This follows the 1st EU-LAC Summit in Rio de Janeiro in 1999.
The summits reflect the growth of Europe's economic and political interest in the Latin American and Caribbean region over the past 20 years. The EU is the region's second largest trading partner, with total trade running at over EUR 100 billion per year.

The Latin American market is especially important for Europe's exports of machinery, equipment and chemicals.

In turn the EU absorbs a great deal of the region's agricultural exports, especially from the countries of the Southern Cone Common Market (MERCOSUR) and Chile, for whom the EU is the largest trading partner.

The EU is also the largest donor of development funding for the region, its grant flows of some EUR 581 million per year exceeding those of the United States.

In this context the African Caribbean and Pacific (ACP) countries have been losing their privileged position in the EU's trade and aid relationships.

Caribbean ACP members now account for less than eight per cent of the EU's trade with Latin America and the Caribbean and less than 14 per cent of its development aid to the region.

However, Europe's relationships with the region are organised around a series of sub-regional and bilateral arrangements, rather than on a bi-regional basis.

There is the Cotonou Agreement, a trade and development treaty between the EU and the ACP Group, which includes Caribbean ACP countries.

There are also separate agreements with Central America, the Andean Community and the Rio Group. The agreements generally cover economic cooperation and political dialogue, while trade relations are mostly governed by the unilateral concessions granted through the Generalised System of Preferences (GSP).

An Economic Partnership, Political Cooperation and Cooperation Agreement with Mexico came into force in 2000. Free trade negotiations are under way with MERCOSUR and with Chile.

The EU-LAC Summits were meant to bring these altogether into an over-arching strategic partnership, as part of the EU's broader global strategy of regionalising its relationship with the developing world in the context of globalisation and the post-Cold War era.

But the strategy lacks an institutional framework. There is no comprehensive agreement with the whole of Latin America and the Caribbean similar to the existing sub-regional or bilateral agreements, nor is one planned.

Earlier hopes that the proposed EU-MERCOSUR free trade agreement might be sealed at the Madrid Summit were dashed as a result of the Argentine crisis.

The Summit seems likely to settle for dialogue on such topical issues as democracy and governance, multilateralism, regional integration, social justice and cultural diversity, issues that will assume greater urgency in the light of recent political developments in the region.