2023 will be the year of Latin America – or so it would seem, with a new EU strategy on Latin America & the Caribbeans, an EU-CELAC Summit and several bi-lateral FTAs on the way (EU-Chile, EU-Mexico and, hopefully, EU-Mercosur).
The EU already has strong economic ties with Latin America & the Caribbeans. The EU has gained a competitive advantage in the region thanks to its bilateral agreements and could reinforce this competitive advantage by finalising & ratifying the FTA with Mercosur countries – benefiting from a first-mover position. In addition, the EU is a significant investor in Latin America: EU foreign direct investment in Latin America amounts to €758 billion, which is more than the total EU investment in China, India, Japan and Russia combined. In the spirits sector, many EU companies have made substantial investments in Latin America and the Caribbeans – both of which are strong centres of spirits production.
Geopolitically, the EU, Latin America and the Caribbeans combine almost one-third of the votes at the UN and include seven members of the G20, reinforcing the importance of a close partnership between the EU, Latin America and the Caribbeans. These elements confirm the place of this region as a key element in the EU’s geopolitical & trade diversification strategies (both for exporters and for the import of critical raw materials).
In order to harness the growth potential and export opportunities in Latin America and the Caribbeans and reinforce our strategic links, we call on the EU to focus on four priorities.
The first priority is to ratify without delays the trade agreements with Mercosur & Mexico. While EU spirits already benefit from an agreement with Mexico, the modernised FTA with Mexico will provide greater protection to a larger number of EU spirits GIs and act as a blueprint for future agreements in terms of regulatory cooperation & provisions. The agreement with Mercosur countries, once ratified, has the potential to be a real game-changer in the region – both strategically and economically. It would greatly facilitate access to Mercosur countries and provide EU spirits producers large and small with the means to tap the significant potential of a promising market of over 270 million inhabitants.
The second priority is to secure the conditions for fair competition between EU spirits exporters & local producers in Latin America & the Caribbeans. In concrete terms, this means putting an end to existing tax discrimination, which is all too prevalent in several countries in the region.
The third priority is to intensify regulatory cooperation with LAC countries to address and prevent regulatory barriers – building, when available, on existing bilateral fora under EU agreements. Good examples include the wine & spirits annexes in the EU-Mercosur & EU-Mexico agreements. For those to fully deliver on their potential, the EU needs to ratify both agreements as soon as possible. Regulatory cooperation should be seen as an opportunity to resolve bi-lateral disagreements and remove existing barriers, but also to join forces in the fight against unjustified barriers in other markets – as these often affect operators on both sides – and to increase and encourage cooperation at multilateral level.
The final priority is to initiate a dialogue with countries in the LAC region to fight illicit trade. Illicit trade is a common challenge for the EU, Latin America, and the Caribbeans. It comes at the expense of the SDGs and presents a significant danger to public health, tax revenues, and competitiveness. Joining forces to tackle what is an increasingly significant challenge would make a lot of sense, and we urge both sides to discuss concrete joint actions.
More detailed recommendations can be found in our recently adopted spiritsEUROPE strategy for Latin America and the Caribbeans, which can be uploaded here. Implementing these recommendations would be a good way for the EU to not only make the most of the key milestones foreseen in EU-Latin America relations this year but to turn an entirely new chapter in this strategic relationship, for the mutual benefit of the EU, Latin America & the Caribbeans.
