MADRID, (Reuters) – The European Union and Central American states reached an agreement yesterday to liberalise trade and cut import tariffs, giving total market access to industrial products on both sides.
The European Commission, the EU’s executive in charge of the 27-nation bloc’s trade policy, said the deal would formally be concluded by EU and Central American heads of state at a summit in Madrid today.
“The agreement will offer new market access prospects for exporters from both sides in agricultural products, automobiles, electronics, banking, telecoms and environmental services,” EU Trade Commissioner Karel De Gucht told a news conference in the Spanish capital.
Trade between the regions stood at nearly 10 billion euros ($12.3 billion) in 2009.
European car makers will be given free access to Central American markets for 10 years, while EU companies in the services sector will also have better access in the region. In return, the EU has offered to cut banana tariffs to 75 euros per tonne from 114 euros per tonne, as agreed in Geneva last year to end a long-running “banana war”.
The EU also offered market access to new imports of 10,000 tonnes of beef and 20,000 tonnes of rice annually from the Central American states. This could create a potential new market worth nearly 50 million euros annually for Central American exporters.
The European Union, Central America’s largest trading partner after the United States, began trade negotiations with Panama, Guatemala, Costa Rica, El Salvador, Honduras and Nicaragua in 2007.
The negotiations nearly collapsed last week due to differences over the EU’s dairy export demands. The EU subsequently agreed to reduce its quota demand from over 4,000 tonnes of milk and 4,000 tonnes of cheese to 1,900 tonnes for powdered milk and 3,000 tonnes for cheese.
“The trade ministers of Central America and the EU express their full satisfaction with the outcome, which will result in an ambitious, comprehensive and balanced trade pillar of the association agreement,” the EU said in a statement.
Central American states export mostly agricultural products such as coffee, bananas and other fruits to the EU and import machinery, chemicals, vehicles and fuels from Europe. ($1=.7453 euro)
