EU-Peru-Colombia FTA: Jean-Luc Demarty

The EU’s social, political and economic relationship with Latin America is set to deepen with the signing of a trade agreement with Peru and Colombia, writes Jean-Luc Demarty.

EU-Latin American relations are based on deep-rooted political, economic and cultural ties. Building on this historical relationship, the EU is committed to strengthening EU-Latin American trade relations at the bi-regional, sub-regional and bilateral level. The trade agreement between Colombia, Peru and the EU – which is open to Ecuador and Bolivia – marks an important step in this process and will add to the existing institutional framework that reflects the EU’s special trade relationship with the region that now practically covers the entire pacific rim of Central and South America, from Tijuana to Punta Arenas. To complete this picture the commission is actively engaging in the negotiations for an EU-Mercosur association agreement on which it expects significant progress in 2012.

For its part, the EU, Colombia, and Peru trade agreement, once implemented, will remove virtually all customs duties on European industrial and fishery goods exported to Colombia and Peru. Within 10 years after its entry into force, European exporters of these products will save more than €250m annually in tariffs. At the end of a transition period, European operators will also benefit from open markets in key dairy products, alcoholic beverages and pig meat. In the case of Peru, significant market opening was also achieved for poultry, maize and rice under the form of quotas.

Regarding services, our operators will benefit from enhanced market access for cross-border services and establishment in areas such as financial services, telecommunication and maritime transport services. On procurement, Colombia and Peru have committed to open their local government procurement markets, in addition to that of central authorities.

The agreement also tackles technical barriers to trade. We will have more cooperation to improve market surveillance, technical standards, regulatory and procedural transparency, as well as conformity assessment procedures. Not to mention innovative measures to simplify labelling requirements.

The agreement breaks new ground in facilitating trade by establishing a body of common trade disciplines. This includes measures relating to sanitary and phytosanitary requirements, as well as provisions to ensure the effective protection of intellectual property rights, including more than 200 EU geographical indications.

The EU will grant 100 per cent coverage for industrial and fishery products at entry into force of the agreement. Colombian and Peruvian exporters of these products will have immediate access to an open EU market of some 500 million consumers. Moreover, Colombia and Peru will benefit from extensive tariff concessions for key agricultural products previously not covered by the preferential import scheme known as GSP+, such as bananas, sugar, rice and rum. Local producers – in the agricultural sector alone – will save up to €150m worth of tariffs annually, at the end of the transition periods.

According to independent experts, the agreement could boost Colombian GDP by 1.3 per cent and Peruvian GDP by 0.7 per cent. Lower production costs will allow industries to better compete in the global economy and move up the value-added chain. That means more jobs. Consumers aren’t left out either. They will get better access to a variety of goods and services at lower prices.

A robust human rights clause will guarantee that the respect for human rights, democratic principles and the rule of law form the basis of the EU’s trade relations with Colombia and Peru. Also, the agreement contains firm commitments to effectively implement core labour standards, as contained in the international labour organisation’s fundamental conventions, and key environmental international conventions, covering area such as biodiversity, sustainable fishing and forestry management. Parties must also refrain from derogating from protection standards to encourage trade or investment.

In order to ensure the effective implementation of these provisions, the agreement establishes stringent monitoring mechanisms, allowing for the systematic participation of civil society, as well as a transparent and impartial arbitration system. Together with an obligation for transparency, these mechanisms will subject governments to high levels of public accountability and will ensure that Peru and Colombia’s commitments on labour and environmental protection are adequately enforced.

This agreement will contribute to fostering a stable trade partnership between the EU and countries in the region. It will boost trade and investment, allow for the development of new business perspectives and foster technology as well as know-how transfers. As a result it will create new opportunities for sustainable economic development; it will support poverty alleviation and improve social cohesion in Colombia and Peru.

Jean-Luc Demarty is director-general of the European commission's DG trade