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Exploring the Trade Agreement between the EU, Colombia, Peru, and Ecuador
In recent years, the European Union (EU) has been expanding its network of free trade agreements (FTAs) with various countries and regions, aiming to create more open and fair markets for goods and services. One of the significant FTAs that the EU has signed is with four Latin American countries, namely Colombia, Peru, and Ecuador, collectively called the Andean Community. The agreement, which entered into force in 2013, enhances the trade and investment flows between the parties and promotes sustainable development and human rights. In this article, we will delve into the main features and benefits of the trade agreement EU-Colombia-Peru-Ecuador and how it affects different industries and stakeholders.
Background and scope
The EU-Colombia-Peru-Ecuador FTA builds upon the existing trade relations between the parties and replaces the previous preferential trade schemes, namely the Generalised System of Preferences (GSP) and the Andean Trade Preferences (ATPs). The FTA creates a comprehensive framework for trade liberalisation, covering not only tariffs but also non-tariff barriers, services, investment, intellectual property, public procurement, competition rules, and sustainable development.
The main goals of the FTA are to:
– Eliminate or reduce most customs duties on bilateral trade in goods, except for some sensitive products, such as agricultural and industrial goods.
– Improve access to services markets, especially in sectors like telecommunications, transport, finance, and professional services.
– Facilitate and protect foreign direct investment, by providing a stable and transparent legal framework, national treatment, and dispute settlement mechanisms.
– Enhance cooperation and dialogue on issues related to sustainable development, labor and environmental standards, social inclusion, and human rights.
The FTA does not only benefit the EU exporters, but also the Andean exporters, who can access a market of over 500 million consumers and diversify their exports beyond traditional partners like the US and China. Moreover, the FTA fosters regional integration and stability, by strengthening the economic ties between the Andean Community and the EU, which is the second-largest trading partner of the region, after the US. The FTA also includes provisions for technical assistance and capacity building, to help the Andean countries adapt to the new market conditions and upgrade their productive and regulatory frameworks.
Sectoral impacts
The FTA affects different sectors differently, depending on their comparative advantages, competitiveness, and regulatory frameworks. Some of the sectors that benefit from the FTA are:
– Agriculture and fisheries: The FTA reduces or eliminates most tariffs on agricultural and fishery products, both for the EU and the Andean exporters. This creates new opportunities for exports of fruits, vegetables, coffee, cocoa, tuna, and shrimp, among others. However, some sensitive products, such as dairy, pork, and beef, still face quotas or high tariffs, due to political and social concerns and the need to protect domestic producers.
– Industrial and manufactured goods: The FTA promotes trade in industrial products, by removing tariffs on most products, except for some steel and textile products that still face quotas or safeguards. This benefits EU manufacturers of machinery, chemicals, pharmaceuticals, and vehicles, as well as Andean exporters of textiles, footwear, leather, and jewelry. However, the Andean producers face challenges in complying with the EU technical standards, norms, and certifications, which may require investments in technology and quality control.
– Services: The FTA liberalizes access to service markets, allowing EU and Andean service providers to offer their services on a non-discriminatory basis. This opens up new opportunities for EU companies in sectors like telecommunications, transport, financial, and professional services, which have high value-added and intellectual property. Moreover, the FTA sets provisions for mutual recognition of professional qualifications, facilitating the mobility of workers and the transfer of knowledge.
– Investment: The FTA provides a stable and transparent legal framework for investments, protecting them from arbitrary or discriminatory measures. This fosters a climate of trust and predictability, which encourages foreign investors to enter the Andean markets and promotes technology transfer, innovation, and competitiveness. However, the Andean countries still face challenges in improving their investment climate, by reducing bureaucracy, corruption, and insecurity. The FTA also includes provisions for responsible business conduct, such as corporate social responsibility and transparency.
Conclusion
The trade agreement between the EU, Colombia, Peru, and Ecuador is a significant milestone in the economic relations between the two regions, fostering a more open, fair, and sustainable trade and investment system. The agreement creates new opportunities for businesses, workers, and consumers, by reducing barriers to trade and investment, promoting competition and innovation, and enhancing cooperation on social and environmental issues. However, the agreement also poses challenges for the Andean countries, which need to adapt to the new market conditions and improve their competitiveness and regulatory frameworks. In this context, the role of civil society, academia, and international organizations is crucial in supporting the implementation and monitoring of the FTA, and ensuring that it benefits all stakeholders, especially the most vulnerable ones.