Countries and regions
The EU and the Central American region concluded a new Association Agreement, signed on 29 June 2012. The Association Agreement relies on three complementary and equally important pillars, namely political dialogue, cooperation, and trade which reinforce each other and their effects. These are the right tools to support economic growth, democracy and political stability in Central America.
The trade pillar of the Association Agreement has been provisionally applied since 1st August 2013 with Honduras, Nicaragua and Panama, since 1st October 2013 with Costa Rica and El Salvador, and since 1 December with Guatemala.
According to EUROSTAT date, the trade flow between the EU and Central America has amounts to EUR 11.6 billion in 2014.The EU's trade balance with Central America presents a deficit which decreased but still amounted to EUR 0.9 billion in 2014 (the year before the deficit was EUR 2.2 billion).
Two major external challenges have negatively impacted EU imports from Central America (which decreased by 5.2% in 2014):
- The coffee rust epidemic (so-called “roya” in Spanish) has limited the production capacity of Central Ameirca.EU imports of Central American Coffee dopped from EUR 1.1 billion in 2012 to EUR 0.7 billion in 2014.
- The relocation to South East Asia of the first Costa Rican exporter of IT components. Between 2012 and 2013, this heading decreased from EUR 2.6 billion to EUR 1.8 billion equivalents to a reduction of -19% of EU import from Costa Rican or -12% of EU import from Central America as a region.
Although considerable in absolute terms, these challenges are concentrated on two products as the remaining EU imports from Central America are extremely dynamic: they increased by 11.1% in 2014.
The main EU imports from Central America are, by order of importance: electronic assemblies of data processing machines, coffee, bananas, pineapple.
The main EU exports to Central America are, by order of importance: machinery and mechanical appliance, electrical appliance, pharmaceuticals, motor vehicle and articles of steels.
The EU and Central America are exchanging annually their respective statistics to elaborate a joint analysis, as given the importance of the Panamanian Trade Free Zone (the second in the world), EUROSTAT data tends to overestimate EU exports to Central America. We recommend consulting the Annual Report of the Commission for detailed analysis.
EU-Central America "trade in goods" statistics
|Year||EU imports||EU exports||Balance|
EU and Central America
Benefits of the Agreement:
- Elimination of most import tariffs.
- improved access to government procurement, services and investment markets
- better conditions for trade through new disciplines on non-tariff barriers to market access, competition, and intellectual property rights
- a more predictable environment for trade with a mediation mechanism for non-tariff barriers and a bilateral dispute settlement mechanism
- strengthening regional integration, for example by setting up a single import duty for the whole region and using a single administrative document for customs
- support for sustainable development, including the consultation of civil society stakeholders
The EU and Central America has maintained close and comprehensive relations for decades, reaching back to the EU’s support to the regions successful peace process in the 1980s.
The EU’s central trade policy objective for Central America are to increase bilateral trade and use it to strengthen the process of regional integration between the region's countries. In practical terms this means the creation of a customs union and economic integration in Central America. The EU has supported this process through its trade agreement and its trade-related technical cooperation programs.
This new agreement aims at fostering sustainable development and deepening their process of regional integration. This closer economic integration between the countries of the Central American region is important for attracting investment to the region and helping local businesses develop the strength in their regional market to compete internationally.
The trade part of the Association Agreement will replace the unilateral preferential access to its market which was granted to Central America under the EU’s General Scheme of Preferences.
Trading with Central America
- The EU is present on the ground in Central America (+ Delegations in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama)
- Trade relations are part of the EU's overall political and economic relations with Central America
- Central America is one of the most integrated regions of the world, progressing towards a customs union and with elaborated potential integration mechanisms.