Free Trade Agreements Between the EU and Latin America.
On 23 April, a pre-meeting entitled “PRACTICAL ISSUES OF LATIN AMERICA AS AN INVESTMENT TARGET: THE FREE TRADE AGREEMENT” will be held prior to the CONSULEGIS Spring Conference scheduled for Barcelona. This premeeting provides us with the opportunity of drawing our attention on FREE TRADE AGREEMENTS (FTAs) already signed between the EU and Latin America, as well as others still under negotiation. These agreements represent the main framework for business and investments between these two areas.
The EU is the largest foreign trade power in the world, representing 20% of total world imports and exports. However, it is estimated that 90% of world demand will be generated outside Europe within the next 10 to 15 years. In recent years, the EU has focused its efforts on tapping into this growth potential by opening up market opportunities for European business abroad, and this focus has a key priority for the EU. These efforts include negotiating agreements with the EU’s key partners, and for Spain, it is clear that a large number of these key partners are located in Latin America.
What is the role of FTAs in practice? Which countries have signed FTAs? What are the terms of the agreements and the trade benefits for business, employees and society?
In general, FTAs are designed to open up new markets for goods and services and to increase investment opportunities. FTAs provide the parties with cheaper and faster trade opportunities by eliminating custom duties, facilitating goods transit through customs and establishing common rules for technical and health standards. The following FTAs are already in place: Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama): The Association Agreement between the EU and Central America was approved by the European Parliament on 11 December 2012. The trade provisions of the agreement have applied to Honduras, Nicaragua and Panama since 1 August 2013, with Costa Rica and El Salvador joining on 1 October 2013 and Guatemala on 1 December 2013.
Andean Region (Colombia, Peru and Ecuador): The FTA signed with members of the Andean region, Colombia and Peru, has been in effect with Peru since 1 March 2013 and Colombia since 1 August 2013. Negotiations with Ecuador for accession to the FTA between the EU and Colombia/Peru were concluded in July 2014.
Mexico: The FTA took force in October 2000; Mexico has agreed to explore options for a modernization of the EUMexico Agreement.
Chile: The EU and Chile concluded an Association Agreement in 2002, which included a comprehensive FTA that entered into force in February 2003.
MERCOSUR (Argentina, Brazil, Paraguay, Uruguay and Venezuela): The EU is currently negotiating a trade agreement with Mercosur as part of the overall negotiation for a biregional association agreement which also covers political and cooperative areas. These negotiations with Mercosur were officially restarted at the EU-Mercosur summit in Madrid on 17 May 2010. The purpose is to negotiate a comprehensive trade agreement covering both industrial and agricultural trade as well as services and institutional and government procurement and to improve inter alia rules on government procurement, intellectual property, customs and trade facilitation, and technical barriers to trade.
Each FTAs have different specificities regarding the regional characteristics, for example, the agreement with Central America establishes duty-free quotas, with annual growth, for important CA export products, such as sugar, beef, bulk rum and rice, but in general, most of the FTAs listed below contain common clauses that govern the following areas: tariff elimination for manufactured goods, fisheries and agriculture (thus enhancing economic development through trade) and substantially improved market access to EU and Latin American markets.
This also achieves greater transparency and cooperation between the areas because tariff elimination is truly beneficial only if technical or procedural obstacles to trade are also addressed. Consequently, FTAs also include clauses establishing international standards for customs legislation and procedural simplification.
The FTAs include common rules to level the playing field in areas, such as intellectual property rights and geographical indications, to attain greater competition and enhanced transparency in subsidies. Lastly, most FTAs contain clauses on sustainable development, like core labor standard or environmental issues of international concern.