San José, Costa Rica, since 1956

Leaders to Negotiate European Trade Pact

A proposed free-trade agreement between the European Union and Central America took a big step toward becoming reality Saturday when leaders from the two regions agreed to begin negotiations. The decision took place at the Fourth E.U., Latin American and Caribbean Summit, held last week in Vienna, Austria.

News of the decision elicited enthusiasm this week from Costa Rica’s business leaders including those in attendance at a conference in San José this week where participants discussed strengthening business ties with the European Union. It also drew criticism from some of the same groups that oppose the controversial Central American Free-Trade Agreement for the United States (CAFTA).

In particular, President Oscar Arias recent announcement that he plans to ask the CAFTA negotiating team to tackle the E.U. negotiations was ill-received by unions.

Edgar Morales, adjunct secretary general of the National Association of Public and Private Employees (ANEP), told The Tico Times Arias statement is a slap in the face to the national conscience calling the ones who turned over the country the first time.

No matter who s at the negotiating table, it seems clear that the process, expected to begin late this year or in early 2007, won t be simple, partly because the European Union s demands include advances in Central American integration, a process in which Costa Rica has tended to lag behind.

The negotiation won t be easy at all, Carlos Quesada, executive director of the Union of Private-Sector Chambers and Associations (UCCAEP), told The Tico Times. Central America will have to negotiate as a bloc, not as (individual) countries We anticipate a complex negotiation. Alvaro Aguilar, president of the Chamber of Foreign Commerce (CRECEX), said in a statement that Costa Rica is already in an advantageous position when it comes to trade with Europe.

For country that, like Costa Rica, is responsible for 60% of the European Union s annual purchases from Central America and is the recipient of the most European investment in the region, this news opens a new world of enormous possibilities, he said.

Forging New Links

Costa Rican and European businesses started laying the groundwork for a stronger trade relationship at the Second European Union Business Conference, called The European Union: Your Business Partner.

The annual convention, held Wednesday at San José Palacio Hotel, gave Costa Rican business executives a taste of E.U. markets through a buffet of business representatives from nine European countries, including Germany, Italy, the United Kingdom, the Netherlands, Spain, the Czech Republic, France, Belgium and Poland.

The goal of the conference, attended by representatives of approximately 70 businesses, was to increase European investment and business in Costa Rica, according to Monique van Hussen, the business, press and cultural affairs attaché for the Dutch Embassy in San José.

The possibility of a free-trade pact with the European Union could steer the focus of next year s business convention to the E.U. import sector, and attract potential investors from Europe to San José, van Hussen said at the convention, which featured speeches by Andrzej Braiter, the Polish Ambassador, and Amparo Pacheco, Costa Rica s Vice-Minister of Foreign Trade, among others.

Participants of the conference, which included stands for the Spanish hotel chain Barceló, Banex bank and Costa Rican cosmetic products, expressed enthusiasm about the potential trade pact.

(With a free-trade agreement) businesses could come here and produce directly (in the country). Costa Rica could be like a commercial bridge to Italy having cheaper labor and a very developed (business) sector, said Laura Tonini, commercial officer of the Italian-Costa Rican Chamber of Commerce.

Gaudy Solórzano, international markets logistician for the Foreign Trade Promotion Office (PROCOMER), highlighted the positive impact of the agreement and trade with E.U. countries on Costa Rican interests.

In opening up to new markets, businesses grow and gain access to new technologies it is a learning process that generates more employment and improves the economy, she told The Tico Times from the PROCOMER stand at the conference.

Preparations Begin

According to Quesada of the Union of Business Chambers, the organization, which serves as an umbrella organization for the country s more than 40 other business chambers, has already begun conversations with various sectors to determine the issues most important to Costa Rican enterprises when it comes to trade with Europe.

The issue is still pretty green, he said, explaining that it s too early to identify the exports likely to be considered sensitive products in the negotiations.

However, CAFTA negotiator Fernando Ocampo and former presidential candidate Ottón Solís both told the daily La Nación agriculture will likely be a tricky issue, thanks to the substantial subsidies approximately $50 billion per year, totaling 40% of the E.U. budget, according to the daily the European Union provides its farmers.

Solís, the leader of the opposition Citizen Action Party (PAC) who advocates the renegotiation of CAFTA, said he is satisfied to hear the announcement from Vienna but is waiting to see how the negotiations proceed.

According to statistics from PROCOMER, Costa Rica exported $1.14 billion from the European Union last year, importing $1.29 billion for a trade balance of -$142 million.

Trade with the region has risen steadily in recent years, with the principal Costa Rican exports including electronics, bananas, pineapple, coffee and ornamental plants. The primary imports from the E.U. include electronics, petroleum and medicine.

Of the 25 European Union countries, Holland receives the most imports from Costa Rica (39%), followed by Germany, the United Kingdom, Belgium, Sweden, Italy and other countries.

The trade agreement wasn t the only issue discussed at the summit; according to the joint declaration released by participants, leaders also agreed to cooperate on research and investment in renewable energy resources and disaster-preparedness measures. The summit s most photographed moment was a visit from a bikini-clad Greenpeace activist who surprised the heads of state during their official photo by entering with a poster decrying pulp mill contamination in Argentina and Uruguay.

ANEP s Morales said he and representatives from 1,500 other social movements throughout Central America and Europe met in Brussels, Belgium, for an Alternative Summit, where they discussed other options to an agreement he says will be identical to CAFTA. While some European leaders have promised the new agreement will include clauses regarding international cooperation, Morales said these would be non-binding and are pure poetry.

CAFTA was signed in 2004 and has been under discussion in the Legislative Assembly since October 2005. Arias has said he hopes Costa Rica, the only signatory country not to have ratified the pact, will approve it within six months.

Quesada echoed this hope, saying several business leaders have told him they think the country should finish what it s started before beginning new negotiations.

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