The Association Agreement between Central America and the European Union represents a basic tool to take into account the Latin-American dimension of the EU commercial policy. This perspective of the Community policy has been in development since 1999, when the First Bi-regional Summit took place in Rio de Janeiro, where the Strategic Association EU-Latin America was launched.

Negotiations of the Agreement were carried out through 8 Negotiating Rounds, from the first, held in October 2007, to the closing round, held in Madrid in May 2010, within the framework of the 6th European Union-Central America Summit. The Association Agreement was signed in Tegucigalpa, Honduras, in June 2012, within the framework of the 39th Summit of Heads of State and Government of the Central American Integration System.

The EU-CA Association Agreement is based on three elements:

  • Political dialogue: Democracy and human rights, governance, gender equality, climate change, sustainable development, the fight against drug and weapons trafficking, corruption, organized crime.
  • Cooperation: Financial and technical aid of the EU in Central America.
  • Trade: Gradual establishment of an EU-CA free trade zone for export diversification and the investment development.

 The Trade chapter came into effect in August, 1, 2013 in Honduras, Nicaragua and Panama; in October, 1, 2013 in Costa Rica and El Salvador; and in December, 1, 2013 in Guatemala.

Political dialogue and Cooperation chapters have still not come into force. In their place, the Political Dialogue and Cooperation Agreement came into force in May 2014, as a transitional instrument until the ratification of the UE-CA Association Agreement by all the national parliaments.

The signing of the Association Agreement has led to important benefits. Regarding the main benefits, we can further distinguish among access to the goods market, access to the services market and public purchases.

Concerning access to the goods market, several benefits have been established in the agriculture, fishing and industry areas.

Regarding agriculture, exports from EU to CA are fully liberalized. From the Spanish point of view, liberalization of wine and olive oil has special importance. As exceptions to these liberalizations we can cite milk powder, cheese, ham and some alcoholic drinks such as beer, vodka and whisky (the last one is liberalized in Panama). On the other hand, exports from CA to EU are fully liberalized, with the exception of the following products: banana, sugar, rice, beef and rum.

In relation to fishing activities, 78% of exports from EU to CA shall be duty-free, reaching 100% within 10 years.

Concerning the industry, 69% of exports from EU to CA shall be duty-free, reaching 95% within 10 years and 100% within 15. At the same time 99% of exports from CA to EU shall be duty-free.

Regarding access to the services market, several measures are provided in order to obtain positive results in business services, engineering, telecommunications and international shipping. Accordingly, freedom to provide services between different countries through the internet is established. A secure, transparent, non-discriminatory and foreseeable environment is guaranteed for investments, and current payments and capital movements are liberalized.

There are also particular provisions for specific suppliers. IT service suppliers from the EU will be able to settle and operate across different borders. In referring to telecommunications, market access conditions have been relaxed. In addition, EU satellite operators will be able to provide telephone and TV services across borders. On the other hand, EU financial service providers have the right to operate in a wide range of products and they will be allowed to set up branches. In the area of transport, suppliers will benefit from market access commitments and the right of establishment. Finally, EU travel agencies and tour operators will be able to settle in Costa Rica and hostelry service suppliers will be able to settle in Panama.

As regards public purchases, commitments differ according to the level of economic development and ambition of each country (higher in Costa Rica, lower in Nicaragua and Honduras). The agreements are similar to those included in CAFTA and the USA-Panama Free Trade Agreement. Accordingly, a commitment to a national treaty to access to public bids is provided.

Lastly, the agreement contains provisions relating to: Intellectual Property Rights and Geographical Indications (GI) protection, with effective protection of 114 GIs, 30 of which are Spanish; trade facilitation commitments, health standards, and suppression of technical barriers to trade; and provisions to guarantee competition, dispute settlement mechanisms and mediation for non-tariff barriers.