well. While it is fair to say that one of the successes of European reconstruction after the Second World War was in tackling social inequality, we still have significant pockets of poverty within different regions and between them. Enlargement has created a new and significant challenge for the EU in promoting social cohesion across a much larger Union with greater differences in wealth.

So this issue is a key one for both our regions and we can and should support each other. I hope, then, that our Heads of State and Government will take the opportunity of this summit to send a clear message to our people, a message that conveys their determination to build fairer and more inclusive societies. I hope that they will express their support for a consistent, concrete and operational action plan to be implemented by both regions, in years to come.

The European Union, and in particular the European Commission, are ready to help in this, and today I would like to announce a new initiative to enable our two regions to exchange experience, know-how and best practice in defining and implementing social policies to improve social cohesion. The EUROsociAL initiative, to which the European Community will commit 30 million euros over the next five years, will address all policies which have a major impact on social cohesion including taxation, justice, health, education and employment. I very much welcome the fact that the Inter American Bank of Development, the United Nations Development Programme and the Economic Commission for Latin America and the Caribbean have all agreed to participate in the programme. No doubt, we will have an opportunity to discuss the details of this new initiative later on.

Turning now to the other themes the European Union would like the Guadalajara Summit to focus on, let me briefly run you through some of the critical points.

The EU places great importance on the deepening of regional integration throughout Latin America. It will help the region fulfil its economic potential and facilitate individual countries’ entry to international markets. Politically it will allow Latin America to become a more influential player on the global scene and it will open the door to stronger and deeper EU Latin American relations. The EU has supported and continues to support the regional integration processes in Mercosur, Central America and the Andean Community. The Madrid declaration implied that further progress on regional integration is a key condition for the launch of negotiations on possible Association Agreements with Central America and the Andean Community.

The Guadalajara Summit should help pave the way towards the opening of negotiations on Association Agreements with Central America and the Andean Community. To begin the process and in order to prepare the ground for the opening of future negotiations, the Commission proposes a “joint evaluation” of the process of regional integration in both regions, including clear benchmarks.

The Summit should also stress the importance of efforts by all to ensure the WTO Doha Development round reaches a rapid conclusion, since any future Association Agreements will be built upon the outcome of Doha.

This summit should also mark progress in the on-going negotiations for an EU-Mercosur Association Agreement, which should enable negotiations to be concluded by October 2004. As to the Caribbean, the Summit will note this April’s launch of negotiations on an EU-Caribbean Economic and Partnership Agreement.

And, finally - multilateralism. I know our two regions share a firm belief that an effective multilateral system, with the UN at its centre, is essential for confronting the formidable challenges facing the world today: poverty; human rights abuses; conflict; terrorism; trafficking; the spread of HIV/AIDS and other infectious diseases; environmental degradation and so on. These are cross-border issues, which cannot be tackled by any country alone but which need a multilateral approach based on common commitments, agreements and rules. The EU therefore has a clear interest in supporting the involvement of all parties in global governance as well as the continuous evolution and improvement of the tools that support it.

Completion of the work Doha trade talks, meeting the Millennium Development Goals, the implementation of international Conventions, the proper working of the International Criminal Court and the entry into force of the Kyoto protocol are multilateral commitments the EU as well as LAC countries support.

I hope this summit will do much to bring closer two regions, which thanks to cultural, political and economic links could be close allies in multilateral approaches to world issues and thereby enhance our joint influence on the international stage and in multilateral institutions.

So, to conclude, for over twenty years the dialogue between the EU and Latin America/Caribbean has been marked by frank and fruitful co-operation, and indeed by tangible achievements. I trust that the EUROsociAL initiative will be another achievement to add to the list, and that our summit tomorrow will be yet another defining moment in our ever-growing relationship.