EU, Central America Trade Talks Tripped Up by Regional Politics

4 November 2009

Free trade talks between Central America and the European Union could resume after a presidential election is held in Honduras on 23 November, a delegation of European lawmakers said last week during a visit to Costa Rica. Brussels expects to pick up the process as soon as possible, the delegates said, taking into account the upcoming vote in Honduras and lingering uncertainty over whether Panama will be allowed to join the negotiations.

The inter-regional trade talks were launched in 2007 and negotiators said in January that they hoped to conclude an agreement before the end of this year (see Bridges Weekly, 28 January 2009, https://www.ictsd.org/bridges-news/bridges/news/eu-central-america-aim-for-free-trade-deal-this-year).  But the talks hit a snag in June, when a military coup overthrew Honduran president Manuel Zelaya. Brussels condemned the coup and refused to recognise the new government, effectively freezing free trade talks with the entire region. But a delegation from Costa Rica visited Brussels on 23 October in an effort to restart the process, and Brussels reciprocated last week.

Upon arriving in San José, the six-person delegation of Members of European Parliament (MEPs) first obtained information on the evolving situation in Honduras. Costa Rica's foreign trade minister, Marco Vinicio Ruiz, told journalists after the meeting that Brussels wants to wait to see whether the presidential election that is set to take place in Honduras later this month meets Europe's legitimacy requirements. Only then will the EU continue negotiations, Ruiz reported.

MEP Jose Salafranca said that if there is no solution in Honduras, the European Parliament could change its mandate so that EU trade officials could conclude a free trade agreement with other countries in the region. In addition to Honduras, the EU trade talks also include Costa Rica, El Salvador, Guatemala and Nicaragua.

Panama pushes to join the talks

Panama also participates in the negotiations, but only as an observer. Recently, however, the country has begun a concerted push to become a full-fledged party to the talks.

But European officials say that Panama's bid to join the negotiations could be hurt by the country's recent decision to withdraw from the Central American Parliament (PARLACEN). The Panamanian government announced in August that it would pull out of the regional body because it was ‘ineffective', according to the country's president, Ricardo Martinelli. But that decision, which the government says that it is sticking to, has not sat well with European officials.

"Panama has to take responsibility and be clear about its commitment," Emine Bozkurt, the head of the delegation of MEPs, told Agence-France Presse, adding that Panama is not taking what she called an "integrationist approach."

Panama hopes to officially withdraw from PARLACEN on 20 November, but several other countries in the region - Nicaragua, El Salvador, Guatemala and the Dominican Republic - have already expressed their disapproval of the move.

"In order [for Panama] to be able to bow out, [the decision] has to be accepted by all parties," Jacinto Suárez, the Nicaraguan chair of the Central American Parliament said last week, according to a report in La Prensa. Nicaragua has already rejected the move, he added. "Legally there is no exit," he said.

But Panamanian Foreign Minister Juan Carlos Varela shot back, saying that Panama is "a sovereign country and nobody can have a say in its foreign policy."

Panamanian president Ricardo Martinelli promised to get Panama out of the organisation, which he considers ineffective and impractical, during his presidential campaign. Costa Rica, which is not a member of the Central American Parliament, is the only Central American country that supported Panama's decision, arguing that the body does not benefit the region.

Costa Rican Foreign Minister Bruno Stagno said last week that Costa Rica supports Panama's inclusion in the EU trade talks, even though Panama is not part of the Central American Economic Integration Secretariat (SIECA).

But Panama's position is hardly understandable to Brussels, which is looking to spur regional integration in Central America, through trade and other means.

Both Central American and European officials have said that SIECA membership should be a prerequisite for participation in the inter-regional trade talks. Panama has put forward a ‘SIECA +1' proposal, which would allow the country to be a party to the trade negotiations without joining the regional secretariat. Reception of that proposal has been lukewarm.

The delegation of European lawmakers will make its next stop in Panama.

ICTSD reporting; translated and adapted from Puentes Quincenal, Vol. 6, No. 19; "Panama will leave PARLACEN unilaterally," PANAMA GUIDE, 22 October 2009; "Panama to resign from Parlacen in November," LA PRENSA, 1 November 2009.

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