Brussels, 13/04/2011 (Agence Europe) - In Brussels on Wednesday 13 April, the European Union, Colombia and Peru welcomed the initialling, on 24 March, of the free trade agreement between the EU and its two Andean Community partners that was concluded in March 2010. The agreement is estimated to be worth overall half a billion euro in saved duties alone.
“This agreement is a milestone in our trade relations with the Andean region and creates the right framework to boost trade and investment on both sides. It creates a foothold for European business in the area and an anchor for structural reforms in the countries concerned. This agreement also recognises that the EU's partnership with Colombia and Peru is based on the respect of democratic principles and fundamental human rights”, said EU Trade Commissioner Karel De Gucht, hosting the ceremony attended by Colombian Minister for Trade Sergio Diaz-Granados Guida and the Peruvian Deputy Minister for Foreign Trade Carlos Posada Ugaz to mark the initialling of the trade agreement.
This trade pact will bring a move from a unilateral system of preferences granted by the EU to its two partners under the system of generalised preferences (SGP) to a reciprocal regime which ensures legal security, stability and predictability for operators in both regions. It will bring total liberalisation of trade in all industrial and fisheries products, and a dismantling of tariffs over a 10-year period. As soon as it comes into force, 80% of trade in industrial goods with Peru will be liberalised and 65% with Colombia. The agreement provides for extending market access for agricultural products, with full elimination of customs duties over the next 17 years.
On the Andean side, the offensive interests in market access are within the agricultural chapter: sugar, bananas, rum, rice and maize, plus poultry for Peru and beef for Colombia. For the Europeans, offensive interests are in the automotive sector, wines and spirits, and dairy products. The EU also pushed, in addition to tariff liberalisation, for the removal of non-tariff barriers. The major part of the benefits expected by the EU is in trade in motor vehicles, as its market share in Peru and Colombia does not exceed 5% and import duties in the two countries are 9% and 35%.
According to the European Commission, the agreement will open up market opportunities for a number of the EU's key export industries: for example, it will be worth over €33 million for the automotive and car parts sector, around €16 million for chemicals and over €60 million for textiles. Other significant tariff reductions will be on pharmaceutical and telecommunication products.
The package on market access is completed by chapters devoted to the trade in services (the EU has offensive interests in telecoms and banking), access to public contracts, intellectual property rights (the EU has gained protection for over 200 geographical indications), investment, competition, rules of origin, trade defence and a dispute settlement mechanism is planned.
The agreement also includes a “human rights clause” which provides for suspension of the agreement in the event of cases of infringement. There is no provision for a suspension clause on sustainable development and labour law but the agreement includes a mechanism for monitoring the adoption and implementation by governments of ILO environmental conventions.
The agreement is based on the principle of regional integration. The door is not closed, then, to the other countries of the Andean community, Bolivia and Ecuador.
The text has now to be translated into all the languages of the EU, before being put to EU member states and the European Parliament for approval.
Bilateral trade in goods between the EU and both Colombia and Peru was €16 billion in 2010. The EU exported €3.9 billion to Colombia and imported €4.7 billion, and exported €2.3 billion to Peru and imported €5.1 billion. (E.H./transl.rt)