EU, Central American countries sign Association Agreement

(RTTNews) — The European Union and six Central American countries — Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama —on Friday signed a comprehensive Association Agreement which also includes an ambitious trade component.

The signing ceremony took place on the occasion of the Meeting of Presidents of SICA (Central American Integration System) in Honduras.

The EU was represented by Trade Commissioner Karel De Gucht and by the European External Action Service Managing Director for the Americas, Christian Leffler. The six Central American countries were represented by their respective Ministers of Foreign Affairs and Ministers for Trade in the presence of the six Presidents.

The agreement consists of three pillars: political dialogue, cooperation and trade. The provisions related to the free trade area will enter into force at the end of this year, beginning of next year at the latest; whereas the Agreement as a whole will enter into force as soon as it is ratified by all parties.

De Gucht said that "in the current economic situation it is vital for European businesses to count on a stable and predictable business and investment environment. The region-to-region trade deal will help to establish major business opportunities for both sides. European exporters will save around EUR 90 million on Customs per year and European service providers, such as for telecoms and transport, will get greater market access. At the same time, this deal should have a positive spill-over effect on Central America’s overall economic integration process and contribute to the stability of the region."

The European External Action Service Managing Director for the Americas Christian Leffler, who attended on behalf of EU Foreign Policy chief, said: "The Association Agreement constitutes a new milestone in our long standing relationship. It is the strongest institutional bond that can tie the EU to its partners. A bond that reflects that both regions share a long term path, a joint project that goes beyond particular circumstances and leaders. Such an ambitious tool encompasses three pillars: Political Dialogue, Cooperation and Trade."

In 2011, bilateral trade in goods between Central America and the European Union was worth EUR 6.7 billion. It is expected that trade flows will increase significantly after the entry into force of the Agreement.

The EU will liberalize 91 percent of tariff lines for Central American exports immediately after the entry into force of the Agreement. Central America will do so for 48 percent of lines and will complete the liberalization schedule within the ten year period.

Only a small amount of products will be liberalized after 15 years. Central America will liberalize 69 percent of its existing trade for industrial and fishery products. Complete liberalization will come about at the end of the tariff phase-out period and generally within ten years. Once the trade pillar of the Agreement is in force, EU exporters will save EUR 87 million annually in Customs duties, its is estimated.

June 29, 2012

Source: RTT News