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Central America seals association deal with EU

Gabriel Coulombe

On May 19, 2010, Central America (CA) signed an Association Agreement with the European Union (EU), a deal that may only prove truly functional if the Central American region manages to deepen its level of multi-dimensional integration. When considering the many diverging opinions within the region regarding whether or not integration should extend beyond the economic sphere, this is clearly a monumental challenge. Nonetheless, consolidating the integration process is crucial to ensure economic prosperity, as well as Central America’s insertion into the global economy when faced with a continent dominated by the North American Free Trade Agreement (NAFTA) and the Southern Common Market (MERCOSUR).

At the EU–CA Summit held in Madrid in May 2010, the two regions finally signed a bilateral strategic Association Agreement following three years of negotiations. The agreement comprises three chapters: trade, political dialogue and co-operation.

With respect to trade, a free-trade area will be established between the two regions. According to Benita Ferrero-Waldner, European commissioner for trade, independent studies have suggested that a free-trade agreement between the two regions would generate annual profits that could potentially reach 2.6 billion euros for Central America and up to 2.3 billion euros for Europe. It is expected that trade between the two regions will continue to increase, not unlike the trend that saw the volume of trade practically double over the last 10 years. In 2009, trade between CA and the EU was in the range of US$6 billion after having registered a decline brought about by the international economic crisis. By opening its market to 500 million European consumers, CA clearly has much to gain economically, while the EU will take another step toward diversifying its trade partners.

As for the political component, its aim is to initiate dialogue and to promote the exchange of information between CA and the EU by establishing institutionalized mechanisms. This could assist in the adoption of commonly held positions in both regions on matters of international concern, while maintaining the image of multilateralism. Continuing in the same vein, as outlined in a study by the Economic Commission on Latin America and the Caribbean (ECLAC) published in October 2009, the agreement with CA may seem of little importance to Europe, but it should, nonetheless, make it possible for the Old Continent to strengthen its strategic alliances within multilateral forums. As for CA, it will have access to a powerful ally that will give it a stronger voice in its international relations.

In terms of co-operation, the primary focus of the chapter is clearly on developing health and education programs, protecting the environment and improving security. Other areas include the war on terrorism, corruption, drug trafficking and organized crime. Therefore, the co-operation aspect’s objective is to promote social and economic development that is both sustainable and equitable for both regions.

The agreement must next be translated into the 23 official languages of the EU and undergo several juridical verifications, meaning that it will likely not come into force before January 2011. Subsequently, the European Commission —which negotiated the treaty on behalf of the 27 EU member countries— will ask the Council of the European Union permission to sign the document, which will then be ratified by the European Parliament. At the same time, the national congresses of the signatory Central American countries will ratify the Association Agreement.

Promoting Central American multilateral integration

According to Juan Daniel Alemán, secretary general of the Central American Integration System (SICA), an institution acting as an umbrella organization bringing together bodies with economic, political and legal mandates, the agreement constitutes a “historic event of international significance, as it is the first agreement between regions to be signed by the EU conjointly with another region of the world.” In addition to creating a new dynamic of co-operation between the two regions, such a trade deal will directly contribute to strengthening the degree of integration of the SICA member countries who signed it (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panamá).

Although the Secretariat for the Central American Economic Integration (SIECA), the economic body of SICA, was the body through which the terms of the association agreement were negotiated, it is important to note that the EU signed the treaty with Central American countries directly, and not with SICA per se. This clearly illustrates the low level of political integration
that characterizes Central America.

However, the EU’s vision of its association with CA is not purely economic; it hopes that the agreement will contribute to a stronger multi-dimensional integration of the Central American region. If achieved, this would significantly improve relations between the two regions. The EU is demonstrating the extent of its commitment by funding a number of projects designed to strengthen the integration of CA in a broader sense.

Roadblocks to Central American integration

While there is relative consensus in terms of the desire for economic integration among SICA member countries, the same cannot be said for political or legal integration. In fact, some countries in the region are wary of all forms of non-economic integration.

For proof of this, one need look no further than Panamá, which occupied the rotating presidency of SICA until June 30. Although the country is very open to strengthening economic integration in the isthmus, its attitude toward political integration is very different. For instance, Panamá announced, last November, that it would unilaterally withdraw from the Central American Parliament (PARLACEN) —the political body of SICA— in November 2010. In the days preceding the announcement, Panamá’s President Ricardo Martinelli went so far as to call PARLACEN “a bunch of losers.” President Martinelli defended his decision to embitter regional integration by giving the example of Costa Rica, which is also a member of SICA, but not of PARLACEN or the Central American Court of Justice. However, during the EU–CA Summit Panamá reiterated its intention to join SIECA, for not doing so would mean that the country would remain a mere observer in negotiations with the EU.

In conclusion, Central American countries must learn to speak with one voice, or they may be forced to give up many of the privileges that the Association Agreement could provide for the region. This is a golden opportunity for Central America, and it is, therefore, highly probable that the region’s countries will learn to put some of their differences aside in order to allow for a strengthening of their economic, political and legal integration. Furthermore, Europe’s experience in multi-dimensional integration will most certainly be a key factor that will contribute to the process’ success.blue square

Gabriel Coulombe conducts research on economic integration for the Centre d’études interaméricaines (CEI), a research group affiliated with the Institut québécois des hautes études internationales (HEI) of the Université Laval. He is also an economic science professor at Cégep de Lévis-Lauzon and the director of Regard critique: le journal des hautes études internationales. He may be reached at:gabriel.coulombe.1@ulaval.ca.

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