The Council of Ministers of Economic Integration of Central America has until November to ratify the tax refund mechanisms governing the import of European goods.
The entire Central American region must have the same system of tax refunds on Import Customs Duties (DAI) from August 1, 2015, as established by the Association Agreement (AA) between Central America and the European Union (EU).
The Association of European Banana Producers has proposed extending the community production model until 2020 in order to face competition from Central America.
From a statement issued by the Costa Rican Foreign Trade Promotion Office:
European banana producers seek to strengthen position in light of Latin American exports
The Association of European Banana Producers (APEB) has advocated maintaining Community production , its acres and producer income until 2020, and notes that "they will take the necessary measures to counter the agreements of the European Union (EU) and Latin American countries that ignore the state of food security and the environment. "
Honduras' customs system has not been updated with the new tariffs for European products, in force since 1 August.
A week ago the Agreement entered into force and Honduran importers have not yet received the corresponding tariff benefits.
"The Automated System for Customs Revenue (known as SARA by its initials in Spanish) is the system where people get information on the taxes that have to be paid based on the treaty and immediately after it enters into force it has to be ready, but the Revenue Office has not yet managed to input, so to speak, all the tax breaks included in this agreement," said Eduardo Ramos, advisor to the Chamber of Commerce and Industries of Cortes.
Honduras and Nicaragua will be the first countries to export to the European market under the preferential tariff agreed between the two regions.
The agreement will be effective only in these two countries, as the parliaments of the rest of the region have not yet ratified it.
Both nations also will benefit from use of the regional quotas agreed for products such as meat, tuna, rice, sugar, sweet corn, preserved mushrooms, cassava flour, fresh or chilled garlic, among others, which can enter without paying tariffs.
There is a requirement to avoid duplicate collection of customs duties levied on imports in order to meet the provisions of the trade pact with the European Union.
The commissioner of Customs at the Superintendency of Tax Administration (SAT) in Guatemala, Oscar Funes, referred to the commitments made by the region in the signing of the Association Agreement between Central America and the European Union, signed on 29 June.
After negotiations to overcome some last minute objections from Nicaragua, Panama has been formally included in the Central American Integration System.
Citing "lack of clarity in the protocol document regarding the exact date, requirements and deadlines to which Panama commits to in order to be integrated into SICA", Nicaragua had objected to Panama’s full integration into the Central American Integration System (SICA).
The canal country's accession will be formalized on 29 June and will accelerate the elimination of tariffs and regional trade facilitation.
The incorporation of Panama to the Secretary for Economic Integration of Central America (Sieca), will allow Central American countries to sign the Association Agreement with the European Union (EU).
"The EU required Panama’s integration into the agreement, it is a country with an economic growth of 10%, a canal through which 5% of world trade passes, it has a robust banking system and a free zone situated in the Atlantic city of Colon ", reported Laprensa.com.ni
The AACUE now must be approved by the legislatures of the countries involved.
A statement from the Ministry of Foreign Trade in Costa Rica (COMEX) reads:
Association Agreement between Central America and the European Union ready for signing
San Jose, June 25, 2012. Today the Council of Ministers of the European Union authorized the signing of the Association Agreement between Central America and the European Union (EU-CAAA) on Friday June 29 in Honduras. The Ministers of Foreign Trade and the Foreign Ministers of the region will sign the document, along with the Trade Commissioner of the European Union and the Danish Foreign Minister, in a formal ceremony under the framework of the Summit of Heads of State and Government of member countries of the System for Central American Integration (SICA).
Panama's accession will be formalized in late June and will accelerate the elimination of tariffs and facilitate regional trade.
In Costa Rica and other Central American countries there are expectations over Panama's accession to the Central American Economic Integration Secretariat, which will be signed in Tegucigalpa on June 29, and the regional benefits it will bring.
Representatives of the Central American countries involved have made progress in harmonizing customs tariffs.
Agreements were achieved relating to the customs classification of various products including LED lights, van type vehicles with one row of seats and washer-dryer machines).
La Prensa Libre reports that, "The food and drink category discussions also finalized 'Central America's Technical Regulations for the Use of Food Additives' but one country's review is still pending. This regulation is necessary in order to establish mutual recognition of the health standards for food processing".
European authorities noted that as long as there are border controls, custom and tariffs, Central America's Integration process won't be complete.
For many years Central American countries have been trying to create an economic integrated block, but now the Association Agreement with Europe requires them to step on the gas and fully complete it.
Stefano Gatto, head of the EU mission in El Salvador, commented that the region is "obliged" to establish a unified tariff code (which should come into force three years after the agreement), remove non-tariff barriers to imports and other issues to facilitate commerce.
Starting on July 1st, Panama will once again enjoy preferential tariff access to the European market, after losing this benefit on 2008, for failing to renew it on time.
Roberto Henríquez, Commerce and Industry ministry, announced that “yesterday, the European Commission confirmed Panama as one of the countries included in the Generalized Tariff Preferences System (SGP-Plus), starting on July 1st”.
Both blocks decided to concede in what seemed to be irreducible positions, making last minute concessions yesterday.
One of the key issues was denominations of origin: Europe demanded laws to protect brands such as champagne and manchego cheese. The other was how many dairy products would be allowed into the Central American market. The latter was closed when Central America agreed to allow 1.900 tons of powder milk with reduced tariffs and 3.000 tons of cheese, excluding fresh cheese.
Next Thursday, Central America and Europe will resume their unfinished negotiations for an Association Agreement between them.
Talks will last for two days, with negotiators trying to solve the differences both blocks have regarding how much tariffs to remove and how to do it on several sensible products.
Rubén Morales, Guatemalan Economy Minister, explained that pending topics include “dairy products, alcoholic beverages, sugar, banana, and tuna, as well as rules of origin and intellectual property”.
Meanwhile, a new meeting between the economy and trade ministers of Central America will take place on May 5th, in Guatemala.
Even though there are many rumours about it, there still nothing confirmed regarding the resumption of the negotiations between Central America and Europe, after the parties failed to reach an agreement on the most sensitive topics for both.
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