Central America and Europe sign trade agreement

May 14, 2010

Central America and the European Union (EU) signed a free-trade and cooperation agreement in Madrid, Spain, that slashed tariffs on key exports between the six countries of this region and the 27-member EU bloc.

If the agreement is ratified by Costa Rica´s Legislative Assembly, this will be the country´s eighth free-trade deal, with number nine – the agreement with China – also awaiting the legislature´s approval.

“This is one of the first achievements of this government,” said Costa Rican President Laura Chinchilla via video conference from Madrid Tuesday. “ Costa Rica now has access to the biggest markets in the world, including Europe, the U.S. and China.”

The final round of negotiations in Madrid centered on setting satisfactory trading quantities for sugar, cheese, powdered milk, textiles, beef, and bananas, as well as assuring the geographic origin of specific products. During the previous round of talks in Guatemala during the first week of May, disagreements over quotas for these products stalled negotiations. Talks had been in the works since mid-2007.

On Tuesday, Foreign Trade Minister Anabel González said that agreement offers a “very positive balance” for Costa Rica and Central America.

“We were able to strengthen and improve access offered for many products, including bananas, sugar, meat, textiles, tuna and rice, which will bring growth to those markets under secure and foreseeable conditions,” González said. “National products will have preferential access to a market of 500 million consumers with strong purchasing power.”

On the top of Costa Rica´s priority list were bananas. The current tariff of €176/metric ton applied to bananas will be reduced in increments to a base tariff of €75/ton over the next 10 years. Costa Rica is a leading global banana exporter.

In terms of the agreements on milk, powdered milk and cheese, which were the most debated products in the previous round of talks, Costa Rica agreed to accept 200 tons of powdered milk annually, while the Central American region will receive 1,900. In terms of cheese, Costa Rica will receive 317 tons a year, with an annual increase of 5 percent. Central America will receive an annual supply of 3,000 tons of European cheese.

“The amounts given to Costa Rica only represent around 10 percent of the total cheese given to Central America,” said Fernando Ocampo, the vice trade minister and one of the deal´s chief trade negotiators. “As far as dairy products, the Costa Rican share is significantly less than what is being sent to the other Central American countries.”

See the May 21 print or digital edition of The Tico Times for more on this story.

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