Central American and Andean Pact association agreements signed
12 August 2012
At the end of June 2012 the EU and Central American governments formally signed the Comprehensive Association Agreement, the text of which had already been agreed. While the consent of the European Parliament is still required, it is expected that the trade pillar of the agreement will enter into effect at the end of 2012. The agreement is expected to significantly increase trade flows.
Under the agreement the EU will ‘liberalise 91% of tariff lines for Central American exports immediately after the entry into force of the agreement’, while Central American governments will undertake similar action for 48% of tariff lines, with the remainder of the tariff elimination commitments being implemented over the following 10 years.
Central American ‘tariffs on key agricultural products will be largely eliminated whilst “sensitive areas” for local markets are being respected.’ The EU will ‘eliminate tariffs on most dairy products with some exceptions (milk-powder, condensed milk and natural yogurt will be excluded)’, while Central American countries will ‘eliminate tariffs on some dairy products, such as evaporated and condensed milk and will grant limited duty-free quotas on milk powder and cheese’. These quotas cover current exports and ‘will be increased on an annual basis’.
Independent impact assessments suggest that the agreement will ‘contribute to large sectoral gains in the fruits, vegetables and nuts sector, especially for Panama and Costa Rica’.
The SPS component of the agreement goes beyond WTO requirements ‘in key areas such as the regionalisation of animal diseases and pests, and the transparency of SPS import requirements and procedures’.
On 26 June 2012 the EU also signed the agreements concluded with Colombia and Peru. The text of the agreements, along with the tariff rate quotas set out in the annexes, has been posted on the EC website.
Banana tariff reductions schedules in the Association Agreements and the Geneva Agreement on Trade in Bananas (GATB) (tonnes)
| Year | Tariff €/t (€/t GATB) | Costa Rica | Panama | Honduras | Guatemala | Nicaragua | El Salvador | Colombia | Peru |
| 2010 | 145 (148) | 1,025,000 | 375,000 | 50,000 | 50,000 | 10,000 | 2,000 | 1,350,000 | 67,500 |
| 2011 | 138 (143) | 1,076,250 | 393,750 | 52,500 | 52,500 | 10,500 | 2,100 | 1,417,500 | 71,250 |
| 2012 | 131 (136) | 1,127,500 | 412,500 | 55,000 | 55,000 | 11,000 | 2,200 | 1,485,000 | 75,000 |
| 2013 | 124 (132) | 1,178,750 | 431,250 | 57,500 | 57,500 | 11,500 | 2,300 | 1,552,500 | 78,750 |
| 2014 | 117 (127) | 1,230,000 | 450,000 | 60,000 | 60,000 | 12,000 | 2,400 | 1,620,000 | 82,500 |
| 2015 | 110 (122) | 1,281,250 | 468,750 | 62,500 | 62,500 | 12,500 | 2,500 | 1,687,500 | 86,250 |
| 2016 | 103 (117) | 1,332,500 | 487,500 | 65,000 | 65,000 | 13,000 | 2,600 | 1,755,000 | 90,000 |
| 2017 | 96 (114) | 1,383,750 | 506,250 | 67,500 | 67,500 | 13,500 | 2,700 | 1,822,500 | 93,750 |
| 2018 | 89 (114) | 1,435,000 | 525,000 | 70,000 | 70,000 | 14,000 | 2,800 | 1,890,000 | 97,500 |
| 2019 | 82 (114) | 1,486,250 | 543,750 | 72,500 | 72,500 | 14,500 | 2,900 | 1,957,500 | 101,250 |
| 2020+ | 75 (114) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
Sources:
EU–Central America Association Agreement appendix 3: http://trade.ec.europa.eu/doclib/docs/2011/march/tradoc_147669.pdf
Colombia Association Agreement EU tariff reduction schedules: http://trade.ec.europa.eu/doclib/docs/2011/march/tradoc_147706.pdf
Peru Association Agreement EU tariff reduction schedules: http://trade.ec.europa.eu/doclib/docs/2011/march/tradoc_147707.pdf
Geneva Agreement on Banana Tariffs: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:141:0003...
Comparison of the tariffs to be charged under quotas within the trigger import volume tonnages for Central American, Colombian and Peruvian banana exporters and the tariffs agreed under the Geneva Agreement on Trade in Bananas shows an accelerated rate of tariff reductions for Central American countries, beginning at €5/tonne less that the GATB tariffs in 2011, increasing to €18 less by 2017 and reaching €39/tonne less by 2020.
Editorial comment
Of particular concern to ACP governments under these agreements are the market consequences of the tariff rate quotas for bananas. Under the Central American Association Agreement, concerns also arise to a lesser extent over TRQs for sugar, bulk rum and beef exports.
Given the trigger import volumes established, the tariff reduction savings on bananas resulting from the association agreements, above and beyond those gained under the GATB, rise from €14,642,500 in 2012 to € 71,234,100 in 2017 and €133,250,000 by 2019
Questions arise over what market effects these additional tariff reductions will have, and over the consequences for individual ACP banana exporters.
In addition to the implications for ACP banana exporters, the regionalisation arrangements for SPS controls under the Central American Association Agreement could potentially be of relevance for Namibia. For many years now the Namibian authorities have been trying to secure similar region-specific SPS arrangements, which would allow the export of bone-in-lamb to the EU market. Currently bone-in-lamb exports to the EU are prevented as a result of foot-and-mouth disease concerns, linked to infected areas 800 km north of the main lamb-raising areas, despite the existence of a veterinary control fence which has prevented southward movement of foot and mouth disease from the affected zone for the past 50 years.
