Perceptions of Mexico and Brazil Regarding the European Union in the 1990's

Perceptions of Mexico and Brazil Regarding the European Union in the 1990's

1990s: transformation of mutual perceptions.
In the last decade European-Latin American relations changed for the better. During the post Cold War years important changes have taken place in the structure of the international system and in this new configuration the European-Latin American relations have found more space to evolve constructively. Moreover, transformations in Europe and Latin America have helped to change mutual perceptions in a positive way, opening the way for a rapprochement.

Until the 1990s the pattern of relations between Europe and Latin America was one of neglect and misunderstanding. In economic terms, there were many obstacles to cooperation, such as the import substitution scheme pursued by the South American countries during most part of the 20th century; the operation of the Common Agricultural Policy (which virtually closed Europe’s markets to many of Latin America’s most important exports); and in the 1980s the debt crisis which placed Europe and Latin America in opposite sides of the world economic debate.
In political terms, during the Cold War Latin America was firmly within the United States’ sphere of influence, hence any European political interference in the region was systematically objected by Washington. In this context Latin American leaders looked traditionally to the United States rather than Europe in search of support and cooperation. However, the 1990s saw an important shift in the European policy towards Latin America. Although as compared with other regions Latin America continued to be a low priority issue for the European Union, the end of the Cold War and a series of changes that took place in the South American countries compelled Europe to look in its direction.

In the first place, almost all Latin American countries implemented radical market-oriented reforms and opened up their economies in order to adopt an export-led model of development. The recession and economic instability of the 1980s, was replaced by policies for structural adjustment and improvement in macroeconomic data. Gradually, economic growth resumed, public finances improved, the debt burden was reduced and foreign investors returned to the region. Secondly, the 1990s marked Latin America’s return to democracy and political stability. Considerable progress was made in the strengthening of the rule of law and the consolidation of democratic institutions, as well as respect for human rights. Third, to a certain extent Spain committed itself to the promotion of the Latin American interests within the European Union and exerted some pressure so that the subcontinent’s position was enhanced in the Union’s eyes.

Both processes – economic reform and democratization – provided a basis for convergence with Europe that, in its turn, was trying to expand or strengthen its links with other regions. The Maastricht Treaty marked the transition of the European Union from an essentially economic project towards a political entity. As such, the Union’s agenda of external relations has gradually become more complex and strategically oriented toward the consolidation of the EU as a global power. This ambition of global projection necessarily entails the design and implementation of policy frameworks for all regions of the world . Within the developing world Latin America stands out as an attractive middle-income partner for trade and investment, with which there are cultural affinities and common values, as well as the shared interest of resisting the trend towards American unipolarity in the new international order.

Therefore, during the 1990s the European Union tried to build up relations with the growing economies of Latin America, encouraged the ongoing processes of regional integration, and intensified political dialogue and cooperation with these nations. Needless to say, the Latin Americans welcomed this more receptive European stance and saw it as a window of opportunity in their pursuit of reinsertion in the world economy. In fact, as the European Union slowly began to show signs of interest and translate it into modest but concrete measures, the expectations of the Latin American governments grew swiftly and in many respects disproportionately. The purpose of this essay is to compare the perceptions of Mexico and Brazil regarding the European Union in the new context of the 1990s. It analyzes four basic variables that evidence the most important differences in the way in which both countries envision the EU. The first section explains the variables and the reason for choosing them. The second section is devoted to the analysis of Mexico, while the third part deals with the case of Brazil. Finally, the conclusions offer a global perspective of why both countries hold different perceptions regarding the role the EU plays in their foreign policy strategies.

What determines perceptions?
The analysis of “perceptions” is a tricky task due to the subjectivity implicit in the term. Therefore, the following clarifications are in order. First, perceptions held within a country regarding an actual or potential international partner may vary across different economic sectors, groups of citizens, political forces and even government agencies. Given the scope of this work, Mexico and Brazil will be considered as unitary actors that hold a single set of perceptions regarding the European Union.

Second, perceptions may be explicitly stated or implied in a given course of action. Here, when possible, perceptions are identified through explicit governmental statements but, for the most part, they are derived from an analysis of the bilateral relationships, the structural constraints of each country’s foreign policies and their recent actions. It is worth noting that perceptions do not necessarily correspond to the reality.
Finally, perceptions may be influenced or determined by a wide array of factors. However, for the sake of simplification, this essay focuses in four main elements that are at the origin of the most important differences between Mexico’s and Brazil’s perceptions of the European Union . These factors are:

1. Relative weight of the European Union in each country’s external economic relations.
Both Mexico and Brazil have adopted an export-led model of development and nowadays strive to position themselves as global traders. Given this choice, both countries depend critically on their ability to find international markets for their exports and their capacity to attract foreign investment in order to finance and maintain economic growth. In this context, the relative weight of a partner in the country’s structure of international trade has become an essential variable in determining the importance ascribed to the relationship and the existing level of interdependence. In simple terms and risking stating the obvious: the higher the volume of trade and investment (actual but also potential) with a given partner, the higher that partner ranks in the scale of foreign policy priorities and interests of a country.
Evidently, the European Union appears as a very attractive trade and investment partner for Mexico and Brazil. In the mid-1990s even a distant possibility of engaging in a more intensive economic relationship with the EU had a great impact on Mexico’s and Brazil’s perceptions of the Union. As explained below, these perceptions varied according to:
• the actual level of economic exchanges between the parties.
• the prospect of increased opportunities through trade liberalization.

2. Nafta and Mercosur membership.
Facing the challenges of globalization, early in the decade Mexico and Brazil realized that their future prosperity depended on their membership in an economic bloc that could enhance their status and bargaining position in the world economy. Nafta and Mercosur were born in the first half of the 1990s and constitute the single most important foreign policy initiatives undertaken by Mexico and Brazil, respectively, in the last twenty years. As such, both economic schemes have had a great impact on the international relations of their members, altering the foreign policy choices available to them and opening a new set of opportunities and constraints.
As almost everything else, the Mexican and Brazilian perceptions of the European Union were strongly influenced by their membership in Nafta and Mercosur. In this regard, perceptions of the EU differed between Mexico and Brazil according to:
• The position occupied by each country (relative to the other partners) in its economic bloc.
• The type of association pursued in each bloc (whether more or less similar to the European model of integration)

3. The trilateral relationship: each country’s degree of dependency on the United States.
As members of the Western hemisphere, in the 20th century both Brazil and Mexico have had to deal with one of the most important determinants of Latin America’s foreign policy, i.e. the supremacy of the United States. Indeed, there is a long-standing Latin American practice of looking “for external counterweights to the overwhelming presence of their northern neighbor” . In the 1990s the European Union – given its economic power, increasing political profile and renewed interest in the region – was perceived as the best candidate to fulfill this balancing role. In the perception of Mexico and Brazil the desirability of a closer association with Europe was linked to their aspiration of counteracting the American hegemony through the diversification of their economic and political relations. It is quite clear that the European Union and Latin America cannot engage in an autonomous relationship that does not take into consideration Washington’s positions and interests. That is, Mexico’s and Brazil’s bilateral relations with the EU are subsumed on the wider agenda of the trilateral relationship . To be sure, Mexico and Brazil not only praise their relationship with the European Union for its own merits (opportunities for trade, cultural exchanges, scientific and technological transfer, etc.) but also for the potential countervailing effect that a closer partnership may have with regard to the United States. Thus, in both cases perceptions of the EU as an international partner are inevitably influenced by this type of strategic calculation.

That said, it is essential to note that Mexico’s and Brazil’s real possibilities of exploiting the European diversifying option differ a great deal according to each country’s degree of dependency on the United States. Therefore, perceptions of the EU in this respect differed between Mexico and Brazil according to:
• Their geopolitical situation (geographic proximity with the US).
• The relative weight of the American participation in the country’s balance of trade and foreign direct investment (the reverse of point 1).

4. Their different paths of democratic consolidation.
In the 1990s the European Union introduced the issues of democracy and respect for human rights as essential elements in its external relations, particularly with developing countries. Early in the decade the so-called “democratic clause” began to be included in all cooperation agreements signed by the EU with third countries. Moreover, comprehensive programs of democracy and human rights promotion were funded in all regions of the world, including Latin America. The EU explicitly stated that it did not consider the issue of respect for human rights and democratic principles as a matter of internal affairs. Both Mexico and Brazil went through a process of democratic consolidation in the last decade. However, these processes were very different and thus the perceptions of how a closer political association with the EU could influence domestic politics differed a great deal.

In the following sections, these four factors will be explored in order to compare the Mexican and Brazilian perceptions of the European Union in the last decade. Although there is an inevitable overlapping of these categories, they will be treated separately.

Mexico: the old dream of diversification
The story of Mexico’s foreign policy in the 20th century can be summarized as the quest for instruments to counterbalance the influence and power of the United States. Indeed, the concept of “diversification” has traditionally occupied a prominent place in the Mexican diplomatic language. At different moments, the international context and the corresponding foreign policy strategies have changed but the fundamental aim has remained the same: counteract the centripetal forces that push Mexico into the hands of the northern neighbor. The 1990s were not an exception in that respect and, as explained below, the Mexican perceptions of the European Union were inextricably intertwined with its attractiveness as a diversifying option.

Relative weight of the European Union in external economic relations
At the beginning of the 1990s the Salinas administration implemented an aggressive strategy to open new markets for the Mexican products and attract capital flows to the country. In 1990 the European Union was Mexico’s second trading partner and second source of Foreign Direct Investment (FDI) after the United States.

Mexico’s trade shares (1990)

European Union 13 % 17.4 %
United States 70 % 66 %
Source: IRELA (1997)

Therefore, the European Union seemed a logical alternative to the United States. Although the Salinas team knew that the European market was a difficult target, they decided to explore the possibilities and offer the EU the conclusion of a free trade agreement with Mexico. The idea was “to compensate the increasing economic linkage with the United States through an intensive relationship with Europe, specially with Germany” . After a tour through the main European capitals and Bruxelles in January 1990, Salinas came back with almost empty hands: he did not succeed in catching the attention of the European private sector and the European Commission’s offer was limited to the negotiation of a Third Generation Agreement (which was in fact concluded in 1991 but did not introduce any important changes with regard to trade). In Mexico’s perception, the European Union was not receptive to the Mexican needs: it was too concentrated in its own process of deepening and in the developments of Eastern and Central Europe. Furthermore, President Salinas perceived that Mexico did not have any chances to attract the European interest if it did not insert itself in an economic bloc that would enhance the country’s economic viability in the era of globalization. At that point, Mexico concentrated its attention in the conclusion of a North American Free Trade Agreement and for the remaining of the Salinas administration the European option was put on stand-by.

However, in the mid-1990s the Mexican perceptions of Europe started to change. In response to the launching of the Free Trade Area of the Americas (FTAA) in the Miami Summit of 1994, the European Union signaled a change in its policy towards Latin America, elaborating for the first time a comprehensive strategy for strengthening relations with the region and opening the door for the negotiation of “fourth generation” agreements with these countries . Mexico perceived that this time the chances of concluding an FTA with the EU were greater than ever before: with Nafta in force Mexico was now a more appealing and credible partner, and countries like Spain and the United Kingdom were strongly supporting this option. Moreover, the prospects for Mexico looked brighter than for the other Latin American countries seeking the same type of agreement (Mercosur and Chile) because the Mexican exports to the EU in the last 10 years consisted mainly of manufactures and oil and thus did not threaten the functioning of the Common Agricultural Policy .

The Zedillo administration (1994-2000) anticipated the inevitable effect of Nafta, i.e. a reinforced concentration of the Mexican economic relations with the United States. In this context, the European Union was once again perceived as the privileged diversifying option. Why? An expansion of trade with the Asian economies was not feasible and in Latin America the biggest markets were those of Mercosur, which in many respects represented more a competitor than a viable source of diversification . In any case, Mexico continued with its policy of negotiating FTAs with Latin American countries, however, due to their market size and low import capacity these agreements did not increase trade diversification . Therefore, top priority was accorded to Europe.

The 1995-2000 National Plan of Development stated explicitly that one of the foreign policy priorities of the administration was to intensify the economic and political links with the European Union and achieve an “orderly liberalization of the commercial exchanges” . The perception of the importance of the FTA with the European Union increased steadily throughout the sexenio as the famous “Nafta effect” began to materialize. By 1997 the European Union’s participation in Mexico’s trade had halved. The EU was still Mexico’s second commercial partner but only because its lost share of trade went to the hands of the already first partner, the United States.

Mexico’s trade share (1997)

European Union 4.7 % 8.6 %
United States 85 % 76 %
Source: IRELA (1997)

Finally, in December 1997 Mexico and the EU signed a Global Agreement that included three broad headings: political dialogue, economic cooperation and trade liberalization. After one year of negotiations the Free Trade Agreement was officially signed in March 2000. It came into effect three months later, on 1 July 2000 . Probably, the FTA placed the European Union in the second position of Mexico’s scale of foreign policy priorities (only after the North American partners). Indeed, at the end of the 1990s Mexican expectations regarding the relationship with the EU were very high.

NAFTA membership
The decision to negotiate Nafta in 1990 led to a total restructuring of Mexico’s foreign policy. Although formally it was only a free trade agreement that did not involve political aspects, in effect the Nafta project meant the beginning of a new era in Mexican international relations. Mexico’s new strategy was to present itself as a dynamic and quickly modernizing developing country, member of the second largest trading bloc and more identified with the industrialized world than with the South . In the 1990s Mexico left behind the discourse of North-South relations that had championed during the 1970s and mid-1980s, de-emphasized its Latin American appurtenance and played the card of “uniqueness” in the developing world. Membership in Nafta undoubtedly enhanced Mexico’s prestige and geostrategic positioning in world affairs. However, it also entailed the risk of exacerbating the structural dependency on the United States. Once that the country had opted for a full-fledged association with the northern neighbor (in stark contrast with the traditional policy of marking vigorously its autonomy) it was vital to generate a network of international relations that contributed to the dilution of the worst effects of asymmetry.

Not only was Mexico the “weakest” partner in Nafta, but also the degree of asymmetry between Mexico and the US was the highest existing between any partners in all the other regional blocs . This fact strongly influenced Mexico’s perception of the importance of establishing closer links with the rest of the world. Hence, the country resorted to the so-called strategy of “multiple belongings”. While using Nafta membership as a source of leverage, Mexico strove to multiply its international linkages in order to emphasize that it was not exclusively in the orbit of the United States. Therefore, a long list of new memberships and associations were established during the 1990s, including FTAs with six Latin American nations and Israel, accession to the OECD, accession to the Asian Pacific Economic Cooperation (APEC) and foundation of the Iberoamerican Summits, to name the most salient. The conclusion of an agreement of political association and free trade with the European Union was perceived as a central piece of this policy, expanding Mexico’s links across the Atlantic. Mexico’s position was to pursue a type of agreement that would situate it (at least formally) on an equal footing with the European Union, i.e. that emphasized a partnership of mutual benefit instead of being a concession of economic cooperation in the traditional North-South style.

The conclusion of such an agreement – “the most wide-ranging ever negotiated by the EU” – was regarded as highly important from the strategic viewpoint. The accord underlines the saliency and uniqueness of Mexico as the only developing nation that holds free trade relations with the most advanced Western economies. In fact, it is the first free trade link between Nafta and the EU and between Latin America and the EU, highlighting the fact that Mexico is much more than the US minor partner: it is an strategic actor positioned at the forefront of the transatlantic relations.

Trilateral relationship
The basic tenet of the trilateral relationship is that the US – as the strongest actor – tends to draw the limits of European involvement in Latin America. Indeed, during the Cold War the EU was very sensitive to the economic and security interests of its major ally and adopted a hands-off policy in the region, – the major exception being the Central American crisis when the EU perceived that its own security was at risk given Washington’s policy of escalating the conflict –.

In the 1990s the post-Cold War context allowed for a convergence of interest between the EU and the United States regarding the support for the consolidation of market reforms and democratization in the region. The United States implicitly accepted the expansion of the European presence in Latin America, a factor that contributed to the intensification of interregional or bilateral relationships, as happened with Mexico.
However, in the case of Mexico the limits of the European involvement and its potential counterweight role, are not only determined by the political approval of Washington but, more fundamentally, by structural factors. With a 2,500 kilometers-border, the American great import capacity that acts as a magnetic force for Mexican exports and an increasing level of informal integration through academic, social, cultural and business exchanges, the Mexican real possibilities of resorting to the EU as a balancing actor are fairly restricted compared with the Southern Cone. In fact, in the case of Mexico the dynamics of the trilateral relationship led to a paradox that exemplifies this complexity: in order to attract the European interest and be able to diversify its economic relations, Mexico had first to concentrate its attention in integrating its economy with the powerful northern neighbor.

As described above, within the constraints derived from its geopolitical situation, the Mexican diplomacy tried to widen the country’s margin of maneuver. The economic aspects of the diversification strategy have been already discussed. However, the European Union is also perceived as a global political actor capable of counteracting some American hegemonic initiatives. Mexico sees the European Union as a potential ally in some specific situations, particularly when the United States implements unilateral initiatives that threaten European interests as well. The European Union’s support for the Contadora Group (led by Mexico) and to the peace process in Central America lends ground to this perception. Equally so, the common front that Mexico, Canada and the European Union presented against the Helms-Burton Law in 1996 and, in general, the common rejection of the Cuban embargo.

Democratic conditionality
It is clear that in the last decade Mexico’s perception regarding a closer association with the European Union was predominantly positive. However, the political aspect of the relationship with the European Union was not seen as totally unproblematic. The type of political dialogue institutionalized by the Treaty opened the door for the discussion of Mexico’s internal affairs, something that Mexico traditionally feared and rejected arguing the defense of national sovereignty. The inclusion of the so-called democratic clause caused much concern in some spheres of the Mexican government and public opinion. It was argued that the clause was against the traditional principles of foreign policy opening the door for foreign intervention, that it was a clear recognition of the asymmetry of the relationship and as such humiliating, that the EU usually used double standards in the application of the clause, etc .

Adding to the fears was the fact that the European Parliament and some European National Parliaments (notably the Italian) had been very outspoken regarding the conflict in Chiapas, criticizing some of the government’s initiatives in the area. Moreover, the Mexican government disliked the European policy of granting funds to NGOs involved in political projects such as electoral observation, conflict mediation, etc. The explicit European policy of supporting democracy and human rights through development cooperation was perceived as an illegitimate intervention in Mexican domestic affairs . In the end Mexico accepted the clause underscoring its reciprocity, which was a step forward in the modernization of the country’s foreign policy and a clear sign that Mexico is successfully transiting the path of democratic consolidation.

BRAZIL: playing poker with two giants.
In the 1990s Brazilian foreign policy was centered on the objective of consolidating its place as Latin America’s regional power. The basic platform for this project was the creation of Mercosur in 1991, which in the internal front would lock in the country’s market reforms and externally would maximize Brazil’s clout in the process of economic globalization. In this spirit, Brazil developed a very effective and sophisticated foreign service through which it presented itself as the spokesman and articulator of South American interests vis-à-vis the United States and the European Union. Brazil’s perceptions of the EU revolved around the way in which the relationship with Europe could reinforce the nation’s leadership role in Latin America.

Relative weight of the European Union in external economic relations
In contrast to Mexico, Brazil has a diversified structure of international trade in which the Latin American countries, the European Union and the United States participate in more or less the same proportion.

Brazilian trade shares (1998)

European Union 28.8% 29.2%
United States 19 % 23.2%
Latin America 26 % 21.4 %
Source: Ministry of development, industry and trade

As indicated in the table, the European Union is Brazil’s first trading partner, accounting for one third of the country’s total trade. Moreover, the EU has also been the country’s first source of FDI in the 1990s. It is clear that from the Brazilian perspective the European Union constitutes a major economic partner, hence the objective of the country in the 1990s was to seek an improvement in the terms of the economic relationship with the Union. After the creation of Mercosur and particularly after the launching of the customs union in 1995, Brazil’s relations with the EU almost ceased to be bilateral and became interregional . That is, in the new context Brazil spoke for Mercosur and the European Union identified the bloc as its main interlocutor in the Southern Cone. This arrangement satisfied both parties since Brazil was the leading country in Mercosur (with 160 million inhabitants, a territory of continental proportions, accounting for 63.3% of total exports from the region and contributing with 70% of the bloc’s GDP) and the European Union had a long tradition and preference for managing external relations on a regional basis. As happened with Mexico, Brazil’s relationship with the EU gained impetus after the 1994 Miami Summit. In this case, it led to the signature of the Mercosur-EU Interregional Framework Agreement in December 1995. However, the agreement only established a mechanism to institutionalize regular political dialogue between the two regions and opened the door for a future agreement on free trade but did not include any specific commitments in that respect.

In Brazil’s perception this was a first step but a too limited one. In the 1990s EU exports to Mercosur experienced a rapid growth that was coupled with an increasing market share. However, the growth of Mercosur exports to the EU was less dynamic and, in fact, the EU market share fell. Accordingly, from 1996 on Mercosur presented a trade deficit with the European Union .

Mercosur trade shares
1990 1997
Imports from EU 23.4% 26.2%
Imports from US 19.3% 22 %
Exports to EU 31.8% 23.5%
Exports to US 20.7% 14.1%
Source: IMF 1998; IRELA calculations

In this context, Brazil and its partners insisted on the project of a free trade area between both regions. From the perspective of Mercosur a FTA with the EU could be beneficial because it could lay down the basis for a reduction of the trade deficit, it would boost flows of export-oriented FDI and it could allow small and medium size firms to benefit from technology transfer and exchange of know-how with the European enterprises .
For Mercosur the main priority in the negotiations with the EU – and also the most thorny and difficult issue to resolve – is liberalization in agriculture. The Mercosur countries regard access to the European markets of foodstuffs and agro-industrial products as one of the main advantages of the agreement . Brazil and its partners have always suffered from the European protectionism in agriculture and thus perceive negotiations in this sector as the test case of the EU’s commitment with the project.

Talks on free trade evolved at very slow pace in the second half of the decade, however, for Brazil this was not a great concern . From the Brazilian viewpoint the important thing was to keep negotiations with the EU running parallel to negotiations of the FTAA. This is not to say that Brazil was not serious about the project. Brazil perceived the strategic importance of concluding the FTA with the European Union in the medium term in order to expand market access, prevent possible trade and investment diversion as a result of the EU’s enlargement to the East , as well as prevent trade diversion from the European Union to the United States in the event of a successful conclusion of the FTAA. However, the target deadline of all these processes was around 2005 and it was in Brazil’s interest to keep all options open so that it could use each of them as a source of leverage in the other bargaining tables.

Mercosur membership
As an integration scheme, Mercosur is closer to the European Union than to Nafta. Indeed, it is closer to the European conception of the political aims of integration than to the American approach, with its narrow focus on trade liberalization. From the beginning, Mercosur had an important political dimension: put an end to the historical rivalry between Argentina and Brazil and strengthen the democratic institutions of its members. Of course, Mercosur is far from having the supranational characteristics of the European Union. Nonetheless, in the process of deepening and enlargement of Mercosur the EU has been regarded as a model and source of innovative ideas. In this respect, Brazil’s perceptions of the European Union in the last decade were positively influenced by the latter’s constructive collaboration in the advancement of the Mercosur project. Throughout the decade, Brazil perceived the European Union as a supportive actor of the integration process that was at the center of its strategy to upgrade the country’s positioning in world affairs. While the United States tended to downplay the importance and seriousness of purpose of Mercosur , the European Union accorded high priority to this process, which was in line with its idea of “open regionalism”. From the very beginning the EU channeled funds to help improve the capacity and efficiency of Mercosur institutions through technical assistance, information exchange, training of human resources and institutional support. Furthermore, within development cooperation assistance to Latin America, the European Union created a budget line to finance initiatives in support of regional integration .

In the same line, the European Union’s requirement that the Mercosur countries engaged in political dialogue and negotiations with it as a bloc contributed to reinforce its identity and unity. Something extremely praised by Brazil, who equates the strengthening of Mercosur with the consolidation of its leadership role in South America and in the international scene. In Brazil’s perception the European Union is a loyal partner of Mercosur and the Union’s support is all the more cherished given the American persistent efforts to weaken the bloc’s unified position in the interamerican affairs. Proof of this is the US recent offer to Argentina and Uruguay to negotiate individual free trade agreements, a proposal that clearly antagonizes with Brazilian interests and introduces centrifugal forces in Mercosur.

Trilateral relations
As noted above, during the Cold War years the United States made very clear that the Americas were part of its sphere of influence and that it would not welcome the interference of third parties. However, after the demise of the East-West conflict, Washington’s critical security concerns regarding Latin America faded away. Very soon the Europeans understood that the United States did not perceive their renewed involvement in Latin America as threatening and even tended to see it with somewhat benign eyes. In fact, “slow but steady increases in European investment, financial operations and bank lending (…) were welcomed” given the US interest in “seeing Latin America develop economically” . This stance marked the beginning of a “friendly” but intense competition for markets and investment opportunities between the US and the European Union in Latin America.

Brazil was the country that most forcefully used this antagonism to advance its own interests. In a demonstration of refined diplomacy, Brazil put to work the dynamics of the trilateral relationship for its own benefit. Given the balanced position of the European Union and the United States in the country’s external economic relations, Brazil was able to play one against the other in the respective negotiating frameworks. Every time one process stalled or took the wrong direction Brazil reminded the other party that it had an alternative option and could open the game in the other front.

In this sense, Brazil saw negotiations with the European Union as highly strategic. The prospect of the association with the Union became a strong weapon in extracting concessions from the United States in the negotiations of the Free Trade Area of the Americas . From the very beginning Brazil presented itself as the defendant of the South American interests regarding the US. It consistently opposed any proposal that would have NAFTA as the center of the hemispheric integration (thus relegating Brazil as one of many partners) and finally achieved the US agreement to carry on negotiations with the already existing blocs of South America (which gave Brazil a prominent place given its leading position in Mercosur).
In the case of Brazil a closer relationship with the European Union could play an effective countervailing role vis-à-vis the United States and allowed it to underscore its independent posture in the interamerican affairs.

Democratic conditionality
Contrary to Mexico, Brazil has an unequivocal positive perception of the European Union’s policy of promotion of democracy and human rights. As Argentina, Brazil welcomed the introduction of a democratic clause in the Third Generation agreement concluded with the EU in the early 1990s. After a devastating and prolonged experience with military dictatorships, the clause was perceived by the nascent civilian democratic governments as a further tool to lock in the democratization of the country. The coincidence of perceptions with the EU on this regard was confirmed in 1996 when a democratic clause was added to the Mercosur process, whereby member states would sanction governments that failed to maintain the democratic order.

As leading Latin American countries – comparable in size, level of industrialization and influence in the regional context – Mexico and Brazil have some similar interests regarding their relationship with the European Union. In general, both countries are aware of the great importance of the EU as a trade partner and source of investment. They are also aware of the European Union’s unique capacity to act as a counterbalance factor to the United States in some regional issues, particularly when the American unilateral initiatives threaten European interests as well.
However, Brazil and Mexico are members of very different regional blocs and their perceptions as to how they can benefit from a closer relationship with the EU diverge according to their different geopolitical situations and agendas. In Mexico’s perception the association with the European Union is an important piece in its policy of multiple international linkages and contributes to its aspiration of being identified with the industrialized world. Brazil’s strategy is to become a privileged interlocutor of the EU in South America in order to reinforce its regional leadership.
Mexico speaks from within Nafta, in which it is the weak partner, and looks towards Europe to mitigate the strong dependency on the United States. Paradoxically, it is precisely Nafta membership what finally convinced the EU to engage in a closer partnership with Mexico. Brazil speaks for Mercosur, in which it is the leading partner, and sees the European Union as an actor that reinforces this integration project and thus the nation’s power position.

While Mexico’s aspiration is to see a sharp increase in trade with the European Union in order to diversify its pattern of commerce, Brazil is worried about expanding the already important trading linkages with the Union and avoiding the trade diversion towards the United States that the FTAA could cause. It is indeed in Brazil’s interest to keep diversified economic relations.

In the context of the trilateral relations Brazil has more chances than Mexico to exploit the European-American competition for markets and investment opportunities. In that sense Brazil has been playing poker with the two economic giants. In the new pattern of trilateral relations, Europe is likely to increase its influence in the Southern Cone where it has been traditionally more present, whereas in Mexico and Central America the United States will keep the lead both in economic and political terms.

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