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EU, Central America reach accord liberalizing trade

EU, Central America Reach Accord Liberalizing Trade

By Jennifer M. Freedman

May 18 (Bloomberg) — The European Union and Central America reached an association agreement that will open up trade in beef, bananas, rice and cars and attract more investment from the EU to the region.

The 27-nation EU and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama completed discussions on the trade pillar of the accord today in Madrid, said John Clancy, the European Commission’s spokesman for trade. Heads of state from the governments will formally conclude the negotiations at their summit tomorrow.

“The entire deal, all three pillars, are now concluded,” Clancy said by telephone today.

The trade agreement, announced a day after the EU and the four-nation South American trading bloc Mercosur agreed to resume free-trade talks, is the first of its kind between Europe and Central America. The EU and the six Central American governments have been negotiating a deal to liberalize trade since 2007.

Under the agreement, cars made by EU producers such as Volkswagen AG, Renault SA and Fiat SpA will be given increasing free access to the Central American market over 10 years. The governments also agreed on quotas for EU imports of 7,000 tons of boneless cuts of beef and 20,000 tons of rice, growing 5 percent annually, that constitute new trade.

Banana Imports

In addition, import duties on bananas will be reduced to 75 euros over 10 years. That means savings of 50 million euros on current trade, taking into consideration the difference between a deal the EU already approved on banana tariffs and the newly agreed preferential levy, the commission said in a statement.

European countries led by France, the main beneficiary of EU farm subsidies, have criticized the EU’s plan to negotiate a free-trade agreement with the Mercosur bloc, comprised of Argentina, Brazil, Paraguay and Uruguay. Talks began in 1999 and stalled five years later amid disagreements over tariffs and subsidies paid to European farmers.

European farm association Copa-Cogeca said last week that resuming the talks with Mercosur would have a “devastating impact on the EU agriculture and agri-food sector.”

A deal “would cause a huge rise in beef, pork, poultry, wheat, citrus fruit/juice imports to the EU from these countries,” said Padraig Walshe, president of Copa. This would lead to a substantial contraction in the EU agriculture sector, threatening 28 million jobs.”

Ten EU nations — Austria, Cyprus, Finland, France, Greece, Hungary, Ireland, Luxembourg, Poland and Romania — issued a statement last week opposing the resumption of the talks with Mercosur, saying “the strategic agricultural interests of the European Union are clearly at stake.” Spain, which holds the EU’s rotating presidency, has promoted a free-trade agreement between the bloc and its former colonies in Latin America.

 source: Bloomberg