Implementation of EU FTAs with Colombia, Peru Could Progress Unevenly

17 March 2010

New details have emerged about the trade deals that the EU initialled with Colombia and Peru last month. The pacts are set to be signed by heads of state at a summit in Madrid in May, but both agreements must still be approved by lawmakers. The deal with Colombia could stumble on this front, while the Peruvian pact appears to have sunnier prospects.

Several specifics of the negotiating texts have come to light since the talks closed in Brussels last month. In the case of Peru, 95 percent of the country's agricultural products and 99.3 percent of all Peruvian exports will enter the EU duty free once the trade deal takes effect, according to Peru's Ministry of Foreign Trade and Tourism (MINCETUR). In return, Peru will fully liberalise 80 percent of the industrial products that it imports from the EU; meanwhile, Colombia has promised to eliminate tariffs on 65 percent of the same products.

Colombia expects that the deal will increase its exports in sectors such as leather goods, textiles and garments, plastics, glassware and fishery products; 65 percent of the exports in those industries will have zero tariffs immediately. Sugar, meat, bananas, coffee, flowers, ethanol and bottled rum, among other products, will also gain new preferential access to the European market. For example, Colombia will be allowed to sell up to 50,000 tonnes of sugar in the EU annually, while the tariff for bananas will drop from 176 euros per tonne to 75 euros over ten years. Meanwhile, European tariffs on 99 percent of Colombian fish exports will be immediately eliminated.

For its part, the EU will get preferential treatment for a number of its exports to Colombia, including processed pork products, liquor, milk powder, cheese, cars, capital goods, intermediate goods and some inputs.

On intellectual property, Peru has offered to formally recognise a list of 200 European ‘geographical indications' - place-based name protections for goods like Champagne and Parma ham. The European bloc recognised only four geographical indications for Peru: Pisco, Giant White Corn Cusco, Ica and Lima Bean Chulucanas.

The section on fisheries - which is of particular interest to Peru - dictates that the export quotas allocated to Peruvian fisheries will be reviewed every three years. Normally, fish caught in Peruvian territorial waters must be caught by a registered Peruvian fishing boat to qualify as Peruvian under fishing rules of origin, but MINCETUR reports that Peru will now get an exception to this condition of ownership for species in which the country has an export interest - mackerel, horse mackerel, squid and anchovies, both in canned and frozen form. This exception to the rules of origin will apply to fish caught outside 200 miles of the Peruvian coastline, contingent on the triennial periodical assessments.

What's left to do

Even with the bulk of the hard-fought negotiations behind them, Peru, Colombia and the EU could still hit a few bumps on the road ahead. Even after the agreement has been signed by heads of state, lawmakers in each country must still review and - hopefully - approve the deal.

The Colombian deal promises to generate heated debate among legislators. A number of critics have spoken out against the deal since it was signed, including several in the country's dairy sector who fear they would be undercut by European imports that benefit from hefty subsidies.

"We hope that the government will succeed in eliminating [the dairy section] of the agreement because, as it stands, it is not beneficial for the country," José Félix Lafaurie, the president of the Colombian National Cattlemen's Federation, told local media.

Representatives from other parts of Colombia's farm sector have also spoken out against the concessions made in agriculture, citing similar fears. Some observers say that this issue represents the greatest risk to the agreement's approval.

Another factor that is perhaps even more influential on the future of the EU-Colombia FTA is the subject of human rights in the South American country, a point that has already attracted the attention of some European non-governmental organisations.

If Colombia fails to find more support among members of the European Parliament, the treaty could languish indefinitely, much like the country's FTAs with the US and Canada. Those two deals have been finalised but have yet to win the approval of lawmakers in either North American country, thanks largely to concerns over Colombia's record on human rights and the rights of labour and trade unions.

The agreement between the EU and Peru, however, is expected to be less problematic; MINCETUR predicts that it could be ready for implementation by 2012.

ICTSD and CINPE reporting; translated and adapted from Puentes Quincenal, Vol. 7, No. 5; "Angustia de lecheros por el TLC con UE," DIARIO EL COLOMBIANO, 6 March 2010; "Cada tres años se revisarán cuotas de productos pesqueros que Perú exporte a la Unión Europea en marco del TLC," AGENCIA PERUANA DE NOTICIAS ANDINA, 5 March 2010; "En segundo semestre culminaría revisión legal de TLC Perú - Unión Europea, prevé Mincetur," AGENCIA PERUANA DE NOTICIAS ANDINA, 11 March 2010; "Llegó la hora de los nuevos negocios con Europa," EL PAÍS, 7 March 2010.

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