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UK-Central America Association Agreement

By Bufete Mejía & Asociados - 07/11/2022

Recently, United Kingdom’s Foreign, Commonwealth & Development Office (FCDO) Deputy Director of the Americas and Head of Latin America Department, James Dauris, met with the Honduran Vice Ministers of Foreign Affairs and Environment. Dauris encouraged Honduras to seize the opportunities of the UK-Central America Association Agreement.

The trade pillar of the EU-Central America Association Agreement has been provisionally applied since 1 August 2013 with Honduras, Nicaragua and Panama, since 1 October 2013 with Costa Rica and El Salvador, and since 1 December 2013 with Guatemala.

Some of the benefits of the agreement are:

-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, and;
-support for sustainable development, including the consultation of civil society stakeholders.

The agreement has allowed the EU and Central America to take their trading relationship to the next level, with trade between them almost fully liberalised. Since the Agreement was signed in 2012, total trade has increased from 8.7 billion euros in 2012 to an all-time high of 12.9 billion euros in 2021, an increase of 67%. EU exports to Central America have increased by 20%. Higher value-added products in particular have benefited: mechanical and electrical machinery has been the most important category of EU exports, with annual exports surpassing 1.1 billion Euros throughout the period. Pharmaceutical products have also shown important growth, with EU exports increasing by over 90%.

Central American exports to the EU also grew substantially with an 86% increase. Central America is an important supplier of climate-specific, agricultural goods that are in high demand in Europe. The main categories are agricultural products, such as bananas, coffee and sugar, imports of which have gone from 2.8 billion Euros in 2012 to 4 billion Euros in 2021- a growth of 44%. In speciality coffees, Honduras alone is now the 2nd biggest supplier of organic coffee to the EU. Industrial products have also grown significantly since the Agreement was signed; for example, EU imports of optical and medical devices from Central America have gone from 189 million Euros in 2012 to 1.1 billion Euros in 2021- an increase of nearly 600%.

By Bufete Mejía & Asociados - 07/11/2022
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