The European Union – Central America Association Agreement, hereinafter the Agreement, was concluded on June 29, 2012. However, it wasn´t until the 1st of August (with Honduras, Nicaragua and Panama), the 1st of October (with Costa Rica and El Salvador) and the 1st of December of 2013 (with Guatemala) that the trade pillar has been provisionally applied. Thus, 2014 will be a year full of challenges and opportunities for the region, if we decide to take advantage of them, of course.
The three pillars of the Agreement
The Agreement focuses on three main pillars: political dialogue, development cooperation and trade. This isn´t a “trade Agreement” only, is much more than that. In the political dialogue pillar for example, Article 13 establishes that the “political dialogue between the Parties shall prepare the way for new initiatives for pursuing common goals and for establishing common ground in areas such as: regional integration; the rule of law; good governance; democracy; human rights; promotion and protection of the rights and fundamental freedoms of indigenous peoples and individuals (…) poverty reduction and social cohesion; core labour standards;(…) regional security and stability, including the fight against citizens’ insecurity; corruption; drugs; trans-national organised crime; the trafficking of small arms and light weapons as well as their ammunition; the fight against terrorism (…)”. Also, in the cooperation pillar, Article 24 establishes as objectives of the cooperation “contributing to reinforcing democratic institutions, good governance and full applicability of the rule of law, gender equality, all forms of non-discrimination, cultural diversity, pluralism, promotion and respect for human rights, fundamental freedoms, transparency and citizen participation”.
As one can notice, the Agreement represents a wide range of commitments. However, as stated before, right now only the trade pillar is being applied. Thus, I´ll focus this post on that pillar, even though the other two, when applied, will also have a serious impact in the region.
As the Preamble of the Agreement states, the EU and the CA Region (the American continent in general), have historically developed trade relations. Before 1492, these two parts of the world didn´t know about each other. It was Cristobal Colon, sent by the Spanish kingdom, whom by mistake, searching for new trade routes to Asia discovered America. Since then, and mostly in the past decades, trade has increased between the two regions. However, in the need of improving trade conditions, this Agreement sets out provisions that will contribute to the main goal, and mark a new era for trade relations between the two regions.
The main aspects of the trade pillar, according to the EU are: that the Agreement substantially improves market access for exporters in both regions; tariff elimination in the sector of manufactured goods, fisheries and agriculture; common rules (Intellectual property rights and geographical indications); and regional integration and sustainable development1.
Challenges to overcome
First, one of the main challenges of the CA region to maximize the benefits of this Agreement is the most obvious and basic one: to integrate as a region and trade as one. Thus, a process of economic integration is the following step. That leads us to a customs union, including the use of international (harmonized) standards and simplified procedures that facilitate imports and exports for both regions.
Consequently from the previous paragraph, the second challenge will be that the countries from the CA region coordinate efforts enough to actually make that system work. It is the first time that something like that is being pursued by the region. Dear reader, if you´re familiarized with our history, you might notice that this really constitutes a challenge. The reason is historical and cultural. However, we should overcome any of that to pursue a greater benefit. That is why 2014 and the upcoming years represent a challenge to us.
And last but not least, a third challenge might be to avoid negative campaigns that diminish the true meaning of what the Agreement represents. For example, once I read an article about this, arguing that the Agreement is only a “tool used (…) to exacerbate and deepen the poverty and exploitation of those who produce wealth by their labour”. People, come on. Don´t hate. Analyze statistics and inform yourself. This Agreement definitely opens a new door of opportunities for the region.
Benefits to the Central American region derived from the agreement: a new door of opportunities
The obvious benefit is economic growth. According to the European Commission (Directorate- General for Trade), “the Central American economy is expected to grow by over €2.5 billion per year now that the Agreement applies to the entire region”2. Other benefits include, inter alia: better conditions for trade; better conditions for investments and business in the region; the improvement of regional economic integration; the simplification of exports/imports transactions; a more predictable system of trade, including harmonized rules; etc.
A new door has been opened to our region. It´s up to us, to take full advantage of it and explore new opportunities.
Image source: https://www.cia.gov/library/publications/the-world-factbook//graphics/ref_maps/political/jpg/central_america.jpg