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Free trade with Europe will help Central America grow

Tuesday, August 6, 2013

Scotch whisky exporters were jubilant as they toasted a new era of trade earlier this month, as an association accord came into effect between the European Union and Central America.

The deal reduces trade barriers with Honduras, Nicaragua y Panamá, with El Salvador and Guatemala expected to follow shortly.

Costa Rica and the EU need to resolve a dispute over intellectual property rights, before the deal goes into effect on a bilateral basis.

The elimination of customs duties in Central America should benefit European liquor producers, including whisky distillers, who sales to the region reached $25 million last year.

Other European products, which will benefit from reduced barriers, include cheese, small vehicles and various types of processed food.

A combination of cheaper imports from Europe and new export opportunities will make the region more productive.

Benefits will range from a 0.5 percent increase in the gross domestic product of Nicaragua, to 3.5 percent in Costa Rica, according to Brussels bureaucrats.

Colombia and the UE entered into a similar agreement, which also went into effect last week.

The agreements with Central America and Colombia "are evidence of the interest and commitment of the EU with the region”, said Europe's Trade Commissioner, Karel De Gucht.

More deals could be coming.

Mexico and Panama, which broke off negotiations on a free trade accord more than a decade ago, recently renewed talks.