San José, Costa Rica, since 1956

Central American Trade Talks With the EU

Trade talks with the European Union (EU) continue stalled two months after they were postponed due to the political crisis in Honduras.

Although a spokesperson for the EU said this week there are no immediate plans to resume negotiations, Central America’s foreign trade ministers are pressing forward with the aim of coming to an agreement soon.

Formal negotiations for a trade agreement began in October of 2007 in Costa Rica and were expected to conclude this year, after four rounds of talks. But internal conflicts in Central America and policies within certain countries delayed the process and pushed diplomats into additional rounds.

“When there is a crisis in one country, the whole process of integration gets interrupted, which is what happened with the Honduran (crisis),” said Rafael Sánchez, a London-based analyst and author of “The Politics of Central American Integration.” He added that it “sets back external relations because it damages an international image.” Sánchez was referring to the June 28 Honduran coup in which President Manuel Zelaya was ousted and Roberto Micheletti was installed to head the de facto government.

An Association Agreement with the EU is predicated on the Central American nations meeting certain benchmarks in terms of integration, including working together to develop common policies, implement a customs union, and reduce vulnerability to natural disasters.

“Support for regional integration is now the central focus of cooperative relations between the EU and Central America,” wrote Rolando A. Guevara, a liaison from Panama, back before formal negotiations began. “Moving relations between Central American and the EU toward an Association Agreement will undoubtedly be the optimal way of helping to increase and guarantee the benefits of Central American integration, which is now well on the way to being consolidated.”

Since 2000, trade among the countries of Central America has grown from $2.6 billion to $6.3 billion. According to the Foreign Trade Ministry (COMEX), there has been an expansion of free trade in sectors, including all agricultural and industrial goods with the exception of coffee, sugar cane, alcohol and oil derivatives (representing roughly 94 percent of all products).

Border crossings have been improved in El Salvador and Honduras, and some countries have relaxed immigration rules. Sánchez said intra-regional cooperation within the region is critical because it allows Central America to become a bigger market.

“Foreign investors feel stimulated to enter the region when they know they can reach more people,” he said. “When small countries operate as separate entities – as is true now – it limits opportunities for production (and restricts its market), which means lower profits and more effort. Integration would be one solution to the problem of underdevelopment.”

Added responsibility for the negotiations fell into Costa Rica’s lap in June when President Oscar Arias assumed leadership of the Central American Integration System (SICA.)

At a late-July conference in Guanacaste in one of his first meetings before fellow heads of state as president of SICA, Arias lamented the setback in negotiations due to the Honduran conflict.

He said, “What is frustrating is to see how Latin America looks to be perpetually on the verge of development, trying to cross the threshold. Then it turns on its hinges like a revolving door to return to the same place it was 10, 20 or 30 years ago.”

Arias still expressed reason for hope, saying, “Who could have imagined 20 years ago that it would be possible to sit down at a table with the factions of a coup? And, who would have believed that it would be possible to reverse a break in constitutional order? We have changed and we have changed for the better.”

Yet, Costa Rica remains one of the biggest obstacles to integration, due to its resistance to open migration within the region.

“Integration should mean that people can travel wherever they want within a region,” said Sánchez. “But countries like Costa Rica and Panama want to control who enters their countries. There is resistance, and there has always been resistance.” Asked whether Central America could ever be similar to a European Union, Sánchez responded without hesitation, “It’s unthinkable that Central America could ever achieve the same level of integration, especially when there is opposition to the free movement of people and goods. Yet, the EU is the model and it will remain the model.”

Christopher Patten, commissioner for external affairs with the EU’s European Commission, pointed out that the two regions began the integration process the same way, which may lead to a similar end.

In a 2003 document chronicling the steps toward a formal Association Agreement, he wrote, “A parallel can be drawn with the process of integration in the EU, where the starting point was the principle of preserving peace through cooperation and collective security and where the process of economic integration has been the main driving force behind the extension of political and legal authority across national borders.”

Yet, with four-hour waits at border crossings and a transportation system that does little to reduce time and distance, the jigsaw puzzle pieces that are the nations of Central America are still looking for a better fit.


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