# EUR-Lex - 52011PC0678 - EN

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# 52011PC0678

**Proposal for a COUNCIL DECISION authorising the signature and provisional application of the trade part (Part IV) of the Agreement establishing an Association between the European Union and its Member States, on the one hand, and Central America on the other /* COM/2011/0678 final - 2011/0293 (NLE) */**

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EXPLANATORY MEMORANDUM

1.           Background

The attached proposal
constitutes the legal instrument for authorising the signature and, pending its
conclusion, provisional application of the trade part (Part IV) of the
Agreement establishing an Association between the European Union and its Member
States, on the one hand, and Central America on the other (hereinafter referred
to as "the Agreement"):

–
Proposal for a Council Decision on the signature
and provisional application of the trade part of the Association Agreement.

At the
European Union - Latin America and Caribbean Summit held in Vienna on 12 - 13
May 2006, the Heads of State and Government of the European Union and of
certain Central American Republics decided to open negotiations on an
Association Agreement between the two regions, including the establishment of a
Free Trade Agreement. Negotiations were formally launched in October 2007
following a Council Decision to authorise these negotiations in April 2007.

Panama, which
had followed the negotiations as an observer, asked to join the negotiations in
January 2010. This inclusion of Panama was formally accepted on the EU side following
the amendment to the negotiating directives by the Council on 10 March 2010.

The
negotiations were successfully concluded in May 2010 and - after a phase of
legal review - the text of the agreement was initialled on 22 March 2011.

In terms of
Political Dialogue, the Agreement includes all the political clauses as an
essential element which reflects EU values. Among the political clauses which
pursue various foreign policy objectives, Human rights, democracy and the rule
of law clause have a specific significance and represent the core of EU values.
With regards to Cooperation, the Commission has reached the objective to include
provisions to enhance bi-regional cooperation in all areas of common interest
with the aim of achieving more sustainable and equitable social and economic
development in both regions.

With regards
to the trade part of the Agreement, and as set out in the negotiating
directives, the Commission has reached the objectives to eliminate high
tariffs, tackle technical barriers to trade, liberalise services markets,
protect valuable EU geographical indications (GIs), open-up public procurement
markets, include commitments on the enforcement of labour and environmental
standards and offer effective and swift dispute settlement procedures. The aim
to go well beyond WTO commitments and ensure a level playing field with
competitors in the region was therefore achieved.

The EU Member States were informed orally
and in writing on the process of the negotiations with Central America via the
Council's AMLAT/COLAT working groups and the Trade Policy Committee. The
European Parliament has also been regularly informed on developments via the
Committee on International Trade (INTA) and the EP Delegation for Central
America. The texts resulting from the negotiations were circulated throughout
the process to both institutions. An independent and detailed Trade Sustainability
Impact Assessment (SIA) examining the Agreement's potential economic, social
and environmental effects was published in September 2009 on which the
Commission services provided their comments in June 2010.

2.           Nature
and Scope of the Agreement

The main objective of the Political
Dialogue is to develop a privileged political partnership based on values,
principles and common objectives as well as the reinforcement of our
collaboration in every aspect of our interests, notably human rights, conflict
prevention and good governance, regional integration, poverty reduction and the
fight against inequality, sustainable development. The second part of the
Agreement addresses Cooperation, which should be manifested in concrete actions
in every aspect of common interest, including economic development, social
cohesion, natural resources, culture, justice and the sciences.

The trade part of the Agreement between the
EU and Central America establishes the conditions for EU economic operators to
take full advantage of the opportunities and the emerging complementarities
between their respective economies. Over the course of its implementation, the
Agreement will fully relieve EU exporters of industrial and fisheries products to Central America from paying
customs duties. It satisfies art. XXIV of the GATT criteria to eliminate duties
and other restrictive regulations of commerce with respect to substantially all
trade between the parties. In addition, it will reduce the scope for Central
America to adopt non-tariff barriers in important areas, for example in the
field of labelling requirements for textiles. Central America will benefit from
substantial new access to the EU market in particular for their key agriculture
exports: bananas, sugar, beef and rum while the EU will grant 100% duty-free coverage
for industrial products and fisheries of Central America origin at entry into
force of the Agreement.

On services and establishment, commitments
obtained from Central American Republics go beyond their commitments under the
GATS (General Agreement on Trade in Services) and match key EU interests in relevant
sectors (notably in telecom services, environmental services and maritime
services as well as in other transport services) while respecting EU
sensitivities, e.g. in terms of temporary presence of natural persons for
business purposes (mode 4). With regard to certain sectors, the commitments
offered by Central American Republics reach effective parity with other
agreements concluded by Central America such as the CAFTA or even go beyond in
areas such as market access in non-services sectors or maritime transport
services. In procurement, the deals concluded with Central America provide
important access both on the level of central government and below (including
for example procurement related to the Panama Canal).

In addition, the Agreement also establishes
a set of disciplines which go beyond those agreed in the multilateral framework
notably on intellectual property (e.g. 224 EU geographical indications
protected, data protection conditions clarified); sustainable development (the Agreement
is GSP+ equivalent or above on labour and environmental issues and contains
specific commitments on sustainable fisheries); competition (disciplines on
monopolies – transparency obligations on subsidies); technical barriers to
trade (market surveillance, transparency in regulation procedures and disciplines
on labelling and marking), Sanitary and Phytosanitary measures (WTO+ measures
on animal welfare, regionalisation, approval of export establishments,
on-the-spot inspections, import check) among others.

Finally, the Agreement establishes an
effective institutional framework for its implementation including both an
Association Council as well as an Association Committee supported by a set of
Sub-Committees to allow for work and consultations on the various areas covered
in the trade part of the Agreement and a bilateral dispute settlement mechanism.

Overall the Agreement will therefore
lock-in and promote – above and beyond WTO rules – policies of openness and
respect at the domestic level for internationally agreed rules and best
practices while securing a transparent, non-discriminatory and predictable
environment for EU operators and investors in the region.

As the Member States of the European Union
will also be Party to this Agreement because of certain commitments in the
Protocol on Cultural Co-operation, it needs to be ratified by them according to
their internal procedures. This could take a considerable period of time. In order
to ensure prompt application of the trade part of the Agreement pending full
ratification by the Member States, the Commission therefore proposes to
provisionally apply the trade part. In light of the significance of the
Agreement, the Commission considers that the Council should send the
notifications referred to in Article 353.2, 353.3 and 353.4 only after a
certain lapse of time so as to allow the European Parliament to express its
views on the Agreement. The Commission is ready to work with the Council and
the European Parliament so that the trade part of the Agreement can be
provisionally applied in 2012.

3.         Procedures

Pending its entry into force, the Agreement
foresees the provisional application of its trade part.

The Commission has judged the results of
the negotiations to be satisfactory and requests the Council:

–
to authorise the signature, on behalf of the European
Union, of the Agreement between the EU and its Member States of the one part,
and Central America of the other;

–
to approve the provisional application of the trade
part of the Agreement pending its entry into force.

2011/0293 (NLE)

Proposal for a

COUNCIL DECISION

authorising the signature and provisional
application of the trade part (Part IV) of the Agreement establishing an
Association between the European Union and its Member States, on the one hand,
and Central America on the other

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular Article217 in conjunction
with Article 218(5) thereof,

Having regard to the proposal from the European
Commission[1],

Whereas:

(1)       On April 2007 the Council
authorised the Commission to negotiate an Association Agreement on behalf of
the European Union with Central America. The negotiating directives were
amended on 10 March 2010 to include Panama in the negotiation process.

(2)       Those negotiations were concluded
at the occasion of the EU-Latin American and Caribbean Summit in Madrid in May
2010 and the Agreement establishing an Association between the European Union and
its Member States on the one hand, and Central America on the other (hereinafter
referred to as "the Agreement") was initialled on 22 March 2011.

(3)       Article 353(4) of the Agreement
provides for the provisional application of its Part IV concerning trade
matters.

(4)       The Agreement should be
signed on behalf of the European Union and applied on a provisional basis,
pending the completion of the procedures for its conclusion.

(5)       Pursuant to Article 218(7)
of the Treaty, it is appropriate for the Council to authorise the Commission to
approve modifications to the list of geographical indications recommended by
the Subcommittee on Intellectual Property to the Association Committee for
approval by the Association Council pursuant to Articles 247 and 274.2(a)
of the Agreement.

(6)       Pursuant to Article 356 of
the Agreement it is appropriate to clarify that the Agreement should not be
construed as conferring rights or imposing obligations which can be directly
invoked before Union or Member State courts and tribunals,

HAS ADOPTED THIS DECISION:

Article 1

The signing of
the Agreement between the European Union and its Member States, of the one
part, and Central America, of the other, is hereby approved on behalf of the
European Union, subject to the conclusion of the said Agreement.

The text of the Agreement is attached to
this Decision.

Article 2

The Council Secretariat
General shall establish the instrument of full powers to sign the Agreement,
subject to its conclusion, for the person(s) indicated by the negotiator of the
agreement and by the Member State holding the Presidency of the Council.

Article 3

Part IV of the Agreement shall be applied
on a provisional basis by the European Union in accordance with Article 353 (4)
of the Agreement, pending its entry into force.

The date from which Part IV of the
Agreement will be provisionally applied will be published in the Official
Journal of the European Union by the General Secretariat of the Council.

Article 4

For the purposes of Article 247 of the
Agreement, modifications of the Agreement through decisions of the Association
Council, as proposed by the Sub-Committee on Intellectual Property on
Geographical Indications, shall be approved by the Commission on behalf of the European
Union. Where interested parties cannot reach agreement following objections
relating to a Geographical Indications, the Commission shall adopt such a
position on the basis of the procedure laid down in Article 15(2) of Council
Regulation (EC) No 510/2006 of 20 March 2006 on
the protection of geographical indications and designations of origin for
agricultural products and foodstuffs[2].

Article 5

A name protected under Annex XVIII "List
of Geographical Indications of the Agreement may be used by any operator marketing
agricultural products, foodstuffs, wines, aromatised wines or spirits
conforming to the corresponding specification.

The Member States and the institutions of the European
Union shall enforce the protection provided for in Article 246 of the Agreement,
including at the request of an interested party.

Article 6

The applicable provision for the purposes of
adopting the necessary implementing rules for the application of the rules
contained in Appendix 2A of the Annex II "Concerning the Concept of 'Originating
Products' and Methods of Administrative Co-operation" and Appendix 2 of
Annex I "Elimination of customs duties" of the Agreement is
Article 247a of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code[3].

Article 7

The Agreement shall not be construed as
conferring rights or imposing obligations which can be directly invoked before
Union or Member State courts and tribunals

Article 8

This Decision shall enter into force on the
day of its adoption.

Done at Brussels, [...]

For
the Council

The
President

LEGISLATIVE FINANCIAL STATEMENT
FOR PROPOSALS HAVING A BUDGETARY IMPACT EXCLUSIVELY LIMITED TO THE REVENUE SIDE

1.           NAME OF THE PROPOSAL:

COUNCIL DECISION on the signature and
provisional application of the Agreement establishing an Association between
the European Union and its Member States, on the on hand, and Central America
on the other.

2.           BUDGET LINES:

Chapter and Article: 12 0

Amount budgeted for the end of the
implementation period

3.           FINANCIAL IMPACT

 ̈      Proposal has no financial implications

x     Proposal has no financial impact on expenditure but has a
financial impact on revenue – the effect is as follows:

(€ million to one decimal place)

|| ||

Budget line || Revenue[4] || 12 month period, starting dd/mm/yyyy || [Year n]

Article ... || Impact on own resources || || 178.4

Article ... || Impact on own resources || ||

Situation following action

|| [n+1] || [n+2] || [n+3] || [n+4] || [n+5]

Article ... || || || || ||

Article ... || || || || ||

4.           ANTI-FRAUD MEASURES

The EU's customs legislation is designed to
ensure the correct application of all EU customs measures including the tariff
preferences laid down in the trade part of this Agreement, which also contains
the necessary provisions on the application of preferential rules of origin and
administrative cooperation (Annex II), assistance with enquiries (Annex III)
and the possibility, after consultations, of temporary withdrawal of tariff
preferences in the event of frauds and irregularities involving preferential
treatment (Annex IV).

5.           OTHER REMARKS

This estimation is based on the average imports
for the period 2007-2009 and represents the annual loss in revenues due to: 1/
full implementation of negotiated tariff preferences of the Agreement i.e.: 10
years after entry into force and 2/ initial levels of conceded tariff rate
quotas. During the previous years, revenue losses will be inferior also bearing
in mind the likely increase in imports of products that will have duties
reduced in stages and that will partly compensate the loss.

[1]               OJ C , , p. .

[2]               OJ L 93, 31.3.2006, p. 12.

[3]               OJ L 302, 19.10.1992, p. 1.

[4]               Regarding traditional own resources (agricultural
duties, sugar levies, customs duties) the amounts indicated must be net
amounts, i.e. gross amounts after deduction of 25 % of collection costs