New Energy Finance | 17.10.2008

EU free trade agreement with Central America to include ethanol

The European Commission has offered to permanently scrap import duties on ethanol from Central America as part of ongoing discussions over an Association Agreement between the two regions.

"The fifth round of talks were concluded last Friday with overall good results. With regard to ethanol, the EC has indeed offered duty free treatment to products originating from Central America that were already benefitting from a 0% duty under the current and future ’GSP+’ regime," said a Commission official.

At present the six Central American countries Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama are able to export ethanol to the EU tariff-free as part of a special incentive arrangement GSP+ to promote sustainable development and good governance in the region.

This preferential treatment for ethanol exports could be made permanent in a free trade agreemeent, part of an Association Agreement currently being discussed between the two blocs.

Such a move would guarantee producers of the renewable fuel in Central America a cheap export market. To be elligible for GSP+, a country has to prove that it is successfully implementing key international conventions and is particularly dependent on the export of a narrow range of goods which could change over time.

The next new round of talks is due to take place in Brussels in December.