Relations between the EU and Latin America and the Caribbean are about to move to another level. It is not that up to now they have been unproductive (by way of example, the EU countries are the main source of foreign direct investment in the region, with some 85.5 billion dollars invested in 2022), but that the interests of various actors High-level leaders are lining up to further enhance political dialogue, trade, private investment and cooperation in key development sectors.

The Government of Spain, which will hold the presidency of the Council of the European Union during the second half of 2023, is one of the actors that is most promoting the rapprochement between the two regions. For this, CAF is one of its main strategic allies to coordinate a new investment agenda in areas such as the green transition, digital transformation and human development.

The promotion of the bi-regional relationship is destined to accelerate the 2030 Agenda in the region. Currently there are still 200 million Latin Americans in a situation of poverty, women occupy only 15% of management positions and the poorest 50% of the population receives 10% of the income, while the richest 10% receives 55 %. For its part, the EU is promoting, through the European Green Deal, a profound social and ecological transition. and thanks the Next Generation EU, the recovery and the green and digital transformation of the EU have received a strong political and financial impetus.

The EU is one of the blocks that contributes the most to international cooperation, and Latin America and the Caribbean is a region of solutions, for example in environmental issues, protection of biodiversity or food security, for which we are destined to collaborate more closely. For this reason, at CAF we are supporting the Government of Spain to create a new framework for collaboration and investment between the EU and the region that allows us to jointly face the great challenges of global development.

CAF Roadmap to promote EU-CELAC relations

Business Summit of Heads of State in Brussels

On July 17, 2023, CAF, the European Commission, and the Inter-American Development Bank (IDB) will jointly organize a Business Roundtable in Brussels before the EU-CELAC Summit of Heads of State and Government, which will consist of a session opening ceremony, seven thematic round tables and final comments (see the preliminary program).

The event will bring together political leaders, company CEOs, heads of development finance institutions and industry associations to review key aspects of the GlobalGateway Investment Agenda. Participants will explore investment opportunities in, among others, renewable energy and green hydrogen, critical raw materials, decarbonization and transport infrastructure projects, 5G and last-mile connectivity, digitization for public services and sustainable finance, and green bonds.

First meeting of finance ministers of the EU and Latin America and the Caribbean

On September 15, 2023, CAF will organize together with the Government of Spain the first meeting of EU-CELAC Finance Ministers, which will bring together in Santiago de Compostela the 33 Latin American and Caribbean ministers and the 27 from the EU to accelerate a cooperation and investment agenda based on the green transition, digital transformation and human development.

Created in 2010, the Community of Latin American and Caribbean States (CELAC) is an intergovernmental mechanism for dialogue and political agreement. Its membership includes the 33 LAC countries, and it arises with the commitment to advance in the gradual process of integration of the region, making a wise balance between unity and the political, economic, social and cultural diversity of the more than 600 million of inhabitants of the region.

Sergio Díaz-Granados, CAF´s Executive President.

Three sector discussion notes presented by CAF

• Green transition: The region is endowed with great potential for renewable energy resources. In fact, renewables account for 33% of the region's total energy supply, compared to just 13% globally. European investments in these technologies can significantly reduce greenhouse gas (GHG) emissions, at the same time achieving a lower cost energy supply and, in the case of some countries -in the region and in Europe- lower dependence on imported products derived from fossil fuels.
• Digital transformation: Connectivity issues will be addressed, from 4G and satellite solutions for remote and rural areas, to the deployment of fiber and 5G, as well as the role of digital education and training in preparing the Latin American and Caribbean workforce for the future of work and leave no one behind. Likewise, smart digital regulation initiatives will be included, specifically on data privacy, cybersecurity, artificial intelligence and ethics, and taxation of digital services.
• Human development: This note will focus on human development through participation in education -especially vocational education and training- and research, social and health protection systems, decent work and labor formalization, gender equality and policies leading to the achievement of the Sustainable Development Goals (SDGs).

EU figures in Latin America and the Caribbean

Currently, the EU is the region's third largest trading partner, behind China and the US. In addition, it is the main source of foreign direct investment, with an accumulated stock of 800,000 million Euros. European companies have invested in Latin America and the Caribbean more than in China, Japan, Russia and India combined.

In parallel, the region is the largest net exporter of food and agricultural goods in the world, with 15% of global exports, a figure that shows the potential to stabilize international food prices, something that benefits European consumers.

The EU has association, free trade or political cooperation agreements with 27 of the 33 countries in the region and is the largest source of foreign direct investment in LAC, with a total of 45% of LAC FDI inflows during 2015-2019 and 36% in 2021.

Bilateral trade between the two regions grew by 18% between 2008 and 2021. EU exports to LAC averaged €116 billion in the last decade, 2% of its global exports, while LAC exports to the EU averaged 98 billion Euros in the same period, around 10% of the region's world exports.