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Mexico-EU: Not everyone happy with results of free trade treaty

Not Everyone Happy with Results of Free Trade Treaty

Diego Cevallos

MEXICO CITY, Feb 8 (IPS) - Five and a half years after the implementation of the Mexico-European Union free trade agreement, the first such accord between Europe and a country in Latin America, the partners tout its success, while social activists complain that it has failed to deliver on its promises.

The agreement, in effect since July 2000, encompasses political dialogue, the opening up of markets, and cooperation in social programmes and scientific research.

But critics charge that the accord is basically trade-oriented, and that little to nothing has been done on other fronts.

During a three-day visit to Mexico that ended Wednesday, EU external relations commissioner Benita Ferrero-Waldner praised the free trade accord, which led to 34 percent growth in the volume of bilateral trade over the last five years, and said she would attempt to expand it in order to consolidate the increase in trade, strengthen investment, and support small and medium businesses.

She also announced that the EU is interested in negotiating similar agreements with Central America and the Andean Community trade bloc (made up of Bolivia, Colombia, Ecuador and Peru), and that it hopes to conclude ongoing talks with the Southern Common Market (Mercosur - consisting of Argentina, Brazil, Paraguay and Uruguay).

Besides its agreement with Mexico, the EU has a free trade accord with Chile, which was signed in 2002.

The heads of state and government of the countries of the EU and Latin America will meet in Vienna, Austria in May, with the aim of making further progress towards integration.

"The Europeans frequently say that their agreement with Mexico focuses on the fields of democracy and human rights. But in practice, it has functioned as just another free trade deal, and other countries should take that into account when they negotiate," Norma Castañeda, with Equipo Pueblo - a local non-governmental organisation working on development issues from a human rights-based approach - told IPS.

A similar view was expressed by Manuel Pérez, an activist with the Mexican Action Network on Free Trade (RMALC).

Mexico’s free trade treaty with the EU "serves as an example for Latin America of the wrong route to follow with Europe, and an illustration of the urgent need to negotiate accords that are more similar to and more in keeping with the social, political and economic principles that exist within the EU itself," said Pérez.

RMALC and Equipo Pueblo staunchly resisted the free trade agreement with the EU, which they see as a threat to small and medium local businesses that are unable to compete with powerful European companies.

They also say Europe signed the accord with Mexico basically to gain an open door to trade with the United States.

Although the trade flow between Mexico and the EU climbed from nearly 20.4 to 27.5 billion dollars between 2000 and 2004, Mexico has remained heavily dependent on the U.S. market, which absorbs more than 80 percent of this country’s exports.

Furthermore, Mexico’s trade deficit with the EU shot up from 9.16 billion dollars in 2000 to 14.4 billion in 2004.

The EU accord is considered the second-most important for Mexico after the North American Free Trade Agreement (NAFTA), which has linked Mexico, Canada and the United States since 1994.

Nevertheless, the treaty with the EU represents less than eight percent of Mexico’s total foreign trade, which amounted to nearly 400 billion dollars a year.

In addition, the majority of Mexico’s exports to the EU involve oil and manufactured goods that are assembled in maquiladora or export assembly plants owned by U.S., Asian and European firms.

Under the treaty, EU investment in Mexico was given a boost, mainly in the financial sector and car industry, environmental initiatives were launched, and development projects were carried out in the impoverished southern state of Chiapas and among women and young people in rural communities in several other states.

The agreement also supports the incorporation of the principle of fair trade in Mexico’s domestic market, scientific research programmes, small and medium businesses, and the promotion of human rights and democracy.

Castañeda, who heads Equipo Pueblo’s programme on free trade, acknowledged the existence of these social plans, but argued that they have been carried out on a very small scale and that they were designed and implemented without any dialogue with local NGOs.

"The agreement with the EU is basically just a free trade accord," she stated.

Castañeda said that even in Chile, whose trade agreement with the EU did create mechanisms for dialogue between the authorities and civil society — which was not the case in Mexico — social organisations complain that they have not been listened to.

But where activists in Mexico complain of failure, the partners in the Mexico-EU accord see great room for success.

Although the government of President Vicente Fox admits that the treaty has not completely lived up to expectations in terms of trade, it maintains that it has huge potential. In addition, administration officials assert that strides have been made in the areas of political dialogue and cooperation.

A similar position is held by authorities in the EU. Ferrero-Waldner said in Mexico that the agreement could yield much more fruit, and should be expanded to areas not previously encompassed, such as trade in a greater number of farm products and the market for public tenders.

 source: IPS