CTA
Small fontsize
Medium fontsize
Big fontsize
English |
Switch to English
Français
Switch to French
Filter by Agriculture topics
Commodities
Regions
Publication Type
Filter by date

New EU trade agreements entering into force

06 September 2011

On 1 July 2011 the EU–South Korea FTA agreement entered into force. This agreement has been described by EU Trade Commissioner Karel De Gucht as ‘the most ambitious trade deal ever concluded by the EU’ and as ‘a game-changer for our trade relations with Asia’. It is estimated that ‘European exporters will save €850 million in duties in the first year alone’, with this figure doubling once all duties have been eliminated on 98.7% of all trade after five years. By the end of the 5-year transitional period tariffs will have been ‘eliminated on all industrial products and most agricultural products, with a few exceptions, such as rice.’

The Association Agreement currently under negotiation between the EU and Central American countries (Costa Rica, El Salvador, Guatemala, Honduras and Panama) is now entering the final approval stage. This agreement is seen as opening up a new era in trade relations between the EU and the countries concerned. The EC has published a memorandum setting out the benefits to the EU of the agreement. The agreement includes substantially improved market access for EU exports via the elimination of tariffs on manufactured goods and fisheries products and key agricultural products. Sensitive products of the Central American economies will however be subject to safeguard arrangements.

The agreement with Central America is expected to bring immediate savings to EU exporters of wines and spirits of €6 million in customs duties. Tariffs on dairy products will be entirely eliminated, with the exception of milk powder and cheese, for which TRQ access is to be increased.

On SPS issues, the EU–Central America agreement goes beyond WTO requirements in ‘key areas such as the regionalisation of animal disease and pests and the transparency of SPS import requirements and procedures’. It also includes ‘other useful trade facilitation tools such as the listing of establishments exports can come from’. Further improvements on animal welfare standards have also been agreed.

Central American governments are also to recognise over 200 EU geographical indications (GIs) through the amendment of domestic regulations. 

In terms of Central American exports, ‘the agreement is expected to contribute to large sectoral gains in the fruits, vegetables and nuts sector, especially for Panama and Costa Rica.’ In 2010, Central American countries’ main exports to the EU consisted of coffee, bananas, pineapples and microchips.

Speaking in Central America in June, Trade Commissioner De Gucht welcomed the agreement, recognising that ‘exports from Central America are still too concentrated [on] a few commodities and food products with a limited added value’. He expressed the hope the agreement would bring about a structural transformation of this trade pattern.

More broadly, the agreement addresses ‘the interrelation between trade and social and environmental policies’ of international concern, and commits the parties ‘as regards internationally recognised labour standards and multilateral agreements addressing environmental issues’. It further includes commitments to encouraging and promoting ‘trade and marketing schemes based on sustainability criteria’.

At a national level in Honduras, European countries have replaced the US as the main export destination in the first quarter of 2011 (US$406.4 million compared to US$344.2 million), following a 74.9% increase in the value of exports compared to the first quarter of 2010. The main Honduran exports to the EU are bananas, melons and watermelons.

On EU negotiations with Mercosur, press reports indicate ongoing frustration at the slow progress following a sixth round of EU–Mercosur negotiations. Agriculture however continues to be one of two major areas of contention (along with intellectual property issues). The agricultural talks are currently awaiting finalisation of an impact assessment study, which must then be subject to detailed discussion with member states and the European Parliament. The EU requirement to link imports of beef to respect for EU production standards is seen as an important area of contention. 

Editorial comment

Statistics from Honduras suggest that some countries in Central America are poised to exploit new trade opportunities that the entry into force of the agreement will give rise to, although the recent trends may well have been strongly influenced by disruptions to traditional banana supplies. However it should be recognised that the impact of the EU–Central America and EU–South Korea agreements on ACP exporters are likely to be very different. Assessing the level of direct competitive threat that each agreement will pose to individual ACP exports to the EU will require detailed line-by-line analysis of new tariff concessions and current and evolving patterns of exports from individual ACP countries.

In addition, in the context of the EU’s expanding range of preferential agreements, the question arises: in what areas should individual ACP governments be focusing policy support to trade development, in view of wider national and regional development aspirations?

The multiplicity of non-tariff issues addressed in the EU–Central American agreement is indicative of the range of issues on which the EU is likely to seek commitments in the ongoing comprehensive EPA negotiations (e.g. social and environment sustainability, including meeting core labour standards). Discussions on the link between respect for production standards and trade preferences in the Mercosur negotiations also highlight the indirect impacts which EU negotiations with third countries could have on ACP exporters. 

Comment

Terms and conditions