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The trade Chapter of the European Union Association Agreement with Central America

Research reports

Written by Jodie Keane, Chris Stevens

The EU Central America Association Agreement is an example of the successful completion of a region-to-region agreement and therefore in line with the EU’s aim of promoting regional integration in other regions through trade and association agreements. For the EU, economic welfare gains and employment effects from the trade chapter of the Agreement are because of the relative small size of the Central American market expected to be negligible. However, EU exporters will benefit from lower tariffs on manufactured goods especially in automobiles. For the Central American countries (CA), there is the potential of significant gains, but these are not evenly spread. The fact that CA exporters already benefited from zero tariffs on almost all exports to the EU under the extended Generalised System of Preferences (GSP+) means that there are relatively few sectors that will have enhanced access with the exception of bananas, raw cane sugar and shrimps. Above all, the Agreement will provide legally secure access to the EU market. The Agreement also tackles cross border services and establishment, technical barriers to trade (TBT), sanitary and phytosanitary (SPS) issues as well as trade remedies in the shape of anti-dumping, countervailing duties or multilateral safeguards. The provisions on intellectual property rights include Geographic Indications (GIs). The trade chapter furthermore contains a human rights clause which stipulates that the parties must ensure that human rights are respected within their jurisdiction. Furthermore there are provisions on sustainable development.

Steve Woolcock; Jodie Keane; Christopher Stevens; Lorand Bartels