EU, Central America to decide on talks

February 13, 2006

EU, Central America to Decide on Talks

Associated Press

TEGUCIGALPA, Honduras (AP) - The European Union and Central American officials will decide whether to launch free trade talks in May, officials said Monday.

The discussions will come as Central American nations are trying to implement the Central American Free Trade Agreement with the United States.

The treaty with the United States was supposed to take effect on Jan. 1, but has been delayed and will be implemented gradually, as countries become ready. Guatemala, El Salvador, Honduras, Nicaragua, the Dominican Republic and the United States have ratified it. Costa Rica’s legislature is still considering it.

Honduran Foreign Minister Milton Jimenez said the possible free trade agreement with the European Union would be a boost to Central America, which is trying to tear down customs and other barriers within its own borders.

"It would be an important goal for Honduras and the region if we can take advantage of it," he said.

EU trade spokesman Peter Power said Monday there could be a decision at a EU-Latin American summit planned for May 11-13 in Vienna.

He added that the decision would depend largely on the level of trade integration within the Central American region and the extent of progress on World Trade Organization talks.

In 2003, Central America sent only 15 percent of its exports to the European Union, while sending 74 percent to the United States and Latin America.

Central America, which has more than 35 million people, has struggled to battle poverty and find new industries to replace the dwindling banana and coffee markets.

If the European Union and Central America agree to talks, banana tariffs are likely to be a hot topic.

After losing a challenge at the WTO initiated by the United States on behalf of U.S. companies operating in central and south America, the EU agreed to change its system of quotas and duties on bananas by 2006.

Under the old rules, former colonies, mostly from the Caribbean, had almost exclusive access to the European market for their bananas.

keywords: