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EU Trade Deal With Honduras, Nicaragua And Panama Operational

by Ulrika Lomas, Tax-News.com, Brussels

05 August 2013


The European Commission has said that a trade deal with Honduras, Nicaragua, and Panama will open up markets and create a stable business and investment relationship.

The trade part of a 2012 Association Agreement became operational on August 1. It will enforce predictable trade rules that the Commission says go further even than the commitments made on each side to the World Trade Organization. Goods, public procurement, services, and investment can all expect to benefit from improved market access.

New institutions, set up under the deal, will tackle trade related issues, and offer a transparent way to settle disputes. Commitments have also been made on labor standards, environmental protection, and the safeguarding of human rights.

The EU is Central America's second largest trading partner. In 2012, the total trade flows in goods amounted to EUR14bn (EUR18.6bn). This included almost EUR1.4bn worth of trade with Honduras, EUR1.2bn with Panama, and EUR0.4bn with Nicaragua. Central American gross domestic product equates to less than 1 percent of Europe's.

The Commission therefore expects that the agreement's macroeconomic benefits will be considerably more tangible for the Central American countries. Once it applies to the entire region, the economy could grow by more than EUR2.5bn a year.

Central American exports are generally highest in agricultural and fisheries products, but some industrial products are also exported. The European Union (EU) exports mainly pharmaceutical products, petroleum oil, cars and machinery.

EU Trade Commissioner Karel De Gucht said: "This Association Agreement is another proof of our interest and involvement in Central America. It will further cement our strategic alliance based on common values and mutual respect. The benefits are not just economic: as European unification has shown, economic integration has a positive impact on political integration, so this agreement should bring more stability to the region. I am glad that Honduras, Nicaragua and Panama are now taking a step in this direction and I am looking forward to seeing other partners in the region joining in very soon."

TAGS: tax | business | European Commission | Nicaragua | interest | World Trade Organisation (WTO) | trade treaty | agreements | trade disputes | standards | trade | European Union (EU) | Honduras | Panama | services | Europe | Central America

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