San José, Costa Rica, since 1956

Region’s Trade Talks With EU Sour Over Milk

Free trade talks between Central America and the European Union (EU) resumed Thursday in Madrid, Spain, after stalling last week in Guatemala over the issue of cheese and powdered milk subsidies.

The two sides are skimming close to their original deadline, as the parties had hoped to complete the talks before the May 18 EU-Latin America summit in Madrid. But newly elected Costa Rican President Laura Chinchilla expressed optimism that an agreement would be reached, claiming that only $4 million were needed to seal up negotiations.

“It can’t be possible that (we) lose something so important with only $4 million in play,” Chinchilla said at a press conference Tuesday. “Our commitment to the development of these countries has to be valued at much more than $4 million and that is the reason we are there, making a call to close this negotiation.”

She will travel to Madrid on Sunday to lobby for the completion of the agreement. She admitted that were it not for the association agreement’s urgency, her new responsibilities at home would keep her from attending.

In her first press conference since stepping into the role of the foreign trade minister, Anabel González referred to the trade negotiations as “complex” and said the goals of this week’s talks would focus on finding a fair balance for all parties involved. González said Chinchilla met with El Salvadoran President Mauricio Funes and Spanish President José Luis Rodríguez Zapatero to “discuss the importance of the agreement for the countries of Central America.”

“(Chinchilla) met with Zapatero (Monday) to reiterate the importance of creating a balanced agreement,” González said. “We are trying to reach a fair agreement that suits the interests of Costa Ricans, as well as the other countries in our region.”

Talks curdled last week when the parties could not come to an agreement regarding trade and subsidies on powdered milk and cheese. According to former foreign trade minister Marco Vinicio Ruíz, European heavily subsidizes its dairy industry, making it nearly impossible for Central American producers to compete.

“We can’t have free trade where there’s a subsidy of this magnitude,” Ruíz told The Tico Times last week. “Under current circumstances, it’s totally impossible for us to close (the deal). We hope (Europe has) reflected on this and that they are coming with an alternative that is of more interest to us” (TT, May 4).

However, according to Tomás Pozuelo, president of the Food Industry Chamber (CACIA), Costa Rica should be faulted for creating the roadblock in negotiations. “Costa Rica is really the only country in the region that produces and exports powdered milk,” Pozuelo told The Tico Times. “Central America imports most of their powdered milk from countries that only have a 15 percent tariff. Costa Rica has a 65 percent tariff in its distribution of powdered milk, which makes it the most expensive country in the region.”

Pozuelo explained that the high tariff on Costa Rican powdered milk was used to “protect and benefit Dos Pinos,” the giant national dairy cooperative. According to Pozuelo, Dos Pinos receives a 65 percent national subsidy for its production of powdered milk. If the trade agreement passes, Dos Pinos’ subsidy would be reduced to the rate established in the agreement.

“If the agreement passes it will hurt Dos Pinos but benefit everyone else,” Pozuelo said. “Not everybody wins in free-trade agreements. If powdered milk is included in the agreement, it will benefit everybody in the region. If it is not, it will benefit a very small number of producers.”

The Tico Times sought a response from Dos Pinos, but the company’s spokesperson for this issue was out of the country.

Over the course of the past year, negotiations have been stalled by the coup in Honduras, then over quotas on textiles and banana tariffs, and now by milk.

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