European Union Launched Negotiations with Isthmus

The year 2007 saw the kick-off of long-anticipated negotiations between Central America and the European Union over a socalled “association agreement.”

More than just a free-trade agreement, the association agreement will include three parts: financial aid for Central America, political cooperation and, of course, a freetrade agreement.

The first round of negotiations, originally intended to take place earlier in the year, was pushed back to October, after Costa Rica’s referendum on the Central American Free-Trade Agreement with the United States (CAFTA).

Speculation was that if Costa Rica were to vote down CAFTA, the E.U. negotiations might be sunk, since regional integration – a requirement set by the E.U. – would be all but impossible.

But Costa Ricans ratified CAFTA in early October, and the first round of negotiations with Europe took place in San José later that month. The initial round defined ground rules and standards for the statistics to be exchanged during negotiations.

The second round is scheduled to take place in January 2008 in Belgium.

A principal issue for Central American countries is the European Union’s banana policy, which favors Africa, Asia and the Caribbean. On the other side, E.U. negotiators are expected to drive hard for access to Central American service industries.