Address by EU-LAC Foundation President Benita Ferrero-Waldner at the International Business Forum's Panel

7/31/2019 Address by EU-LAC Foundation President Benita Ferrero-Waldner at the International Business Forum's Panel

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ADDRESS BY EU-LAC FOUNDATION PRESIDENT BENITA

FERRERO-WALDNER AT THE INTERNATIONAL BUSINESS

FORUM LATIN AMERICA MEETS CENTRAL AND EASTERN

EUROPE IN VIENNA BRIDGING THE TWO WORDS THROUGH

TRADE AND INVESTMENT

Panel: Strengthened cooperation between Central and Eastern Europe andLatin America: perspectives, opportunities and prospects

Vienna, Business Forum, 14 May 2012

PLEASE CHECK AGAINST DELIVERY UNICAMENTE SERA AUTENTICA LA VERSIONPRONUNCIADA

Dear Co-Speakers,

Dear Ladies and Gentlemen,

I am delighted to contribute to this panel discussion.

Throughout the next fifteen minutes, I would like to carve out the benefits of closer politicaland especially economic cooperation between Latin America and the European Union.

I will refer to the current state of the global economy, the impact of the crisis in our regions,differences as well as common challenges and opportunities for enhanced cooperation.

In my role as President of the European Union-Latin America and the Caribbean

Foundation, theEU-LAC Foundation

, it will also be my pleasure to tell you what we canbring to the table to strengthen bi-regional business networks.

Ladies and Gentlemen,

The Heads of State and Heads of Government of the European Union and the countries ofLatin America and the Caribbean launched the strategic partnership more than a decade ago.At the time, I was present as Austrias State Secretary for Foreign Affairs. Since then, ourworld has significantly changed, and todays challenges clearly transcend national

boundaries.

The wellbeing of our societies will largely depend on our capacity to adapt to these changes:at the national, regional and the global level. For our bi-regional relationship this means that

we jointly need to target and seize the opportunities where they are.

The strategic partnership between the EU and Latin American and the Caribbean relies onthe three pillars of political dialogue, development cooperation and trade.

With a GDP of five and a half trillion dollars and a population of 575 million consumers theregions importance must not be underestimated. It represents one of the key emergingmarkets of the world offering huge potential benefits for European companies in the nearfuture.

The global economic crisis and its implications

The global economy has been facing a sustained period of turmoil with Europe at its veryheart. But even though the impact varies greatly from region to region and from country tocountry, this crisis affects all economies and societies.


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Europes economic downturn -with parts of the euro zone crushed by recession and massunemployment- and its dilemma to ensure financial stability via budgetary disciplinewithout compromising prospects for vital growth and job creation contrasts with the overalldynamism and resilience of Latin American economies.

From a regional perspective, Latin American economies have performed well. Two thirds of

them grew at rates above 3 per cent last year, and exports increased by 23 per cent during2011. Unemployment rates dropped from 7.3 per cent in 2010 to an anticipated rate between6.6 and 6.8 per cent in 2012, and levels of poverty have reached a historic low.Macroeconomic management has become increasingly sound.

In 2011, Latin America and the Caribbean attracted more Foreign Direct Investment (FDI)than ever before -153 Billion US$, an amount likely to be exceeded this year. 1 Brazil aloneaccounted for 43.8 per cent of the total flows into the region.

This general picture merits a close-up view though. Let me start by quoting PresidentCaldern of Mexico who at the last finance chiefs meeting of the G20 pointed out that weare all in the same boat and that the failure of a containment strategy will mean not only

the implosion of the euro but a devastating crisis with consequences for the rest of the world.

Ladies and gentlemen,

The EU is Latin Americas second trading partner after the United States and followed byChina2, and the leading foreign investor in the region.3 Brazil, in particular, features amongthe top ten trading partners of the EU.4

In the last decade, the EU invested an average of US$30 billion per year in the region.European investments are widely diverse and strongly relevant to strategic sectors, such aselectricity and banking. EU transnational corporations are key also to investments in themanufacturing sector, the main mechanism for developing new productive capacity.

Although the Economic Commission for Latin America and the Caribbeans (ECLAC)estimates that, in 2012, the FDI flows to Latin America and the Caribbean will maintain highlevels, the organization at the same time warns that if the crisis in the euro zone worsens,especially the flow of European investments could be reversed.

According to ECLAC, regional growth will suffer a slowdown to 3.7 per cent this yearhaving reached 5.9 per cent in 2010. This is due to international economic turmoil, lowergrowth of the world and especially Europes economy and greater uncertainty and volatilityin international financial markets.

A deepening of the euro zone crisis would have dire consequences for Latin American andCaribbean economies, primarily through the real channel -exports, prices, foreign

investment, remittances and tourism- and the financial channel, this means greater volatility,possible capital outflows and difficulties in accessing credit.

As for investments, Latin America and the Caribbean and the European Union shouldpromote cooperation in order to foster quality investments as a sustainable source of growthand development.

Indeed, quality investment is one of the areas where the bi-regional partnership between theEuropean Union and Latin America can generate real added value. The central theme of the

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According to an ECLAC report from 2012, the main foreign direct investment recipients in the region were

Brazil, Mexico, Chile, Colombia, Peru, Argentina, Venezuela and Uruguay.2 Based on figures for 2010.3

In spite of these figures, according to ECLAC, the Latin American and Caribbean region has increasingly lost

relevance as a location for European transnational companies when compared to Asia and Eastern Europe.4

Based on figures for 2011, Brazil is the 9th

most important trade partner for the EU.


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seventh EU-LAC Summit, in Santiago de Chile in January 2013, in reality the first EU-CELAC Summit, reflects this idea.

Both regions agreed on an Alliance for Sustainable Development: Promoting Social andEnvironmental Quality Investments. This clearly shows a strong convergence of interests

between our regions. We agree that we need to do our utmost to pursue an economically,

social and environmentally balanced development.

The strife for sustainable growth

Ladies and gentlemen,

Our governments all strive for growth, sustainable development and job creation. As EUCommissioner for Trade, Karel de Gucht recently said, we need to recommit to policies ofproductivity, growth and economic integration within our own regions and in ourrelationship with each other.

In order to generate sustainable growth it is necessary to boost competitiveness. On both

sides of the Atlantic!

As for the EU, I welcome the fact that the debate now openly tackles the question of austerityand growth, and that the fiscal compact is likely to be topped up with a growth compact.

The International Monetary Fund (IMF) has made clear its view that the adjustment inEuropean countries has often proven to be too harsh, as in periods of downturn, deficit-cutting has a strong multiplier effect that pushes countries into unexpectedly deep recession.

In my opinion, Europe needs to find the right balance and a healthy policy mix betweenausterity and sustainable public finances on the one hand, and higher growth rates to create

jobs and wealth. Here, coherent and coordinated industrial policies for reinforced

competitiveness are key.The main drivers of strong economic growth are competitive firms of all sizes. The EuropeanCommission has identified six areas to make progress towards the Europe 2020 goals,Europes growth strategy for the next decade.

- Structural changes in the economy,- The innovativeness of industries,- Sustainability and resource efficiency,- Business environment,- The single market, and- Small and medium size enterprises.Generally speaking, Latin American and Caribbean economies need to step up their game interms of modernisation and productivity. European countries are well placed to contributewith quality investment and technology. In this context, a reinforced cooperation betweenour regions in the field of small and medium size enterprises is crucial and extremelypromising, and will therefore also be one of the priorities of the EU-LAC foundation.

In Europe, these companies play a decisive role for the competitiveness and the dynamism ofour economies. Vice-President of the European Commission and European Commissionerfor Industry and Entrepreneurship, Commissioner Antonio Tajani recently underlined themedium-term objective of the European Commission to establish a dialogue between smalland medium size companies on innovation with the EUs partners across the world.

Two days ago, I came back from a weeks trip to Brazil Sao Paulo, Brasilia and Rio deJaneiro- where I promoted the EU-LAC Foundation, but at the same time was invited to aninteresting conference organised by the BNDES, Brazils Development Bank together with


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ECLAC, UNIDO and ABDI, Brazils agency for industrial development on the topic ofindustrial policies, competitiveness and productivity.

Whereas some, like Chief Economist and Senior Vice President of the World Bank, Justin Lin,strongly emphasized the comparative advantages governments need in their industrialpolicies, others highlighted important other factors, such as fiscal and trade policies, and

referred to the overall context of economic policy.

I highlighted that in my view, a field of cooperation between Brazil and the EU andtherefore the EU-LAC Foundation- was competitiveness. In this regard, education, includingvocational training, innovation, science and technology cooperation plays a key role.

I came back feeling very stimulated by the incredible economic fervour and optimism of thishuge economy for which the EU is the No. 1 trading and investment partner.

Now, allow me to say a few words about the EU-LAC foundation.

The EU-LAC Foundation

The EU-LAC Foundation is a catalyst for increased mutual understanding. We willstrengthen a multi-stakeholder and a multi-level dialogue across key areas of cooperation

between the EU and Latin America and the Caribbean.

Integration, trade, and connectivity, science, technology and investment are at the top of ouragenda; and so is the promotion of closer cooperation between small and medium sizeenterprises as well as both regions participation in international investment and trade flows.

Moreover, we will be active in the areas of social cohesion and inclusion, the fight againstpoverty and unemployment, sustainable development, climate change, and of course cultureand education, including vocational training.

Our objective is to connect the non-governmental sectors of Europe-Latin America and theCaribbean with each other and bring them closer to the agenda of the governments of bothregions. The private sector is key in this regard.

Dear business leaders,

We want to invest in you so that you progressively own and invest in the strategicpartnership. You are the agents of transformation to forge a strategic partnership withtangible results for our societies.

The EU-LAC Foundation is composed of the governments of Latin America and theCaribbean and the Member States of the European Union as well as the EU institutions, all of

which are represented in the Foundations Board of Governors.

The Foundation was created in Madrid at the 6th EU-LAC Summit, almost exactly two yearsago and after first discussion here in Vienna at the 4th EU-LAC Summit. It is based inHamburg and took up its activities in November last year.

We work with a limited number of strategic partners from both regions. Each of themrepresents a specific field of action relevant to the bi-regional partnership and will, in a non-exclusive way, take a leading role in executing activities related to their field of expertise.

These are the Institut des Amriques in Paris, the Lombardy Region in Italy, Fundacin GlobalDemocracia y Desarrollo (FUNGLODE) based in the Dominican Republic and the Economic

Commission for Latin America and the Caribbean.The Lombardy Region is very experienced in facilitating partnerships among small andmedium sized companies. They have a special focus on innovation, research and technology


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transfer, and particularly in clustering industries that enhance competitiveness, for example,in Brazil and Mexico.

Apart from these strategic partners we will build a quality network of committed allies fromthe public and private sector and civil society.

I would also like to point out, ladies and gentlemen, that we are a young institution withlimited resources albeit great aspirations. We are determined to match these. But to do so wedo rely on the explicit political and financial commitment and support of our foundingmembers. In parallel, we are also actively looking for external sponsors.

We would be happy if some of the companies coming from the Austrian or other Europeanbusiness world would start using us as a platform and also support us financially.

Dear friends,

To conclude, I would like to repeat what I already said during my opening remarks. Theseare challenging times. Sustainable development is critical for all of us. Therefore, we need to

build smart and creative partnerships.

Let us seize the opportunity and start doing this here and now.

Thank you very much for your attention.

Documents

Address by EU-LAC Foundation President Benita Ferrero-Waldner at the International Business Forum's Panel