•  guatemala city
• Tuesday, June 05, 2012
• Inter Press Service

The poverty-stricken countries of Central America will face major challenges when the Association Agreement to be signed in late June with the European Union, including commitments on trade, political dialogue and cooperation, comes into effect.

'The region could benefit if all of its products, especially fruit and vegetables, other crops and some manufactured goods, are given privileged access' to the European market, Jonathan Menkos, an expert with the Central American Institute for Fiscal Studies (ICEFI), told IPS.

Menkos said this is the conclusion reached by impact studies carried out by the Economic Commission for Latin America and the Caribbean (ECLAC).

Under the European Union-Central America Association Agreement (EU-CAAA), both sides will open their markets to industrial products from the other. This will primarily benefit the EU, which will be able to sell its vehicles and machinery in this region, and invest in services like finances, communications and transport, experts said.

Central America, on the other hand, will be able to take advantage of quotas for the sale of beef, rice, sugar and textiles to the EU, a market of 500 million people, and of other concessions for the sale of coffee, bananas and rum.

In Menkos' view, 'the success of the agreement depends on generating public goods in the rural areas of our region that are today almost non-existent, such as education, health, roads, highways and other infrastructure for trade.'

Half of Central America's 43 million people live in poverty, which is concentrated in rural areas. Because of this, Menkos suggested, the region should also aim at other markets, such as South Africa, Russia, China or India.

The EU and the governments of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama signed the basic agreement in May 2010, after three years of negotiations. Now, following lengthy technical adjustments, the final accord will be signed this month.

Javier Sandomingo, head of the European Commission delegation to Central America and Panama, announced that the definitive agreement would be signed Jun. 28-29 in Tegucigalpa, when Honduras hands over the rotating presidency of the Central American Integration System (SICA) to Nicaragua.

After the signing ceremony, the European Parliament and the legislatures of the Central American countries must ratify the agreement for it to enter into force. Francisco Robles Rivera of the University of Costa Rica told IPS that the EU's aim is merely 'to consolidate the legal framework for its investments in the region.

'This is important in the present context, when Spanish companies, especially in the energy sector, are being nationalised in the public interest in Bolivia and Argentina,' he said. 'The EU wants new legislation on investments to safeguard, expand and facilitate the operations of European capital in the region, especially in the fields of mining, and insurance, telecommunications, tourism and other services,' he said.

Virgilio Álvarez, of the Latin American Faculty of Social Sciences (FLACSO), told IPS that 'unfortunately, all bilateral and multilateral trade agreements ultimately are of greatest benefit to the wealthiest partners, and are therefore asymmetric.'

Nevertheless, Álvarez said it was 'important and necessary' to sign an association agreement with the EU. 'It will allow us to move forward with Central American integration, and unlike the free trade agreement with the United States (DR- CAFTA), non-trade elements are included,' he said.

The EU-CAAA includes cooperation goals for the region, such as improvement of the situation of indigenous people, justice, security, protection of the environment, fighting climate change, and transport.

It also encompasses an agenda for political dialogue, seeking to promote a series of common values between the parties, such as respect for democratic principles and basic rights.

© Inter Press Service (2012) — All Rights Reserved. Original source: Inter Press Service

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