The trade Pillar in the EU-Central America Association Agreement.
Date: 2018-11-08
Institutions: Directorate-General for Parliamentary Research Services
Subjects: Central America, European Union, civil society, cooperation agreement, economic agreement, free-trade agreement, political cooperation, sustainable development, trade agreement, trade policy

The Trade 
Pillar in the 
EU-Central 
America 
Association 
Agreement 
European 
Implementation 
Assessment 

STUDY 

EPRS | European Parliamentary Research Service 

Author: Isabelle Ioannides 
Ex-Post Evaluation Unit 
PE 621.852  –  October 2018 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Trade Pillar in the 
EU-Central America 
Association Agreement 

European Implementation Assessment 

On 17 April 2018, the Conference of Committee Chairs approved a request made by the Committee on 
International  Trade  (INTA)  to  draft  an  implementation  report  on  the  trade  pillar  of  the  Association 
Agreement  (AA)  with  Central  America  (rapporteur:  Reimer  Böge,  EPP,  Germany).  This  European 
implementation  assessment  (EIA),  which  has  been prepared  internally  by  the  Ex-Post  Evaluation  (EVAL) 
Unit of the European Parliamentary Research Service (EPRS), seeks to accompany the scrutiny work of the 
INTA committee and the preparation of the aforementioned implementation report. 

Abstract 

The EU-Central America Association Agreement was signed in June 2012 
and  its  trade  pillar  has  been  provisionally  in  force  since  December  2013. 
This evaluation assesses specifically the implementation of the trade and 
sustainable development (TSD) chapter of the trade pillar of this agreement 
during the five years of its operation.  

After  briefly  outlining  the  trade  interests  of  this  agreement,  this  study 
situates sustainable development by explaining its legal foundations in the 
Association  Agreement  and  reviewing  the  ex-ante  impact  assessment 
conclusions on the issue. It then focuses on the monitoring mechanisms of 
the  Association  Agreement,  including  the  European  Commission  annual 
reports,  Parliament's  oversight  work,  the  civil  society  dialogue,  and  the 
results  of  the  meetings  of  the  specialised  committee  and  annual 
Association Committee and Association Council meetings.  

Through  this  review  it  identifies  strengths  and  shortcomings  in  the 
implementation of the TSD chapter and ends by suggesting a number of 
ways  to  enhance  efforts  to  support  sustainable  development  in  Central 
America. 

EPRS | European Parliamentary Research Service 

 
 
 
 
 
 
AUTHOR 

Dr Isabelle Ioannides, Ex-Post Evaluation Unit, EPRS 

This paper has been drawn up by the Ex-Post Evaluation Unit of the Directorate for Impact Assessment and 
European  Added  Value,  within  the  Directorate-General  for  Parliamentary  Research  Services  (EPRS)  of  the 
Secretariat of the European Parliament. 

To contact the author, please email: EPRS-ExPostEvaluation@ep.europa.eu  

ACKNOWLEDGMENTS 

The author would like to thank the Directorate-General for Trade in the European Commission for their time, 
cooperation and insights into the topic examined. 

LINGUISTIC VERSIONS 

Original: EN 

Manuscript completed in September 2018.  

DISCLAIMER AND COPYRIGHT 

This  document  is  prepared  for,  and  addressed  to,  the  Members  and  staff  of  the  European  Parliament  as 
background  material  to  assist  them  in  their  parliamentary  work.  The  content  of  the  document  is  the  sole 
responsibility of its author(s) and any opinions expressed herein should not be taken to represent an official 
position of the Parliament. 

Reproduction  and  translation  for  non-commercial  purposes  are  authorised,  provided  the  source  is 
acknowledged and the European Parliament is given prior notice and sent a copy. 

Brussels © European Union, 2018. 

PE 621.852 
ISBN: 978-92-846-3308-1 
DOI: 10.2861/341125 
CAT: QA-01-18-809-EN-N 

eprs@ep.europa.eu  
http://www.eprs.ep.parl.union.eu (intranet) 
http://www.europarl.europa.eu/thinktank (internet) 
http://epthinktank.eu (blog) 

 
 
 
 
 
 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

Executive summary 

Trade relations between the European Union and the Central American region are determined by 
an association agreement signed in June 2012. Pending the agreement's ratification, the trade pillar 
of  the  agreement  has  been  provisionally  implemented  since  1  August  2013  with  Honduras, 
Nicaragua and Panama, since 1 October 2013 with Costa Rica and El Salvador, and since 1 December 
with Guatemala. With a five-year view on its implementation, the time is ripe to examine the impact 
that this agreement has had on the Central American region. 

In the light of time concerns, this study has focused on assessing the implementation of the trade 
and sustainable development (TSD) chapter of the agreement's trade pillar. The analysis points to 
the following possible options for enhancing the effectiveness and impact of these provisions. 

1.  The  importance  of  political  dialogue  and  engagement  with  the  six  Central  American 
signatories  to  the  AA:  implementation  of  the  TSD  chapter  is  ultimately  linked  to  the  political 
commitment of partners in Central America towards their citizens. In that sense, the EU's influence 
has its limits and pressure needs to come at the level of the Association Council and the Association 
Committee  to  encourage  the  authorities  to  commit  to  the  implementation  of  these  important 
provisions. At the moment, labour rights and environmental protection hardly figure in discussions 
at high political level.  

2.  In  that  spirit,  ratification  of  the  EU-Central  America  Association  Agreement  by  the  EU 
Member States who have not done so yet, would send a strong message as to the commitment of 
the EU and facilitate implementation of the TSD provisions (e.g. by pushing forward social cohesion 
and further supporting regional integration). 

3. It is important to improve information and sponsor awareness campaigns, something that 
should  be  strengthened  at  local  level  in  Central  America  by  capitalising  on  the  potential  of  the 
relevant  EU  delegations.  Moreover,  while  the  merits  of  digital  technologies  are  recognised,  civil 
society  representatives  recommend  establishing  political  contacts,  face-to-face  exchanges, 
between European politicians engaged in cross-border cooperation and the competent authorities 
in target countries. 

4. Better coordination of the various instruments that the EU has at its disposal and better 
cooperation  between  the  EU  and  other  donors  will  further  push  forward  the  sustainable 
development  agenda  in  Central  America.  This  translates  into  stronger  policies  for  regional 
integration,  a  streamlined  exchange  of  information  among  stakeholders,  and  coherence  on  the 
interpretation of the environmental and labour provisions in the different trade agreements that 
Central  America  has  signed  (beyond  the  one  with  the  EU)  and  the  relevant  international 
environmental and labour conventions. 

5. Stronger monitoring mechanisms are needed. Firstly, this entails ensuring substantive (not just 
substantial)  civil  society  participation  in  the  monitoring  of  the  EU-Central  America  Agreement. 
Although joint consultative structures that include local partners and civil society in monitoring the 
implementation of the sustainable development chapters are in place, it is not clear to what extent 
their contribution actually feeds into policy-making. Secondly, there is evidence of the benefits of 
providing for capacity-building projects (for example, on labour inspections) in third countries to 
help the relevant national and local authorities in the Central American countries in their efforts to 
monitor, apply and enforce environmental and social obligations. Thirdly, stronger evaluations that 
are ongoing, have clear benchmarks from the outset and engage local actors (both local authorities 
and  civil  society)  in  the  design,  monitoring  and  evaluation  phase  are  key.  Fourthly,  appropriate 
funding and facilitating of private-public partnerships would help involve business more concretely 
in the implementation of the TSD provisions. 

5 

 
EPRS | European Parliamentary Research Service 

6. There is a need for clearer enforcement mechanisms. Experts recommend both the consistent 
and  forceful  application  of  the  existing mechanisms  and  the  combination  (when  appropriate)  of 
promotional  and  conditional  approaches.  It  is important  to  create incentives for  implementation 
rather than sanctioning non-compliance, thus building on engagement, cooperation and capacity-
building with Central American partners. In order to address labour violations more directly, experts 
suggest  creating  a  'collective  complaint  mechanism'  that  would  enable  civil  society,  unions  and 
social partners – independently from their governments – to initiate a complaint procedure. Other 
experts  have  called  for  use  to  be  made  of  paragraph  161  (on  sustainable  development)  of  the 
landmark opinion of the European Court of Justice (May 2017) on the powers to conclude the EU-
Singapore  free  trade  agreement.  Yet others  focus on  dispute  settlement  in  the  wider  context, in 
which 
international  rules. 
Accordingly,  they  call  for  the  use  of  key  performance  indicator  scorecards,  information  on 
compliance from the ILO, voluntary sustainability standards and OECD guidelines. 

implementation  would  be  enforced  through  compliance  with 

6 

 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

Table of contents 

Executive summary  ____________________________________________________________  5 

1. Background _________________________________________________________________ 11 

1.1. Trade picture _____________________________________________________________ 12 

1.2. Objectives and structure ____________________________________________________ 14 

1.3. Methodology _____________________________________________________________ 16 

2. EU-Central America AA and sustainable development  ______________________________ 17 

2.1. Sustainable development in the ex-ante impact assessment _______________________ 17 

2.2. The legal foundations ______________________________________________________ 18 

2.3. Parallel development aid____________________________________________________ 20 

3. Monitoring implementation  ___________________________________________________ 22 

3.1. Monitoring mechanisms ____________________________________________________ 23 

3.2. European Commission assessment  ___________________________________________ 25 

3.3. European Parliament monitoring _____________________________________________ 26 

3.3.1. Human rights violations __________________________________________________ 27 

3.3.2. Tackling the consequences of conflict _______________________________________ 28 

3.3.3. Promoting environmental protection rights __________________________________ 29 

3.5. Civil society consultation ____________________________________________________ 31 

3.6. Government-to-civil society relations__________________________________________ 32 

3.7. Other relevant monitoring activities ___________________________________________ 33 

4. Complexities linked to implementing the TSD chapter ______________________________ 35 

4.1. Lack of enforceability of the TSD chapter _______________________________________ 35 

4.2. Challenges to intra-regional cross-border cooperation ____________________________ 36 

4.3. Weak coordination  ________________________________________________________ 37 

4.4. Representativeness of civil society ____________________________________________ 39 

7 

 
 
EPRS | European Parliamentary Research Service 

5. Options for the future _________________________________________________________ 40 

5.1. Completing the ratification process ___________________________________________ 40 

5.2. Strengthening communication  ______________________________________________ 41 

5.3. Enhancing coordination  ____________________________________________________ 42 

5.4. Better monitoring of compliance _____________________________________________ 43 

5.5. Strengthening the enforcement mechanism ____________________________________ 44 

6. Conclusions _________________________________________________________________ 47 

References  __________________________________________________________________ 49 

Annex 1 – The TSD chapter in the EU-Central America Association Agreement ____________ 53 

Annex 2 – Rules of procedure of the EU Advisory Group, created pursuant to Title VIII (Article 294) 
of the EU-Central America Association Agreement  __________________________________ 61 

8 

 
 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

Table of figures 

Figure 1 – Map of Central America  ________________________________________________ 11 

Figure 2 – EU28 trade in goods with Central America, 2007-2017 (€ millions)  ______________ 13 

Figure 3 – EU28 trade in services with Central America, 2010-2016 (€ millions) _____________ 14 

Figure 4 – Institutional set-up for civil society organisation consultation __________________ 24 

Table of tables 

Table 1 – Sustainable development in the EU-Central America Association Agreement ______ 19 

Table of boxes 

Box 1 – What dispute settlement? _________________________________________________ 23 

9 

 
 
 
 
 
 
 
 
EPRS | European Parliamentary Research Service 

List of acronyms 

AA 
AEBR 
CABEI 
CAFTA-DR 
CC-SICA 
CCEI 
CITES 
CSDF 
CSR 
CSOs 
DAGs 
DEVE 
DG TRADE 
DG REGIO 
EEAS 
EESC 
EIA 
EPP 
EPRS 
EU 
EuroLat 
EVAL 
EUSFTA 
FDI 
FTA 
GSP 
HS 
ILO 
INTA 
MSMEs 
MEAs 
NGOs 
OECD 
PARLACEN 
PROCUENCA  Plan  for  the  integrated  management  of  water  resources  and  the  sustainable 

Association Agreement 
Association of European Border Regions 
Central American Bank for Economic Integration 
Dominican Republic-Central America Free Trade Agreement (with the United States) 
Consultative Committee of the Central American Integration System 
Consultative Committee for Economic Integration 
Convention on International Trade in Endangered Species of Wild Flora and Fauna 
Civil Society Dialogue Forum 
Corporate social responsibility 
Civil society organisations 
Domestic advisory groups 
Committee on Development, European Parliament 
Directorate-General for Trade, European Commission 
Directorate-General for Regional and Urban Policy, European Commission 
European External Action Service 
European Economic and Social Committee 
European implementation assessment 
European People's Party, European Parliament 
European Parliamentary Research Service 
European Union 
Euro-Latin American Parliamentary Assembly 
Ex-Post Evaluation Unit, EPRS 
EU-Singapore FTA 
Foreign direct investment 
Free trade agreement 
General Scheme of Preferences 
'Harmonised System' trade nomenclature 
International Labour Organization 
Committee on International Trade, European Parliament 
Micro-, small and medium-sized enterprises 
Multilateral environmental agreements 
Non-governmental organisations 
Organisation for Economic Co-operation and Development 
Central American Parliament (Parlamento centroamenricano) 

development of the San Juan river basin 
Sustainable development goals 
Central American Integration System (Sistema de Integración Centroamericana) 
Small and medium enterprises 
Treaty on European Union 
Treaty on the Functioning of the European Union 
Trade and sustainable development 
United Kingdom 
United Nations 
World Health Organization 

SDG 
SICA 
SMEs 
TEU 
TFEU 
TSD 
UK 
UN 
WTO 

10 

 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

1. Background 

Trade relations between the European Union (EU) and the Central American region are determined 
by an Association Agreement (AA) signed in June 2012.1 The Central American countries included 
in  the  agreement  are  Costa  Rica,  El  Salvador,  Guatemala,  Honduras,  Nicaragua  and  Panama  (see 
Figure  1  below).  The  AA  builds  on  the  San  José  Dialogue  of  1984,  the  Framework  Cooperation 
Agreement (signed in 1993 and in force since 1999) and the Agreement on Political Dialogue and 
Cooperation (signed in 2003 and in force since 2014). 

The EU-Central America AA covers, inter 
trade,  political  dialogue  and 
alia, 
cooperation.  Pending  the  agreement's 
ratification, the trade pillar of the AA has 
been  provisionally  implemented  since 
2013  with  Honduras, 
1 August 
Nicaragua and Panama, since 1 October 
2013  with  Costa  Rica  and  El Salvador, 
and since 1 December with Guatemala. 
unilateral 
It 
preferential  access  to  the  EU  market 
that  was  granted  to  Central  America 
under  the  EU's  Generalised  Scheme  of 
Preferences (GSP). 

replaced 

has 

the 

only 

agreement 

The 
applies 
provisionally in the EU until all Member 
States  have  ratified it.  To date,  Austria, 
Belgium,  Greece  and 
the  United 
Kingdom (UK) have not yet ratified the 
EU-Central  America  agreement.2  The 
ratification 
completion  of 
process by all the EU Member States will 
activate  the  political  dialogue  and 
the 
cooperation  pillars,  which, 
meantime,  are  addressed 
the 
framework  of 
the  1999  political 
dialogue and cooperation agreement. 

the  AA 

in 
in 

Figure 1 – Map of Central America 

Source: EPRS. 

1  

2  

The European Parliament gave its consent to conclusion of the agreement on 10 December 2012 (by 557 votes to 
100,  with  21  abstentions).  European  Parliament,  MEPs  back  two  major  pacts  with  Latin America,  Press release,  11 
December 2012. 

The status of the ratification is posted on the Council's website. Croatia, which joined the EU after the signature of the 
EU-Central America AA, in 2013, granted Central America all preferences as provided in the AA then. However, it was 
still necessary to make the necessary adjustments to the AA to allow Croatia to enjoy preferential access to Central 
American markets. The conditions for the full inclusion of Croatia in the AA have therefore been under discussion 
between  the  Parties  since  2013  and  in  all  Association  Committee  meetings.  In  the  latest  Association  Committee 
meeting of 14 June 2018, which took place in Brussels, all six Central American Republics accepted the EU offer of 
compensation, which had been on the table for consideration for some time. This offer has been calculated according 
to the methodology used for similar discussions in the framework of the WTO and in all EU bilateral agreements. On 
this basis, the Parties will now start the administrative and institutional procedures to adopt the relevant Protocol to 
the Association Agreement. See European Commission, EU-Central America Association Agreement, Summary Report 
of the fourth meeting of the Association Committee – Trade part: Brussels, 14 June 2018. 

11 

 
                                                             
 
EPRS | European Parliamentary Research Service 

The trade pillar of the EU-Central America AA contains a separate chapter on trade and sustainable 
development (hereafter referred to as the 'TSD chapter'), under which, as is the case in other recent 
EU  trade  agreements,  the  parties  to  a  given  agreement  pledge  to  abide  by  a  number  of  social 
(including  labour)  and  environmental  principles.  In  that  light,  the  EU  has  committed  itself  to 
ensuring that its trade policy is not only supportive of the economic development of the Union, but 
also of broader, non-trade issues. More specifically, TSD chapters can: 

  reflect international labour and environment standards and agreements; 
  enforce their environmental and labour laws; 
  ensure there is no deviation from environmental or labour laws to encourage trade or 

investment, and thereby prevent a 'race to the bottom'; 

  promote the sustainable trade of natural resources, such as timber and fish; 
  combat illegal trade in threatened and endangered species of fauna and flora; 
  encourage trade that helps to tackle climate change; and 
  promote practices such as corporate social responsibility.3 

TSD provisions are underpinned by the logic of the Lisbon Treaty that links 'fair' to 'free' trade as one 
of the Union's external policy objectives (Article 3(5) TEU) and stipulates that the EU's trade policy 
'shall be conducted in the context of the principles and objectives of the Union's external action' 
(Article  207(1)  TFEU).  The  European  Commission's  ‘Trade  for  All’  communication  also  strongly 
emphasises 'values' and 'responsible trade'.4  

These  provisions  are  seen  as  constituting  a  new  form  of  conditionality  and  contain  obligations, 
modelled on similar provisions in United States and Canadian free trade agreements requiring the 
parties to comply with labour and environmental standards (including ILO core labour standards). 
This conversely means that parties are not to use labour and environmental regulation as a means 
of economic protection.5 

1.1. Trade picture 

It is difficult to draw conclusions on trade with Central America as a region because intra-regional 
social  and  economic  development  is  heterogeneous.  Panama  and  Costa  Rica  are  middle  income 
countries while Nicaragua is the poorest country. This means that economic growth, food security 
and access to food, and average wages, among other factors, vary widely within the region. 

The European Commission-contracted ex-ante trade sustainability impact assessment for the trade 
part of the Association Agreement between the EU and the six Central American republics showed, 
for example, that Panama would benefit from participating in the Association Agreement in terms 
of changes in national income and trade.6 Access to the EU market was expected to generate major 
economic and social benefits in Central America with gains in national income for Central America 
as  a  whole  expected  to  amount  to  €2.6 billion.  Estimates  of  change  in  national  income  varied 
between 0.5 % in Nicaragua to 3.5 % for Costa Rica in the long term. This would be the result of large 
sectoral  gains  in  the  fruit,  vegetable,  and  nut  sector  in  Costa  Rica  and  Panama.  Guatemala  and 
Nicaragua were expected to become more competitive in the textiles and clothing sector, while El 

Sustainable development, Directorate General for Trade, European Commission, 9 April 2018 (accessed 17 July 2018). 

European  Commission,  Trade  for  All:  Towards  a  More  Responsible  Trade  and  Investment  Policy,  COM(2015) 497, 
14 October 2014 (see especially p. 5). 

Isabelle Ioannides, The effects of human rights related clauses in the EU-Mexico Global Agreement and the EU-Chile 
Association Agreement, EPRS, European Parliament, February 2017. 

Ecorys  and  Corporate  Solutions,  Trade  Sustainability  Impact  Assessment  of  the  Association  Agreement  to  be 
negotiated  between  the  EU  and  Central  America,  TRADE08/C1/C14  &  C15  -  Lot  2,  Final  Report,  (Evaluation 
commissioned by the Directorate General on Trade, European Commission), 18 September 2009. 

3  
4  

5  

6  

12 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

Salvador and Honduras would see an increase in their exports of transport equipment. Accordingly, 
the agreement was expected to have an overall poverty-reducing effect across the Central American 
region.7 

Figure 2 – EU28 trade in goods with Central America, 2007-2017 (€ millions) 

s
n
o

i
l
l
i

m
€

7.000

6.500

6.000

5.500

5.000

4.500

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0

-500

-1.000

-1.500

-2.000

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: EU trade since 1988 by SITC, Eurostat. 

Export

Import

Balance

Overall, experts argued that the impact of the agreement on the economy and trade flows of the EU 
would be negligible due to the small size of the Central American economies.8 This has indeed been 
the  pattern  of  trade  flows.  In  the  countries  of  the  region,  the  biggest  impact  of  the  Association 
Agreement on production and trade has been in the fruit, vegetables and nuts sector, something 
that  experts  had pointed to  even  before  the  signature of  the  agreement.9  According  to  Eurostat 
data, the trade flow between the EU and Central America amounted to €10.7 billion in 2016. The 
EU's trade balance with Central America presented a deficit equal to €0.13 billion in 2016. In 2015, 
there was a surplus of €0.5 billion, but in 2014 there was a deficit of €1.7 billion and in 2013 a deficit 
of €2.2 billion.10 EU exports to Central America decreased by 7.8 % in 2016. This could be explained 
mainly by exports of products of the chemical or allied industries and transport equipment, which 
decreased by 7.3 % and 36.1 % respectively (see Figure 2.) 

7  

8  

European Commission, Highlights of the trade pillar of the Association Agreement between Central America and the 
European Union, Press release, Brussels, 20 June 2011, p. 3. 

EU - Central America Association Agreement - Free Trade Chapter, Policy Briefing, Directorate-General for external 
Policies of the Union Policy Department, European Parliament, May 2011. 

Ibid. 

9  
10   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of 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(2016) 73 final, Brussels, 18 February 2016, 
p. 3. 

13 

 
 
                                                             
 
EPRS | European Parliamentary Research Service 

During  the  same  year,  the  main  EU  imports  from  Central  America  by  harmonised  system  (HS)11 
section were, in order of importance: vegetable products; foodstuffs, beverages, tobacco; optical 
and photographic instruments, etc.; and animal or vegetable fats and oils. The main EU exports to 
Central America by HS section were, in order of importance: machinery and appliances; products of 
the chemical or allied industries; transport equipment; and foodstuffs, beverages and tobacco.12 

Figure 3 – EU28 trade in services with Central America, 2010-2016 (€ millions) 

s
n
o

i
l
l
i

m
€

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0

-500

2010

2011

2012

2013

2014

2015

2016

Credit

Debit

Balance

Source: Total services, detailed geographical breakdown by EU Member State (since 2010) (BPM6), Eurostat. 

The European Commission annual reports do not provide much information on trade in services, 
which admittedly is complicated to measure and which at a global level may give a biased picture. 
While  Honduras  and  Nicaragua  saw  very  significant  fluctuations,  the  larger  markets  of  Panama, 
Costa Rica and Guatemala saw more moderate variations (generally under 10 %) as did El Salvador. 
In  this  study,  an  attempt  is  nonetheless  made  to  provide  readers  with  an  overview  of  trade  in 
services  between  the  EU  and  Central  America  (aggregated  figures  for  trade  in  services  of  all  the 
countries that are party to this AA) using data from Eurostat (see Figure 3 below.)  

1.2. Objectives and structure 

Recent  studies  have  expressed  doubt  as  to  whether  the  TSD  chapters  included  in  EU  free  trade 
agreements (FTAs) live up to the expectations they create.13 In terms of structures for monitoring 
the agreement, civil society organisations have − at least on paper − been granted an important role 

11   The Harmonised Commodity Description and Coding System, also known as the Harmonised System (HS) of tariff 

nomenclature, is an internationally standardised system of names and numbers to classify traded products. 

12   European  Union,  Trade  in  goods  with  Central  America  6,  Directorate-General  for  Trade,  European  Commission, 

16 April 2018. 

13   See, for example, I. Ioannides, The effects of human rights related clauses in the EU-Mexico Global Agreement and the 
EU-Chile  Association  Agreement,  EPRS,  European  Parliament,  February  2017;  W.  Douma,  'The  Promotion  of 
Sustainable Development through EU Trade Instruments', in L. Pantaleo and A. Mads (eds.), The European Union as a 
Global Model for Trade and Investment,  Research  Paper  Series  No  2016-02,  University  of Oslo, Faculty  of  Law  Legal 
Studies, 2016. 

14 

 
 
                                                             
 
The Trade Pillar in the EU-Central America Association Agreement 

in the follow-up and monitoring of these chapters. Civil society meetings have become a standard 
and  quite  prominent  feature  of  EU  free  trade  agreements,  specifically  with  a  view  to  promoting 
labour and environmental principles.14 

In  addition,  while  the  inclusion  of  labour  rights  in  EU  trade  agreements  has  become  an 
'unobjectionable norm',15 analyses of their impact remains difficult and limited.16 Critics have argued 
that  current  trade  sustainability  impact  assessment  methodology  and  practice  fail  to  yield  an 
adequate assessment of the social impact of a given trade agreement.17 They have argued that the 
monitoring  and  enforcement  of  the  sustainable  development  chapters  that  specifically  address 
labour rights are particularly erratic, leading to suspicions of weak political commitment and double 
standards.18 The debates focus on the negative social, environmental, and health consequences of 
international trade and a potential 'race to the bottom' in environmental and social standards. The 
main  added  value  of  TSD  chapters  may  therefore  not  lie  in  the  'harmonisation'  of  social  and 
environmental standards between the partners, but rather in fostering dialogue and cooperation to 
achieve sustainable trade in the long run.19 

In response to these concerns, the European Commission launched a debate on the performance of 
existing TSD chapters in EU trade agreements and, in this context, issued a non-paper on this topic20 
in July 2017, which was sent to the European Parliament and the Council intended to contribute to 
the debate. More specifically, the non-paper hopes to address:  

  whether  the  current  TSD  chapters  meet  expectations,  and  what  could  be  done  to 

improve them; 

  whether a more assertive partnership on trade and sustainable development in bilateral 

FTAs should be pursued; 

  whether a sanction-based approach would address the shortcomings identified; and 
  whether  any  other  issues  related  to  trade  and  sustainable  development  need  to  be 

addressed. 

This study examines and assesses the TSD chapter in the trade pillar of the EU-Central America AA 
against  these  four  objectives  that  the  European  Commission  has  set  for  itself  and  that  it  uses  as 
benchmarks. It is, however, beyond the scope of this study to evaluate how successful the EU has 
been  at  implementing  sustainable  development  in  individual  countries  of  the  Central  American 
region. 

14   See J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, 
CLEER PAPERS 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016. 
15   L.  Van  den  Putte  and  J.  Orbie,  'EU  Bilateral  Trade  Agreements  and  the  Surprising  Rise  of  Labour  Provisions', 

International Journal of Comparative Labour Law and Industrial Relations, Vol. 31(3), 2015, pp. 263–283. 

16  

J. Orbie et al., 'The Impact of Labour Rights Commitments in EU Trade Agreements: The Case of Peru', Politics and 
Governance, Vol. 5(4), 2017. 

17   E. Bürgi Bonanomi, EU Trade Agreements and Their Impacts on Human Rights, Study commissioned by the German 
Federal  Ministry  for  Economic  Cooperation  and  Development  (BMZ),  CDE  Working  Paper  No  1,  Centre  for 
Development and Environment, University of Bern, Switzerland, 2014, p. 9. 

18   L.  Beke  et  al.,  Report  on  the  Integration  of  Human  Rights in  EU  Development  and  Trade  Policies,  Large-Scale FP7 
Collaborative  Project  GA  No  320000:  Fostering  Human  Rights  among  European  Policies,  Work  Package  No  9  – 
Deliverable No 1, Leuven Centre for Global Governance Studies, Leuven, September 2014. 

19   A.  Marx  et  al.,  Dispute  Settlement  in  the  Trade  and  Sustainable  Development  Chapters  of  EU  Trade  Agreements, 

Leuven Centre for Global Governance Studies, Leuven, 2017. 

20   European Commission, Trade and Sustainable Development (TSD) chapters in EU Free Trade Agreements (FTAs), Non-

paper of the Commission services, 11 July 2017. 

15 

 
                                                             
EPRS | European Parliamentary Research Service 

1.3. Methodology 

Owing  to  time  constraints,  the  analysis  in  this  study  is  based  essentially  on  available  secondary 
literature.  It  includes  a  review  of  academic  and  think  tank  analysis  of  ambitions,  successes  and 
challenges in EU-Central America relations, European Commission reports on the implementation 
of  the  EU-Central  America  agreement,  and  reports  and  opinions  produced  by  the  European 
Parliament and the EU advisory bodies, namely the European Economic and Social Committee, on 
the  strengths  and  shortcomings  of  this  agreement.  The  author  has  also  consulted  EU  national 
parliamentary  registers  to  find  relevant  literature  on  the  implementation  of  the  AA.  Moreover, 
discussions with DG TRADE in the European Commission complemented the analysis of secondary 
literature and answered any questions that arose. 

It  should  be  noted  that  at  the  time  of  writing  this  study,  the  European  Commission  had  not 
published its 2018 annual report on the implementation of the EU-Central America AA, which was 
due in September 2018.21 Unlike previous years, the annual implementation report will include all 
EU trade agreements rather than assessing them individually in separate reports. 

Moreover, it is important to  note  the  limitations  of the  quantitative  data on  regional  trade  flows 
between the EU and Central America. While the EU and Central America exchange their respective 
statistics annually to elaborate a joint analysis,22 given the importance of the Panamanian Trade Free 
Zone  (the  second  in  the  world),  the  European  Commission  admits  that  Eurostat  data  tends  to 
overestimate EU exports to Central America.23 Another limitation to keep in mind is the difficulty of 
dissociating the impact that trade activities conducted in the context of the EU-Central America AA 
may have had on sustainable development from the specific impact that trade with other countries 
or  EU  development  aid  may  have  had  on  promoting 
labour  rights  and  environmental 
sustainability.24 

21   The European Commission hopes to publish its 2018 report on the implementation of all the EU FTAs by the end of 

October 2018. 

22   The EU uses the statistics published by the Secretariat for Central American Economic Integration (SIECA). 
23   See, for example, Report from the Commission to the European Parliament and the Council, Third Annual Report on 
the Implementation of 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(2017) 160 final, Brussels, 5 April 2017. 

24  

Ioannides, Isabelle, The effects of human rights related clauses in the EU-Mexico Global Agreement and the EU-Chile 
Association Agreement, EPRS, European Parliament, February 2017. 

16 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

2. EU-Central America AA and sustainable development 

The EU's central trade policy objective for Central America is to increase bilateral trade and use it to 
strengthen the process of regional integration between the region's countries. In practical terms, 
this means the creation of a customs union and economic integration in Central America. The EU 
has supported this process through its trade agreement and its trade-related technical cooperation 
programmes.  This  closer  economic  integration  between  the  countries  of  the  Central  American 
region is important for attracting investment to the region and helping local businesses develop the 
necessary capacity in their regional market to be able to compete internationally. When doing so, 
fostering sustainable development is key. 

2.1. Sustainable development in the ex-ante impact assessment 

The  ex-ante  impact  assessment  of  the  EU-Central  America  AA  commissioned  by  the  European 
Commission argued that the deal could stimulate implementation of effective EU-Central America 
cooperation and policies on illegal logging, among other issues, which would have positive effects 
in mitigating deforestation and biodiversity loss. The assessment argued that, in general, 'specific 
sustainable  development  provisions 
in  the  AA  can  stimulate  the  commitment  to  and 
implementation  of  international  and  multilateral  environmental  agreements  (MEAs),  thereby 
encouraging further progress on issues of international concern such as climate change, biodiversity 
and natural resources'.25 

The  assessment  also  pointed  out,  however,  that  'the  effects  on  other  environmental  quality 
indicators [were] not clear-cut'. More trade and marine transport as well as more consumption (i.e. 
waste generation) could put a pressure on environmental and water quality. Nonetheless, FDI flows 
and  the  inclusion  of  Central  American  firms  in  global  production  networks  as  well  as  specific 
sustainable  development  provisions  included  in  the  AA,  could  potentially  enhance  'green' 
production and help bring about improvements in environmental quality.26 

In  that  context,  the  trade  and  sustainability  impact  assessment  had  recommended  that  the 
sustainability development chapter in the AA address social and environmental issues related to the 
trade-part of the deal, supported by an appropriate incentive structure. Social issues would include: 
(enforcement of) international labour standards; small and medium-sized enterprises (SMEs); strict 
monitoring and evaluation systems; positive indirect effects on labour standards (in relation to the 
ILO conventions) and working conditions (e.g. in the maquilas),27 including in domestically oriented 
sectors.  Environmental  issues  that  the  AA  could  cover  include:  multilateral  environmental 
agreements  (MEAs);  regional  approaches; 
impact  monitoring  mechanisms;  environmental 
standards;  wildlife  and  biodiversity;  and  sector-specific  issues  (e.g.  on  forests,  fishery,  biofuels, 
organic  farming,  etc.).28  The  same  impact  assessment  highlighted  that  'if  the  EU  insists  upon 
standards being met in the production of goods to be exported there and the implementation of 
ILO conventions, then this could benefit Central American workers, in particular the most vulnerable 

25   Ecorys  and  Corporate  Solutions,  Trade  Sustainability  Impact  Assessment  of  the  Association  Agreement  to  be 
negotiated  between  the  EU  and  Central  America,  TRADE08/C1/C14  &  C15  -  Lot  2,  Final  Report,  (Evaluation 
commissioned by the Directorate General on Trade, European Commission), 18 September 2009, p. 17. 

Ibid. 

26  
27   The maquila (or maquiladora) is a sub-contractor, manufacturing operation, where factories import certain material 
and equipment on a duty-free and tariff-free basis for assembly, processing, or manufacturing and then export the 
assembled, processed or manufactured products, sometimes back to the raw materials' country of origin. They are 
often accused of subjecting workers to unsafe and unsanitary working conditions. 

28   Ecorys  and  Corporate  Solutions,  Trade  Sustainability  Impact  Assessment  of  the  Association  Agreement  to  be 
negotiated  between  the  EU  and  Central  America,  TRADE08/C1/C14  &  C15  -  Lot  2,  Final  Report,  (Evaluation 
commissioned by the Directorate General on Trade, European Commission), 18 September 2009, pp. 18-19. 

17 

 
                                                             
EPRS | European Parliamentary Research Service 

groups (women, children and indigenous populations)'.29 The importance of including employees' 
health in the sustainable development chapter was also recommended in the ex-ante assessment.30 

On  monitoring  implementation  of  the  sustainable  development  chapter,  the  ex-ante  impact 
assessment called for a system to monitor and evaluate labour issues, 'such as that included in the 
EU-Chile agreement' once the agreement had been implemented. It argued that the TSD chapter 
could  also  use  the  enforcement  mechanisms  implemented  as  a  result  of  the  CAFTA-DR  white 
paper,31 which envisages employer sanctions and the provision of direct support for labour unions, 
and urges governments to create laws to regulate employment subcontracting.32 The role of civil 
society  in  monitoring  sustainable  development  was  stressed  and  an  emphasis  was  put  on  the 
importance of it playing 'a responsible and vocal role so as to ensure the broad and often varying 
interests are adequately represented'.33 

2.2. The legal foundations 

The very premise of the TSD chapter – provisions to protect labour, social and environmental rights 
–  resonates  with  a  growing  concern  that  trade  agreements  should  not  only  promote  economic 
interests but should also take broader values into account. Accordingly, an overarching objective of 
the EU-Central America AA is to contribute to sustainable development in both Central America and 
the European Union, taking due account of the differences and specificities of each region.  

This objective  is  embedded  in  all  the  sections of  the  agreement.  The  AA  starts  with  its  'essential 
elements' clause by stressing the underlying principles, which include respect for democratic rule 
and  fundamental  human  rights  as  well  as  the  promotion  of  sustainable  development,  good 
governance  and  the  rule  of  law.  This  is  further  developed  and  the  commitment  to  sustainable 
development  is  reaffirmed  in  the  TSD  chapter.  It  addresses  the  interrelation  between  trade  and 
social and environmental policies and the Parties' commitments to labour and environment-related 
matters.  These  include  commitments  to  internationally  recognised  core  labour  standards  and 
multilateral agreements addressing environmental issues of international concern, amongst other 
things,  implementation  of  the  fundamental  ILO  conventions  and  multilateral  environmental 
agreements  such  as  the  Convention  on  Biological  Diversity,  the  UN  Framework  Convention  on 
Climate Change and the Convention on International Trade in Endangered Species of Wild Flora and 
Fauna (CITES).  

More specifically, in the TSD chapter of the AA (see Annex I), the EU and Central American countries 
have  made  commitments  to  ensure  a  high level of labour  and  environmental  protection  in  their 
domestic legislation, to strive to improve laws and policies in these areas, and not to lower these 
levels in order to attract trade or investment. They have also expressed their will to cooperate in 
areas related to trade and, respectively, labour, the environment and sustainable development. This 
comprises  facilitation  of  trade  and  investment  in  environmental  technologies  and  services,  the 
promotion  of  renewable  energy  and  energy-efficient  products  and  the  promotion  of  corporate 

29   Ecorys  and  Corporate  Solutions,  Trade  Sustainability  Impact  Assessment  of  the  Association  Agreement  to  be 
negotiated  between  the  EU  and  Central  America,  TRADE08/C1/C14  &  C15  -  Lot  2,  Final  Report,  (Evaluation 
commissioned by the Directorate General on Trade, European Commission), 18 September 2009, p. 77. 

Ibid., p. 80. 

30  
31   This refers to the following paper of the Office of the United States Trade Representative, The Labor Dimension in 
Central  America  and  the  Dominican  Republic,  Building  on  Progress:  Strengthening  Compliance  and  Enhancing 
Capacity, 2005. 

32   Ecorys  and  Corporate  Solutions,  Trade  Sustainability  Impact  Assessment  of  the  Association  Agreement  to  be 
negotiated  between  the  EU  and  Central  America,  TRADE08/C1/C14  &  C15  -  Lot  2,  Final  Report,  (Evaluation 
commissioned by the Directorate General on Trade, European Commission), 18 September 2009, p. 77. 

33  

Ibid., p. 86. 

18 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

social  responsibility  (CSR)  and  of  trade  in  products  subject  to  ethical  or  fair  trade  schemes. 
Cooperation  may  also  include  trade-related  aspects  of  the  sustainable  management  of  forest 
resources, the promotion of sustainable fishing and other relevant areas. 

Table 1 below illustrates the extent to which sustainable development is enforceable and the limits 
of  implementation.  Having  explicitly  put  in  the  'essential  elements'  clause,  the  promotion  of 
sustainable  development  as  a  guiding  principle  for  the  implementation  of  this  agreement, 
demonstrates a strong commitment to this objective by all signatory parties. However, the wording 
in the TSD chapter is softer. The use of such terms as 'shall strive to ensure [...]' (see Article 285 in 
Annex I) ultimately does not ensure that declarations of intent are actually implemented. While the 
intentions are noble, the conservative way in which the title is written does not do enough to ensure 
their implementation.  

Table 1 – Sustainable development in the EU-Central America Association Agreement 

Type of clause 

Articles linked to sustainable development 

'Essential elements' 
clause 

Article 2 

2. The Parties confirm their commitment to the promotion of sustainable 
development, which is a guiding principle for the implementation of this 
Agreement, taking notably into account the Millennium Development Goals. 
The Parties shall ensure that an appropriate balance is struck between the 
economic, social and environmental components of sustainable 
development. 

When appropriate 
measures may be taken 

Article 355 

2. If a Party considers that another Party has failed to fulfil an obligation 
under this Agreement, it may have recourse to appropriate measures. 

Meaning of 'special 
urgency' 

Article 355 

3. The Parties agree that the term 'cases of special urgency' in paragraph 2 
means a case of material breach of this Agreement by one of the Parties. 

4. A material breach of this Agreement consists in: 

(a) repudiation of this Agreement not sanctioned by general rules of 
international law; 

(b) violation of the essential elements of this Agreement. 

Article 355 

Proportionality 
conditions on 
appropriate measures 

2. In selecting which measures to adopt, priority shall be given to those 
which are least disruptive to the implementation of this Agreement. 

3. The Parties further agree that the term appropriate measures, referred to in 
paragraph 2 means measures taken in accordance with international law. It is 
understood that suspension would be a measure of last resort. 

Notifications and 
consultations 

Article 355 

2. Such measures shall be notified immediately to the Association Committee 
and shall be the subject of consultations in the Committee if a Party so 
requests.  

5. If a Party has recourse to a measure in case of special urgency, the other 
Party may request that an urgent meeting be called to convene the Parties 
within fifteen days. 

Source: Agreement establishing an Association between the European Union and its Member States, on the 
one hand, and Central America on the other, Official Journal L 346, 15 December 2012. 

In addition, while climate change has gradually emerged as the key cooperation priority in the EU-
Central America relationship, it is not explicitly mentioned in the AA even though it is a distinct and 

19 

 
EPRS | European Parliamentary Research Service 

ambitious  area  of  environmental  cooperation.  Experts  also  question  the  effectiveness  of  the 
'implementation' clause (Article 355 of the EU-Central America agreement), arguing that 'the exact 
meaning of this clause is unclear'.34 According to Bartels 'it could have the effect of imposing on the 
parties  not  only  a  negative  duty  to  ensure  that  ...  democratic  principles  are  respected  but  also  a 
positive duty to ensure that these norms are ensured and fulfilled'.35 

The cooperation part of the AA contains a non-exhaustive list (see Article 27: Evolution Clause) of 
areas of cooperation such as, democracy and human rights, good governance, modernisation of the 
state  and  public  administration,  conflict  prevention  and  resolution,  reinforcement  of  institutions 
and  rule  of  law,  justice,  freedom  and  security  (e.g.  money  laundering,  including  the  financing  of 
terrorism  and  the  fight  against  corruption),  social  development  and  social  cohesion  (e.g. 
employment  and  social  protection,  education  and  training),  migration,  environment,  natural 
disasters and climate change, economic and trade development (e.g. customs and trade facilitation, 
technical  assistance  on  various  trade  aspects  such  as,  intellectual  property,  technology  transfer, 
artisanal  goods,  food  safety,  sanitary  and  phytosanitary  matters  and  animal  welfare,  renewable 
energy, fair and sustainable tourism, SMEs, and microcredit and microfinance).  

2.3. Parallel development aid36 

Implementation of the cooperation agreed is supported by the European Commission's Regional 
Strategy Paper for Central America and bilateral aid to each of the six signatories to the EU-Central 
America AA. In the light of new needs that emerged during the Association Agreement negotiations 
(possible new financial mechanism for regional development, cross-border action, etc.) and given 
the  increasing  vulnerability  of  the  region  in  terms  of  security  and  cross-border  criminality,  the 
European Commission's Regional Indicative Programme for Central America increased funding for 
the 2011 to 2013 period to €61 million.37 

As part of the Agenda for Change,38 with a view to increasing the impact of EU development policy, 
the  EU  refocused  its  aid  to  enhance  results  and  sustainable  development.  For  the  2014  to  2020 
period,  the  EU  maintains  bilateral  cooperation  with  El  Salvador,  Guatemala,  Honduras  and 
Nicaragua. For Costa Rica and Panama, the EU engages in a more strategic relationship, in which it 
seeks solutions on matters of common concern via regional cooperation, thematic programmes and 
new financial instruments. 

In financial terms, an indicative amount of €775 million has been allocated for bilateral cooperation 
with Guatemala (€186.8 million), El Salvador (€149 million), Honduras (€235 million) and Nicaragua 
(€204  million).  In  addition,  €120  million  have  been  earmarked  for  sub-regional  programmes  in 
Central America in three key areas:  

34   S.  Velluti,  'The  Promotion  and  Integration  of  Human  Rights  in  EU  External  Trade  Relations',  Utrecht  Journal  of 

International and European Law, Vol. 32(83), 2016, pp. 41-68. 

35   L.  Bartels,  'Human  Rights  and  Sustainable  Development  Obligations  in  EU  Free  Trade  Agreements',  Legal Issues of 

Economic Integration Law, Vol. 40(4), 2013, p. 301. 

36   The European Commission disburses aid to the Central American countries that are party to this AA on a bilateral 
basis. It is, however, beyond the scope of this paper to analyse the impact of this funding on EU-Central America trade 
relations or to examine how it interacts with the trade activities on sustainable development. Nevertheless, it is worth 
noting this EU assistance to Central American countries is key to supporting long-term sustainable reforms related to 
sustainable trade, sustainable development, decent work and necessary institutional reforms to ensure the respect of 
human rights (including labour law). For this point, see I. Ioannides, The effects of human rights related clauses in the 
EU-Mexico Global Agreement and the EU-Chile Association Agreement, EPRS, European Parliament, February 2017. 

37   European  Commission,  Summary,  Mid-Term  Review  RSP  –  Central  America  2007-2013  and  Regional  Indicative 

Programme 2011-2013, 2010. 

38   European Commission, EU Communication on the Agenda for Change, 2011. 

20 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

  regional economic integration (€40 million);  
  security and the rule of law (€40 million); and 
  climate change and disaster management (€35 million).  

Compared  to  the  2007  to  2013  allocation  (€95  million),  the  allocation  for  Central  America  has 
increased by over 30 % and priorities have been defined through the Central American Integration 
System (SICA).39 

Financing available for regional economic integration and climate change have been key in pushing 
forward with the implementation of sustainable development clauses. They have been particularly 
useful, for example, for tackling challenges in the area of sustainable development in border regions 
that are poorer and may become less peripheral in a more integrated region. This is an example of 
the development effect of integration.  

In June 2018, the European Union, the Secretariat General of the SICA, the Central American Bank 
for Economic Integration (CABEI) and the German government launched a 'Green Fund for Central 
America',  for  a  total  amount  of  €88.1  million.  The  EU  will  support  the  programme  through  a 
€34 million contribution. The fund aims to support mitigation and adaptation measures to help the 
SICA  region  become  more  resilient  to  the  effects  of  climate  change.  In  order  to  accomplish  its 
mission, it encompasses two programmes:  

  the Green Fund for Development, of which the aim is to invest at local level to improve 
resilience to climate change in vulnerable areas of the Central American region, and will 
have as its main focus the restoration of forest landscapes and the implementation of 
integrated ecosystems; and 

  the  Green  MSMEs  II  Initiative,  which  will  focus  on  generating  renewable  energy  and 
improving  energy  efficiency  in  Micro,  Small  and  Medium  Enterprises  (MSMEs). 
Ultimately,  this  initiative  seeks  to  reduce  energy  consumption,  curtail  CO2  emissions, 
and thereby improve the environmental situation of the region.40 

The  EU  also  works  closely  with  its  Member  States,  for  example,  with  the  Foreign  Ministry  of  the 
Netherlands,  with  which  it  has  launched  a  €4  million  project  on  'Promoting  sustainable  export 
development in Central America' (2017-2020).41 

39   The SICA members are Guatemala, Belize, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, and the Dominican 
Republic.  See  Regional  cooperation  with  Central  America,  Directorate-General  for  International  Cooperation  and 
Development, European Commission. 

40   European  Commission,  The  EU  launches  a  'Green  Fund'  for  Central  America  to  support  the  fight  against  climate 

change, DG DEVCO, Brussels, 13 June 2018. 

41   Dutch Ministry of Foreign Affairs, Investing in Global Prospects, Policy Document on Foreign Trade and Development 

Cooperation, May 2018. 

21 

 
                                                             
EPRS | European Parliamentary Research Service 

3. Monitoring implementation 

The  expectations  of  the  impact  that  the  EU-Central  America  AA  would  have  on  sustainable 
development were rather optimistic. The 2009 trade and sustainability impact assessment that the 
European  Commission  commissioned  in  advance  of  the  negotiation  of  the  EU-Central  America 
Association Agreement demonstrated that wages for low-skilled and high-skilled workers in Central 
America were  likely  to  increase,  except in Panama, while, in  the  EU,  the  social impacts  would  be 
negligible. These wage increases would range from 0.2 % for high-skilled workers in Guatemala to 
up  to  3.2 %  for unskilled workers in  Costa  Rica.  These  figures  were  expected to  be  upper-bound 
estimates because of the existing informal sector. Modest migration of workers to Costa Rica could 
be the consequence. In Central America, special attention needed to be paid to gender equality, 
labour conditions and vulnerable social groups. According to the same ex-ante assessment, it was 
estimated  that  the  AA  could  stimulate  the  improvement  of  labour  standards  as  EU  firms  made 
higher demands on Central American exporters and since EU investors adhere to the ILO Decent 
Work Agenda. This hypothesis was made under the proviso that firms in the Central American region 
would not lower wages and standards in a competition for scarce FDI and thereby start a 'race to 
the bottom' in labour regulations.  

The  assessment  also  concluded  that  the  trade  part  of  the  AA  would  have  an  overall  poverty-
reducing effect for all Central American countries except for Panama, but the degree of this effect 
differed per country. For the Central American region as a whole, the aggregated estimated effect 
was 0.6 % reduction in poverty levels (in the scenario where Panama joined the AA). For Nicaragua, 
El Salvador and Honduras the poverty reductions were most pronounced (at 1 %). The effect was 
much smaller in the short run for Costa Rica, but greatest in the long run. For Panama, the AA was 
expected  to  raise  poverty  levels  slightly  whether  or  not  it  decided  to  join,  though  far  less  so  if 
Panama  joined  (0.2 %  compared  to  1.2 %  if  it  did  not  join).  In  addition,  unskilled  wages  were 
expected to rise faster than skilled wages, indicating a decline in income inequality, for both the 
comprehensive and very comprehensive scenarios. These were – however – average effects, and the 
effects of the AA for the domestic sectors, vulnerable groups, and women would need to be looked 
at in more detail. No major direct effects of the AA on education or health were expected. 

Regarding environmental concerns, it was expected that the AA would cause limited increases in 
CO2 emissions (+0.0 % of global greenhouse gas emissions) and more so for the EU than the Central 
American countries. Equally, resource (land) use was expected to change significantly especially in 
Costa Rica and Panama, towards the fruit, vegetable and nut sector at the expense of livestock and 
grains. Overall pressure on land use was likely to increase if the effects of mining, deforestation and 
biofuels production were taken into account.42 

Against this backdrop, this section examines the institutional set up envisaged by the EU-Central 
America AA to monitor compliance with the TSD provisions. It then analyses the monitoring carried 
out  by  the  European  Commission  through  its  annual  reports,  the  oversight  conducted  by 
Parliament, and other activities that have been carried out between the EU and Central America in 
the context of this agreement and with the aim of facilitating compliance. 

42   Ecorys et al., Trade Sustainability Impact Assessment of the Association Agreement to be negotiated between the EU 

and Central America, Final Report, TRADE08/C1/C14 & C15 - Lot 2, Rotterdam, 18 September 2009. 

22 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

3.1. Monitoring mechanisms 

The  Parties  to  the  EU-Central  America 
to 
Association  Agreement  committed 
monitor  the 
impact  of  the  sustainable 
development  title  in  the  agreement.  The 
compliance  mechanisms  pertinent 
to 
ensuring  the  implementation  of  the  TSD 
chapter is illustrated in Figure 4. 

Box 1 – What dispute settlement? 
The TSD chapter is excluded from the general dispute 
settlement  system  of  the  AA  as  a  whole.  When  a 
violation of labour or environmental provisions arises, 
in  governmental 
the 
consultations. As a last resort, a panel of experts can be 
is  no  provision  for 
established.  However,  there 
sanctions  if  the  panel's  recommendations  are  not 
followed up. 

issue  can  be  discussed 

The Association Agreement provided for the 
establishment  of  an  Association  Council, 
composed of representatives of the EU Party 
and of  each of  the  countries of  the  Central 
American Party at ministerial level, who meet annually to oversee fulfilment of the objectives and to 
supervise  implementation,  including  sustainable  development  issues.  The  Association  Council  is 
assisted  by  an  Association  Committee,  which  meets  annually  at  senior  official  level  to  consider 
specific issues such as, political dialogue, cooperation and/or trade. However, the main innovation 
of TSD chapter resides in its systematic monitoring by a specialised body, the Board on Trade and 
Sustainable Development (TSD Board).  

In parallel, the Parties agreed that political dialogue should encompass all aspects of mutual interest 
either at the regional or international levels. In the pillar on political dialogue and cooperation there 
is a body to channel the views of civil society in relation to the implementation of the agreement. 
This is  called  the  Joint  Consultative  Committee,  consisting  of  the  European Economic  and  Social 
Committee  (EESC),  the  Consultative  Committee  of  the  Central  American  Integration  System  (CC-
SICA) and the Consultative Committee for Economic Integration (CCEI). This dialogue covers issues 
including  finance  for  development,  migration,  environmental  protection  and  sustainable 
development, public security, and good governance in the tax area. 

Furthermore, an EU-Central America Joint Parliamentary Committee was established, which consists 
of Members of the European Parliament, on the one hand, and of Members of the Central American 
Parliament (PARLACEN), on the other hand. PARLACEN has established its rules of procedure itself 
and works in close contact with the Association Council. The Committee meets regularly to discuss 
the implementation of the EU-Central America AA, including the TSD chapter. 

An important element in the overall structure of the Association Agreement is the role of civil society 
in the follow-up. In its discourse about the new trade agreements, the European Commission never 
fails to emphasise the importance of the TSD chapter and the civil society mechanisms it includes. 
TSD chapters seek to ensure ongoing dialogue with civil society and social partners (especially on 
the environment and labour provisions), notably through the creation of domestic advisory groups 
(DAGs)  for  each  party,  one  for  the  EU  and  one  for  Central  America.  Composed  of  a  balanced 
representation  of  economic,  social  and  environmental  stakeholders  including  independent 
representative civil society organisations (CSOs), employers' and workers' organisations, business 
associations, non-governmental organisations and local authorities, these groups are supposed to 
meet on a regular basis, typically annually.  

Interestingly, the EU-Central America AA goes a bit further than other new generation agreements 
(such as the EU-Korea FTA of the Peru-Colombia agreement) by stipulating (in a footnote) that, if 
existing groups are used, these should be offered 'the opportunity to reinforce and develop their 
activities with the new perspectives and areas of work' provided in the TSD chapter.  

New DAGs have been formed (or are in the process of being formed) under the Central American 
agreement,  specifically  within  each  of  the  Central  American  countries.  On  the  EU  side,  the  EU 

23 

 
EPRS | European Parliamentary Research Service 

advisory  group  comprises  representatives  from  the  European  Economic  and  Social  Committee 
(EESC), which also provides the secretariat for the group, and from EU civil society organisations who 
expressed interest in participating in this group following a call for expressions of interest launched 
through DG TRADE'S civil society database. See also Annex II on the Rules of Procedure of the EU 
Advisory Group. 

The  work  of  the  domestic  advisory  groups  goes  hand  in  hand  with  a  bi-regional  Civil  Society 
Dialogue  Forum  (CSDF)  to  facilitate  exchanges  across  the  Atlantic  regarding  the  sustainable 
development  aspects  of  the  trade  relations.  At  the  latest  meeting  of  the  Civil  Society  Dialogue 
Forum  with  the  TSD  Board  (in  June  2018),  it  was  agreed  to  ask  the  advisory  groups  to  actively 
support  the  CSDF.  Taking  into  account  that  the  participation  and  support  of  the  DAGs  is  very 
important to strengthen the opportunities for public participation provided for in the agreement, 
the TSD Board agreed to establish a permanent agenda item in its meeting with the Civil Society 
Dialogue Forum under which the advisory groups can present their recommendations.43  

Figure 4 – Institutional set-up for civil society organisation consultation  

EU (Party A) 

Intergovernmental 
body on Trade & 
Sustainable 
Development 
(governmental) 

Central 
America 
(Party B) 

Domestic Advisory 
Group (DAG) 

Environmental, 
economic & social CSO 

Bi-regional Civil 
Society Dialogue 
Forum 

Domestic Advisory 
Group (DAG) 

Environmental, 
economic & social CSO 

DAG-to-DAG meeting 

Government consultations  

Panel of experts 

Source: Author, based on TSD chapter in the EU-Central America Association Agreement. 

43   European Commission, Report to the Civil Society Forum of the Fourth Meeting of the Board of Trade and Sustainable 
Development Association Agreement between Central America and the European Union, Brussels, 13 June 2018, p. 8.  

24 

 
 
                                                             
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

While the use of state-to-state dispute settlement has been ruled out for TSD chapters, an arbitration 
system  is  in  place.  According  to  this  set  up,  should  divergences  between  the  Parties  arise  in  the 
implementation of the TSD chapter's provisions, recourse to an independent and impartial panel of 
experts is possible under conditions of transparency.44 When a violation of labour or environmental 
provisions arises, the issue can be discussed in governmental consultations. As a last resort, a panel 
of experts can be established. However, no sanction is envisaged if the panel's recommendations 
are not followed up. 

Substantive work is carried out in EU delegations in the countries concerned, where much of the 
work on disseminating information about the agreement, planning joint activities for supporting 
implementation,  and  also  managing  some  of  the  decentralised  EU  assistance  (notably  European 
Commission grants) takes place.  

3.2. European Commission assessment 

Under Article 13 of Regulation (EU) No 20/2013 of the European Parliament and of the Council of 
15 January 2013 implementing the bilateral safeguard clause and the stabilisation mechanism for 
bananas  of  the  Agreement  establishing  an  Association  between  the  European  Union  and  its 
Member States, on the one hand, and Central America on the other,45 the Commission is to present 
an annual report to the European Parliament and the Council. 

In  that  context,  the  European  Commission  has  published  three  annual  reports  on  the 
implementation of the EU-Central America AA: in 2015, 2016 and 2017. At the time of the writing, 
the annual report for 2018 has not been published.46 Additionally, this year (2018) as opposed to the 
past, DG TRADE in the European Commission is preparing a single report on the implementation of 
all the trade agreements that the EU has with third parties/countries/regions. The last three annual 
reports paint a somewhat positive picture and progress in the implementation of the TSD chapter, 
but  do  not  offer  much  information  on  the  discussions.  On  the  monitoring  of  the  TSD  chapter, 
discussions  appear  to  concentrate  mainly  on  the  ratification  of  ILO  conventions  by  each  Central 
American country (the state of their implementation is not detailed). 

The  2015  annual  report  on  the  EU-Central  America  AA,  provides  limited  information  on  the 
implementation of the TSD chapter. This report broadly concludes that while 'it is too early to make 
any  conclusive  assessment  of  the  impact  of  the  trade  part  of  the  Agreement',47  'the  first  year  of 
implementation... has brought about a rapid set-up and functioning of the institutional framework 
of the Agreement and the process of implementation is overall positive'.48 More precisely, activities 
in the field of TSD in the first year of implementation of the agreement focused on establishing the 
institutional structures set out in TSD chapter, in particular the government-to-government Board 
on Trade and Sustainable Development. In that context, the Parties have launched the dialogue on 
trade  and  sustainable  development  and  shared  their  experiences  with  domestic  mechanisms  to 
promote the participation of civil society and groups committed to the implementation of the trade 

44   European Commission, EU-Central America: Trade Relations under the Association Agreement, 2012, p. 10. 
45   Regulation (EU) No 20/2013 of the European Parliament and of the Council of 15 January 2013  implementing the 
bilateral safeguard clause and the stabilisation mechanism for bananas of the Agreement establishing an Association 
between the European Union and its Member States, on the one hand, and Central America on the other, Official 
Journal L 17, 19 January 2013, pp. 13-24. 

46   The  European  Commission  hopes  to  publish  its  2018  report  on  the  implementation  of  all  EU  FTAs  by  the  end  of 

October 2018. 

47   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the  Implementation  of  Part  IV  of  the  EU-Central  America  Association  Agreement,  COM(2015)  131  final,  Brussels, 
18 March 2015, p. 12.  

48  

Ibid., p. 13. 

25 

 
                                                             
EPRS | European Parliamentary Research Service 

and sustainable development provisions of the agreement.49 The issue of sustainable development 
was not raised at the annual meeting of the Association Committee, but at the Association Council 
meeting  the  Parties  mentioned  that  they  expected  the  AA  to  have  a  positive  impact  on  social 
development in Central America. In addition, the EU referred to the entry into force of the Political 
Dialogue and Cooperation Agreement in 2014.50 

The 2016 annual report states that the European Commission, the EU and Central America held 
the meetings of the institutions in charge of monitoring the implementation of the TSD provisions 
of  the  Agreement  on  27,  28  and  29  May  2015.  The  overall  conclusion  of  this  report  is  that  'the 
agreement  appears  to  work  well  and  the  implementation  process  is  continuing  steadily'.51  The 
Association Committee did not discuss the TSD chapter and the Parties did not consider it necessary 
to hold a meeting of the Association Council in 2015.52 

According  to  the  European  Commission's  2017  annual  report,  the  Association  Committee, 
probably partly in response to the Panama Papers scandal, concentrated its discussions on Central 
America's commitment to making their best endeavours in the implementation of internationally 
agreed  standards  as  regards,  inter  alia,  financial  services,  the  fight  against  money  laundering, 
terrorism  financing,  and  tax  evasion.  These  issues  have  an  indirect  effect  on  sustainable 
development, labour provisions and decent work.53 However, this same report does not mention 
the Association Council, nor if it met in 2016.54 

3.3. European Parliament monitoring 

In 2015, the Parliament and its Central American counterparts set up the EU-Central America Joint 
Parliamentary  Committee.  Its  stated  objective  is  to monitor  and  supervise  the  various  aspects  of 
relations between the European Union and Central America and, in particular, the implementation 
of  the  2003  Political  Dialogue  and  Cooperation  Agreement,  while  it  remains  in  force,  and  the 
Association Agreement since its entry into force. The Committee also seeks to cooperate with the 
Euro-Latin  American  Parliamentary  Assembly  (EuroLat),  in  accordance  with  the  provisions  of  the 
latter's Rules of Procedure.55  

As  a  result  of  this  monitoring,  missions  conducted  in  the  countries  that  are  party  to  the  AA  and 
exchanges between Parliament and its counterparts in the region and high-level representatives 
from other EU institutions, several resolutions and reports calling for action in different aspects of 

49   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of Part IV of the EU-Central America Association Agreement, COM(2015) 131 final, Brussels, 18 
March 2015, p. 7. 

Ibid., pp. 9-10. 

50  
51   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of 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(2016) 73 final, Brussels, 18 February 2016, 
p. 12. 

52  
53  

Ibid., p. 10. 

I.  Ioannides,  The  Inclusion  of  Financial  Services  in  EU  Free  Trade  and  Association  Agreements:  Effects  on  Money 
Laundering, Tax Evasion and Avoidance, Ex-Post Impact Assessment, EPRS, European Parliament, June 2016. 

54   European  Commission,  Report  from  the  Commission  to  the  European  Parliament  and  the  Council,  Third  Annual 
Report on the Implementation of 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(2017) 160 final, Brussels, 5 April 2017, 
pp. 9-10. 

55   See  Working  Document  on  the  Draft  Rules  of  Procedure  of  the  Joint  Parliamentary  Committee  European  Union-

Central America, European Parliament, 8 September 2015. 

26 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

sustainable  development  have  been  prepared  and  a  number  of  questions  to  the  European 
Commission raised. The concerns expressed are outlined below. 

3.3.1. Human rights violations 
Human rights violations are an issue that has been raised regularly by civil society in Central America 
during Members' visits. During their visit to Costa Rica and Panama in 2016, the consequences of 
increasing  drug  trafficking,  organised  crime  and  violence  were  highlighted,  as  was  the  lack  of  a 
coherent  strategy  to  combat  the  violence,  also  the  result  of  the  political  fragmentation  and  an 
ideological polarisation.56 They highlighted the problem of impunity, owing to inefficiencies in the 
judicial sector, leading to human rights loopholes in prisons. Other shortcomings mentioned were 
the  gap  between  child  and  adolescent  rights  (marriage  age)  and  security,  the  problem  of  the 
protection  of  children  and  young  people  and  that  of  school  drop-outs.57  In  El  Salvador  too,  civil 
society  actors  informed  Members  of  the  need  to  ensure  respect  for  workers'  rights  and  of  the 
inability  of  governments  to  follow  through  because  of  the  lack  of  independence  of  state 
institutions.58 

local 

including 

in  rural  areas  between 

The  issue  of  the  protection  and  respect  of  human  rights  is  also  predominant  in  Guatemala  and 
Honduras, and concerns all vulnerable groups (children, women, indigenous populations and poor 
people), 
farmers  and  agribusiness  enterprises. 
Representatives  of  the  trade  unions  denounced  state  policy  in  Guatemala  as  being  anti-trade 
unionist, criminalising the trade union movements, and reported that impunity was rife and many 
trade  unionists  had  been  assassinated.59  Equally,  the  DEVE  Delegation  mission  to  Honduras,  in 
September 2017, pointed to the numerous obstacles that the country is still facing in its efforts to 
achieve sustainable economic growth and social development, including a dependence on export 
revenues, stemming mainly from a limited number of agricultural products and a growing textile 
sector (the maquilas), where working conditions are of serious concern. The work of the Civil Society 
Dialogue Forum − 'thanks to the establishment of the new Economic and Social Committee (with 
the  support  of  the  EU)'  −  has  helped  move  forward  on  social  issues.  Nonetheless,  the 
implementation of legislation is often a problem, for example, in the field of human rights.60 

Parliament has repeatedly highlighted the violence and human rights violations in Nicaragua, where 
'there  has  been  limited  progress  towards  addressing  impunity  and  prosecuting  human  rights 
violators'.61 In its latest report of May 2018, Parliament takes a strong stance against the extensive 
physical violence of security forces (murders, injuries and arrests) inflicted on peaceful student-led 
protests that started in April 2018 to oppose the social security reforms announced by President 

56   Equally, the ‘US State Department named seven Central American countries as havens for laundering the proceeds of 
drug trafficking and organised crime, and described the region as a main cocaine corridor for US markets, confirming 
the importance of Central America in the international drug trade’. See Silva Ávalos, H., US Report Shows Revitalized 
Central America Cocaine Corridor, Insight Crime, 9 March 2017. 

57   European  Parliament,  Mission  Report  -  Report  by  Delegation  Chair,  Sofia  Sakorafa,  on  the  visit  to  Costa  Rica  and 
Panama, 28 March to 1 April 2016, San José (Costa Rica) and Panama City (Panama), Delegation for relations with the 
countries of Central America, 9 June 2016. 

58   European Parliament, Report by Emine Bozkurt, Chair of the Delegation for Relations with the countries of Central 
America, on the visit by a Delegation Working Group to Nicaragua and El Salvador, 28 October – 1 November 2013, 
Nicaragua and El Salvador, Delegation for relations with the countries of Central America, 9 January 2014, p. 16. 
59   European Parliament, Report by Delegation Chair Sofia Sakorafa on the visit to Guatemala and Honduras, 16 to 20 
February 2015, Guatemala City (Guatemala) and Tegucigalpa (Honduras), Delegation for relations with the countries 
of Central America, p. 16. 

60   Delegation for relations with the countries of Central America, Minutes of the Meeting of 12 October 2017, European 

Parliament. 

61   European Parliament, Report by Emine Bozkurt, Chair of the Delegation for Relations with the countries of Central 
America, on the visit by a Delegation Working Group to Nicaragua and El Salvador, 28 October – 1 November 2013, 
Nicaragua and El Salvador, Delegation for relations with the countries of Central America, 9 January 2014, p. 8. 

27 

 
                                                             
EPRS | European Parliamentary Research Service 

Daniel Ortega. Parliament condemned the brutal repression and intimidation of peaceful protestors 
in Nicaragua who are opposing social security reform, and deplored the violation of media freedom 
in  the  country.  In  the  light  of  the  Association  Agreement  between  the  European  Union  and  the 
countries  of  Central  America,  Members  reminded  the  Nicaraguan  government  'of  the  need  to 
respect the principles of the rule of law, democracy and human rights, as set out in the agreement's 
human rights clause; urge[d] the EU to monitor the situation and, if necessary, assess the potential 
measures  to  be  taken;  [and]  warn[ed]  against  the  serious  political,  economic  and  investment 
consequences which might follow the breaches of human rights'.62 

3.3.2. Tackling the consequences of conflict 
Migration is an important issue in Central America, and a consequence of unresolved conflicts, since 
more  than  10 %  of  the  population  of  Costa  Rica  comes  from  the  Northern  Triangle,  mainly  from 
Nicaragua, as a consequence of the armed conflicts in the 1980s. Today, Costa Rica is confronted 
with the Cuban refugee crisis, a consequence of the normalisation of relations between the USA and 
Cuba.63 The EU is supporting Guatemala and Belize in their efforts to find a peaceful solution to the 
border conflict.  

Equally, in its resolution of 11 December 2012 on the EU-Central America Association Agreement, 
Parliament pointed out the opportunities offered by the agreement to improve social cohesion and 
sustainable  development  and  to  open  up  new  channels  for  dialogue  in  the  fight  against  drug 
trafficking and organised crime. It also emphasised the need to help revitalise economic and trade 
relations and promote balanced and sustainable growth.64 Equally, in its resolution on EU political 
relations with Latin America, Parliament asked the EU to support the Central American countries 
afflicted by organised crime threatening their social and political structures. It also called on Member 
State  parliaments  that  had  not  yet  done  so  to  ratify  the  EU-Central  America  Association 
Agreement.65  

Perhaps the greatest challenge for Salvadoran society and for the government in recent years has 
been  the  threats  and  high  levels  of  violence  associated  with  organised  crime,  in  particular  drug-
trafficking cartels and the violent gangs known as maras.66 In Honduras, a high level of violence, 
organised  crime, impunity  and  corruption  also  persist.  During  a  Members'  visit  to  the  country in 
September 2017, it was noted that Honduras has one of the world's worst homicide rates, although 
it has fallen substantially since 2012.67 Civil society representatives in Nicaragua are highly critical of 
the political situation (in particular as regards the electoral system) and the state of democracy in 

62   European Parliament resolution of 31 May 2018 on the situation in Nicaragua (2018/2711(RSP)). 
63   European  Parliament,  Mission  Report  -  Report  by  Delegation  Chair,  Sofia  Sakorafa,  on  the  visit  to  Costa  Rica  and 
Panama, 28 March to 1 April 2016, San José (Costa Rica) and Panama City (Panama), Delegation for relations with the 
countries of Central America, 9 June 2016, p. 8. 

64   Parliament  resolution  of  11  December  2012  on  the  draft  Council  decision  on  the  conclusion  of  the  Agreement 
establishing  an  Association  between  the  European  Union  and  its  Member  States,  on  the  one  hand,  and  Central 
America, on the other. 

65   European Parliament resolution of 13 September 2017 on EU political relations with Latin America (2017/2027(INI)). 
66   European Parliament, Report by Emine Bozkurt, Chair of the Delegation for Relations with the countries of Central 
America, on the visit by a Delegation Working Group to Nicaragua and El Salvador, 28 October – 1 November 2013, 
Nicaragua and El Salvador, Delegation for relations with the countries of Central America, 9 January 2014, p. 9. 
67   Delegation for relations with the countries of Central America, Minutes of the Meeting of 12 October 2017, European 

Parliament. 

28 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

the country. They deplore the political violence, the militarisation of the police forces (for internal 
security purposes) and the deteriorating relations between themselves and the government.68 

3.3.3. Promoting environmental protection rights 
Parliament has consistently raised concerns about the need for EU trade to ensure that sustainable 
development  is  fostered  and  the  environment  protected.69  This  is  of  particular  importance  in  a 
region that is vulnerable to natural disasters and climate change. Parliament has also often stood up 
for more forceful policies on the right to food, large-scale land deals for plantation agriculture ('land 
grabbing'), the human rights obligations of businesses, the use of sustainable development clauses 
and  the  need  to  pay  equal  attention  to  social,  economic  and  cultural  rights.70  Climate  change 
polices,  food  security  and  sustainable  development  are  some  of  the  key  issues  discussed  in  this 
context  and  have  figured  consistently  in  the  discussions  of  the  EU-Central  America  Joint 
Parliamentary Committee. 

In line with these concerns, during its mission to Honduras, in 2015, the delegation for relations with 
the countries of Central America visited a project promoting the environmental governance of the 
sustainable  management  of  natural  resources  in  the  Valle  de  Ángeles,  notably  by  encouraging 
sustainable  farming  methods  that  aim  to  increase  yields  and  avoid  forest  clearances  in  the 
mountains,  which  impacts  negatively  on  water  supply.  A  key  issue  of  concern  was  the  need  to 
spread environmental education, including sustainable farming methods, to the rural population.71 

3.4. Board on trade and sustainable development 

This government-to-government mechanism engages leaders of the Central American region on 
rather legalistic and technical matters linked to the TSD chapter, namely ratification of and, to some 
extent, progress in implementing ILO conventions and other environmental obligations. It does not 
engage parties clearly, however, on the consequences of the non-implementation of international 
conventions and therefore does not respond sufficiently to the concerns outlined in the previous 
section  (i.e.  human  rights  violations,  organised  crime,  and  the  need  to  promote  environmental 
rights and sustainability). 

During  the  first  meeting  of  the  Board  on  Trade  and  Sustainable  Development  in  Managua, 
Nicaragua, on 18 and 19 November 2014, the Parties reported on their implementation of ILO 
conventions, and fundamental ILO conventions in particular. The focus was on measures to address: 

  child  labour,  especially  in  the 

informal  economy,  with  a  particular  focus  on 
strengthening labour inspections, increasing the rate of children's school attendance, 
and reinforcing children's social protection;  

  efforts to support social dialogue and effective and dissuasive sanctions against anti-
union  discrimination  and  against  violence,  including  violence  against  trade  union 

68   European Parliament, Report by Emine Bozkurt, Chair of the Delegation for Relations with the countries of Central 
America, on the visit by a Delegation Working Group to Nicaragua and El Salvador, 28 October – 1 November 2013, 
Nicaragua and El Salvador, Delegation for relations with the countries of Central America, 9 January 2014, p. 9. 
69   See,  for  example,  European  Parliament,  Resolution  of  24  April  2008  on  the  Fifth  Latin  America  and  Caribbean-
European Union Summit in Lima, 24 April 2008; European Parliament, Resolution of 21 October 2010 on the European 
Union's Trade Relations with Latin America, 21 October 2010. 

70   M. Lerch, The European Year for Development: Human Rights, Policy Department, Directorate General for External 
Policies, and European Parliamentary Research Service, European Parliament, Brussels, 1 December 2015, p. 3. 
71   European Parliament, Report by Delegation Chair Sofia Sakorafa on the visit to Guatemala and Honduras, 16 to 20 
February 2015, Guatemala City (Guatemala) and Tegucigalpa (Honduras), Delegation for relations with the countries 
of Central America, p. 15. 

29 

 
                                                             
EPRS | European Parliamentary Research Service 

leaders.  Participants  also  addressed  the  need  for  these  sanctions  to  be  effectively 
enforced. 

On  the  implementation  of  multilateral  environmental  agreements,  the  Parties  concentrated,  in 
particular, on climate change (which in Central America calls for work on adaptation), endangered 
species  (CITES),  and  hazardous  chemical  and  waste  shipments.  The  Central  American  countries 
reported that they had all now ratified the Rotterdam Convention (on trade in hazardous chemicals) 
as  well  as  the  Gaborone  Amendment  to  CITES,  and  a  number  of  countries  from  the  region  also 
outlined ambitious plans to increase the share of renewable energy in their energy supply.72 

The  second  meeting  of  the  Board  on  Trade  and  Sustainable  Development  was  held  in 
Brussels, Belgium on 27 and 28 May 2015. As in the previous year, the Parties reported on their 
implementation  of  ILO  conventions.  Several  Central  American  countries  emphasised  action 
undertaken to tackle child labour, which had been the focus of the Board's meeting the year before. 
Honduras and Panama reported on recently adopted labour legislation and policies. For its part, the 
EU  reported  on  progress  made  by  EU  Member  States  in  ratifying  the  new  ILO  Protocol  that 
supplements the Forced Labour Convention, as did several Central American countries. The EU also 
presented its policies on health and safety at work and related structures for dialogue with social 
partners. A capacity-building programme was agreed with the ILO in 2015 that will provide support 
for Guatemala and El Salvador to help them meet their commitments under ILO conventions.73 

In  terms of  pushing  forward with  the implementation  of  multilateral  environmental  agreements, 
the  2016  annual  report  maintains  that  special  emphasis  was  placed  on  climate  change.  Central 
America  emphasised  the  vulnerability  of  its  agricultural  and  related  agro-industrial  sectors  to 
climate  change  and  extreme  weather  events.  Since  these  products  constitute  the  majority  of  its 
exports to the EU, there is a clear economic and trade impact. In response, several countries have 
developed sectoral programmes and targets to reduce the carbon footprint of the targeted sectors. 
Many have ambitious programmes to increase the share of renewable energy and are interested in 
investments and technologies in this sector. The EU set out its general climate change objectives 
and  policy  and,  together  with  Costa  Rica,  provided  a  briefing  on  the  state  of  play  of  the 
Environmental Goods Agreement negotiations.74 

The  third  meeting  of  the  Board  on  Trade  and  Sustainable  Development  took  place  in 
Honduras, on 14 to 16 June 2016. The Board exchanged information on labour and environmental 
issues  including  topics  such  as  social  dialogue,  non-discrimination,  responsible  value  chains,  the 
circular economy, and wildlife trade. The EU, for its part, focused on the value agenda of the Trade 
for All’ communication,75 which it sees as being of particular relevance to the TSD Board, while the 
Central American countries outlined their progress on implementing the ILO conventions.76 

72   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of Part IV of the EU-Central America Association Agreement, COM(2015) 131 final, Brussels, 18 
March 2015, pp. 10-11. 

73   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of 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(2016) 73 final, Brussels, 18 February 2016, 
p. 10. 

Ibid., p. 11. 

74  
75   European  Commission,  Trade  for  All:  Towards  a  More  Responsible  Trade  and  Investment  Policy,  COM(2015) 497, 

14 October 2014. 

76   European  Commission,  Report  from  the  Commission  to  the  European  Parliament  and  the  Council,  Third  Annual 
Report on the Implementation of 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(2017) 160 final, Brussels, 5 April 2017, 
pp. 10-11. 

30 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

The latest and fourth meeting of the Board took place in Brussels on 13 June 2018. Costa Rica 
highlighted progress made in the implementation of fundamental ILO conventions, especially of 
procedural  reforms  in  the  labour  sector  in  order  to  ensure  more  effective  application  and 
enforcement  of  its  labour  law,  including  the  right  to  non-discrimination  and  collective  rights;  its 
strategy for the transition from informality to formality; progress on corporate social responsibility; 
and the recent adoption of its national policy on social responsibility.77 

3.5. Civil society consultation 

While dialogue at state level is central, CSOs have – at least on paper – been granted an essential 
role in the implementation and monitoring of TSD chapters. However, information on their specific 
activities and what is said in their meetings is scarce, especially when it comes to the DAGs in the 
Central American region. It is also unclear how the members are recruited and if the diversity and 
representativeness of the members of the DAGs is monitored. While a higher level of substantial 
diversity  takes  place  when  observers  can  be  admitted  to  attend  the  meeting  without  actively 
contributing, which is the case with the EU-Central America Civil Society Dialogue Forum (CSDF), 
there is no data on whether such observers are invited.78 

In practice, new DAGs have been formed (or are in the process of being formed) specifically within 
each of the Central American countries. Domestic advisory groups were established in 2015 by the 
Central  American  parties  and  information  was  exchanged  on  their  composition  and  contacts 
facilitated between them and the EU DAG.79 Of all the Central American DAGs, Costa Rica is the only 
country  to  have  divided  its  DAG  into  three  separate  meetings  for  the  labour,  environment  and 
business  groups,  with  apparently  no  interaction  between  them.  Each  of  the  sub-DAGs  is  then 
characterised by more similar interests.80 

The EU DAG comprises representatives from a broad range of EU civil society organisations and the 
European  Economic  and Social  Committee  (EESC),  which  also  provides  the  secretariat  for  the  EU 
DAG. The EU DAG has met 13 times (on average twice a year, but only once in 2014 to agree on its 
rules  of  procedure).81  The  (draft)  rules  of  procedure  of  the  EU  DAG  for  the  Central  American 
agreement spell out that 'members of the EU AG shall be appointed for a two-and-a-half-year term 
(aligned with the EESC mandate) with the possibility of renewal for individual members' (see Annex 
II.) The information shared publicly on these meetings is, in general terms, limited to the programme 
and the participants. Very little information is available on the discussions that take place. 

While  the  EU  has  created  an  EU-wide  DAG  for  the  agreement  with  Central  America,  a  regional 
configuration has not been established in the Central American region. It is difficult to assess the 
participants  in  the  DAG  meetings  in  the  partner  countries,  as  participation  lists  are  not  publicly 
available. Moreover, 'the selection procedure seems even less transparent', so little is known except 
that  for  some  of  these  governments,  such  as  Honduras,  it  has  been  difficult  to  put  forward 

77   European Commission, Report to the Civil Society Forum of the Fourth Meeting of the Board of Trade and Sustainable 
Development Association Agreement between Central America and the European Union, Brussels, 13 June 2018. 

78  

J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, Cleer 
Papers 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016, p. 17. 

79   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of 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(2016) 73 final, Brussels, 18 February 2016, 
p. 10. 

80  

J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, Cleer 
Papers  2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016, p. 16. 
81   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of Part IV of the EU-Central America Association Agreement, COM(2015) 131 final, Brussels, 18 
March 2015, p. 10. 

31 

 
                                                             
EPRS | European Parliamentary Research Service 

independent  CSOs  to  participate.82  Their  discussions  are  also  not  publicly  available.  Also, 
interactions  between  the DAGs  of  the  Central  American  region  seem quasi-absent.  According  to 
Orbie et al., there have been no meetings among the Central American DAGs to prepare DAG-to-
DAG meetings.83  

The  EU-Central  America  Association  Agreement  stipulates  that  the  Parties  must  organise  and 
facilitate  a  bi-regional  civil  society  dialogue  forum  (CSDF),  with  balanced  representation  of 
economic,  social  and  environmental  stakeholders  representing  EU  and  Central  American  civil 
society.  Its  purpose  is  to  provide  a  framework  for  open  dialogue  on  trade  and  sustainable 
development aspects in relations between the Parties, as well as for discussions on how cooperation 
may help achieve the objectives of the chapter. It aims to provide a space for dialogue on how trade 
can  promote  sustainable  development  and  an  opportunity  to  interact  with  government 
representatives from the two sides. In addition, the EU and Central American DAGs have agreed to 
hold annual joint meetings organised back-to-back with the meetings of the bi-regional CSDF. Such 
joint meetings provide an appropriate framework for structured, in-depth discussions on a broad 
range of aspects relating to implementation of the TSD provisions. They also provide the necessary 
forum to prepare joint recommendations to be presented to the TSD Board. Accordingly, this multi-
levelled and multi-dimensional dialogue helps to boost transparency in the consultation process.84 

3.6. Government-to-civil society relations 

Every  intergovernmental TSD  Board meeting  includes  a  session  with  civil  society  representatives 
from  the  EU  and  Central  America,  the  bi-regional  Civil  Society  Dialogue  Forum,  to  discuss 
implementation of the TSD chapter. These annual government-to-civil society meetings have been 
key in providing civil society with the opportunity to feed concerns regarding TSD into government-
to-government discussions. However, it is unclear the extent to which these concerns are taken on 
board  at  government  level,  as  this  rests  on  the  governmental  participants'  goodwill.  The  board 
meetings  have  therefore  had  some  positive  results,  but  when  it  comes  to  monitoring  the 
implementation of the TSD chapter of the EU-Central America AA, they have had an indirect impact 
at best. 

The EU-Central America TSD Board and the bi-regional CSDF have met three times. Here too, limited 
concrete  information  is  made  available  on  the  discussions  of  civil  society  organisations  and  no 
controversies are recorded in the summaries that are publicly available. According to the European 
Commission's 2015 annual report, during the joint meeting of the CSDF on 18 and 19 November 
2014,  in  Managua,  Nicaragua,  examples  where  production  and  trade  had  had  a  positive 
environmental and social impacts, were presented. Government policies to promote such outcomes 
were  outlined,  and  the  need  for  partnerships  between  businesses,  labour  representatives, 
environmental NGOs and communities was underlined. Common themes included corporate social 
responsibility, renewable energy, sustainable agricultural production, cleaner production processes 
and sustainable tourism.85 

82  

83  

J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, Cleer 
Papers, 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016, pp. 17, 
19. 

J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, Cleer 
Papers 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016. 

Interview with DG TRADE, European Commission, 23 July 2018. 

84  
85   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the  Implementation  of  Part  IV  of  the  EU-Central  America  Association  Agreement,  COM(2015)  131  final,  Brussels, 
18 March 2015, p. 11. 

32 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

The  joint  session  of  the  Board  and  the  CSDF  was  held  on  29  May  2015,  Brussels,  Belgium, 
chaired  by  the  EU  DAG  representative,  emphasised  the  importance  of  taking  into  account  the 
gender dimension in TSD. To further reinforce government-to-civil society contacts, a workshop was 
organised  on  fair  trade  and  sustainability  in  agricultural  value  chains,  bringing  together 
representatives of fair and ethical trade schemes, trade associations and producers, from both the 
EU  and  Central  America,  to  exchange  best  practices  and  experiences  in  this  area  –  notably  with 
regard to the sugar and coffee sectors. Discussions continued in between on fair trade, respect for 
labour and environmental standards, the situation and role of small and medium-sized producers, 
sustainability considerations, the role of supply chains, examples of best practices in corporate social 
responsibility (CSR), and support for producers.86 The joint declaration adopted was presented on 
the following day at the CSDF meeting.87 

The third joint meeting between the EU and Central America under the trade and sustainable 
development  chapter  of  the  Association  Agreement  took  place  on  15-17  June  2016,  in 
Tegucigalpa, Honduras. The workshop on market access, organised in this framework, provided 
participants  with  the  opportunity  to  discuss  the  possibilities  and  challenges  that  economic 
operators, in particular SMEs, face because of the AA. Separate sessions focused on fair trade and 
value  chains  as  ways  facilitating  market  access  for  SMEs  and  small  producers.  On  16  June,  the 
representatives  of  the  EU  and  Central  American  advisory  groups  exchanged  experiences  in  their 
operations and discussed proposals for strengthening the capacity of the civil society monitoring 
mechanism, the role of the Parties in this context and future cooperation. This was followed by the 
CSDF where civil society representatives from the EU and Central America (except Panama) were 
present. They expressed positions with regard to implementation of the Association Agreement and 
its impacts. A workshop on trade schemes and practices for sustainable development and a meeting 
of advisory group members from both regions were also held. The joint declaration they adopted 
was presented on the following day in the CSDF meeting.88 

3.7. Other relevant monitoring activities 

The two Parties have held a number of other events to nurture the exchange of views and enhance 
cooperation on issues relating to sustainable development. This effort was launched with an event 
organised to introduce the Association Agreement, in San Jose, Costa Rica, in 2014. The conference 
also included a presentation on the TSD chapter.89 

On 4 and 5 May 2017, the European Commission and the Costa Rican ministry of external trade held 
an  event  on  responsible  value  chains  under  the  EU-Central  America  Association  Agreement  in 
San Jose,  Costa  Rica.  This  event  brought  together  policymakers,  international  organisations, 
business  and  civil  society  to  discuss  and  share  their  expertise  on  the  main  challenges  and 
opportunities of the conception, production of components, assembly and eventually the final use 
of a product that may take place each in a different part of the globe. These developments occur 
when at the same time, business, brands and consumers seek assurances about the environmental 
and social conditions in which the production actually happens. In practice, participants discussed 
international guidelines and best practices for responsible business conduct and participated in a 

86   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of 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(2016) 73 final, Brussels, 18 February 2016, 
p. 11. 

87   See 2nd EU-Central America joint meeting of civil society Advisory Groups and Civil Society Dialogue Forum. 
88   See 3rd EU-Central America joint meeting of civil society Advisory Groups and Civil Society Dialogue Forum. 
89   See Trade and Sustainable Development - 6 Years in a Snapshot, TSD Implementation – Achievements, not dated. 

33 

 
                                                             
EPRS | European Parliamentary Research Service 

workshop led by the Organisation for Economic Co-operation and Development (OECD) to develop 
capacities for more sustainable value chains.90 

More recently, on 16 and 17 May 2018, the European Commission held an event in Guatemala City, 
Guatemala,  on  decent  work,  corporate  responsibility  and  the  EU-Central  America  Association 
Agreement.91 It was aimed at providing a framework for open dialogue on the implementation of 
the TSD chapter to promote inclusive and sustainable economic development, full and productive 
employment and decent work. In that context and building on the UN 2030 Agenda for Sustainable 
Development,  representatives  of  business  and  civil  society,  policymakers  and  international 
organisations  discussed  international  guidelines  and  best  practices  on  responsible  business 
conduct and their contribution to Sustainable Development Goal 8 (SDG8),92 the role of government 
in supporting contributions of the private sector to SDG8 as well as best practices in the textile and 
sugar sectors. 93 

90   Responsible  Global  Value  Chains:  Case  of  EU-Central  America  Trade,  Directorate  General  for  Trade,  European 

Commission, 7 April 2017. 

91   See programme of the event for further information. 
92   Sustainable Development Goal 8 refers to the promotion of sustained, inclusive and sustainable economic growth, 
full  and  productive  employment  and  decent  work  for  all.  For  further  information,  check  the  UN  Sustainable 
Development Knowledge Platform. 

93   Decent  Work,  Corporate  Responsibility  and  the  EU-Central  America  Association  Agreement:  Contributing  to 

Sustainable Economic Growth, Directorate General for Trade, European Commission, 28 March 2018. 

34 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

4. Complexities linked to implementing the TSD chapter 

Despite  some  positive  results  from  the monitoring mechanisms  of  the  EU-Central  America  AA in 
facilitating implementation  of  the  TSD  chapter,  progress  in  this  field  has  been  mixed.  As  seen in 
Section 3.3, in particular, some of the key challenges relating to rights and practices linked with trade 
and sustainable development that were identified in the ex-ante impact assessment commissioned 
by the European Commission persist.94 For instance:  

  a significant proportion of workers are active in the informal sector. The effects on these 
groups are difficult to assess given the lack of data on the informal sector, but need to 
be included in the policy space within the trade part of the AA or flanking it; 

  despite  the  application of  labour  laws  in  theory, issues  of  concern  remain  as regards 

freedom of association, social dialogue, forced labour and unpaid overtime; 

  vulnerable  groups  such  as  women,  children  and  indigenous  populations  suffer  from 
disadvantaged  positions.  Females  have  higher  rates  of  unemployment  and  lower 
salaries. Indigenous populations are affected by poor labour conditions in the informal 
sector and child labour is prevalent in all six countries.  

This section explains the main factors holding back implementation of the TSD chapter.  

4.1. Lack of enforceability of the TSD chapter 

The TSD chapter in the EU-Central America AA suffers from the same weaknesses as those in other 
recent EU trade agreements. A number of commentators have expressed their scepticism about the 
potential of these provisions to actually enforce labour rights and environmental protection in their 
current  design.95  They  have  argued  that  the  current  design  might  promote  compliance  with 
international agreements on labour and environment in terms of formal ratification, but it does not 
necessarily address non-compliance in practice. In particular, there is concern that the monitoring 
institutions established in relation to the TSD chapter might be too weak, as outlined in Sections 3.4 
(Board on trade and sustainable development), 3.5 (civil society consultation) and 3.6 (government-
to-civil-society relations). In this respect, closing the so-called compliance gap seems to be especially 
challenging. Most countries currently engaged in EU trade agreements might comply formally with 
the relevant provisions in terms of ratification of international commitments, but not necessarily in 
practice.96  Hence,  there  is  a  growing  consensus  that  the  current  provisions  are  insufficient  to 
significantly foster sustainable development. 

The absence of 'hard enforcement' mechanisms in TSD chapters in EU FTAs has been at the centre 
of ongoing debates on the effectiveness of these chapters. The European Parliament has supported 

94   Ecorys  and  Corporate  Solutions,  Trade  Sustainability  Impact  Assessment  of  the  Association  Agreement  to  be 
negotiated  between  the  EU  and  Central  America,  TRADE08/C1/C14  &  C15  -  Lot  2,  Final  Report,  Evaluation 
commissioned by the Directorate General on Trade, European Commission, 18 September 2009, p. 17. 

95   See,  for  example,  J.  Harrison  et  al.,  'Governing  Labour  Standards  through  Free  Trade  Agreements:  Limits  of  the 
European Union's Trade and Sustainable Development Chapters', Journal of Common Market Studies, 2018, pp. 1-18; 
A. Marx et al., 'The Protection of Labour Rights in Trade Agreements: The Case of the EU-Colombia Agreement', Journal 
of World Trade, Volume 50, Number 4, 2016, pp. 587-610; S. Velluti, 'The EU's Social Dimension and its External Trade 
Relations', in A. Marx et al. (eds.), Global Governance of Labour Rights: Assessing the Effectiveness of Transnational Public 
and  Private  Policy  Initiatives,  ,  Edward  Elgar  Publishing,  2015,  pp.  42-62;  A.  Marx  et  al.,  'Does  Integrating  Labour 
Provisions  in  Free  Trade  Agreements  Make  a  Difference?  An  exploratory  analysis  of  freedom  of  association  and 
collective bargaining rights in 13 EU Trade Partners', in J. Wouters et al. (eds.) Global Governance through Trade, Edward 
Elgar Publishing, 2015, pp. 13-41; J. Vogt, 'The evolution of Labor Rights and Trade - A Transatlantic Comparison and 
Lessons for the Transatlantic Trade and Investment Partnership', Journal of International Economic Law, Volume 18, 
Number 4, 2015, pp. 827-860. 

96   E. M. Hafner-Burton, Making Human Rights a Reality, Princeton University Press, Princeton, NJ, 2013. 

35 

 
                                                             
EPRS | European Parliamentary Research Service 

the establishment of hard enforcement mechanisms in these agreements, in line with existing US 
practice.  In  a  2010  resolution,  it  raised  the  need  to  provide  'recourse  to  a  dispute  settlement 
mechanism on an equal footing with the other parts of the agreement, with provision for fines to 
improve the situation in the sectors concerned, or at least a temporary suspension of certain trade 
benefits  provided  for  under  the  agreement,  in  the  event  of  an  aggravated  breach  of  these 
standards'.97 This position was recently echoed by the European Parliament when it stated that the 
provisions  of  the  sustainable  development  chapters  should  be  covered  by  a  dispute  settlement 
mechanism  capable  of  issuing  financial  sanctions.  The  European  Commission  has  not  supported 
sanctioning. Some experts have argued that the EU's stance is justified by the general reluctance of 
the  EU's  counterparts  in  trade  negotiations  to  accept  hard  enforcement  mechanisms  in  these 
fields.98 Section 5.5 on Strengthening the enforcement mechanism suggests remedies for tackling 
these shortcomings.  

4.2. Challenges to intra-regional cross-border cooperation 

A  2014  European  Commission  study99  found  that  cross-border  cooperation  within  the  Central 
American  integration  process  has  been  weak.  It  is  mostly  absent  from  local  agendas  because  of 
prevailing  centralisation  and,  probably  also  because  of  the  absence  of  an  intermediate  level  of 
government. Some bilateral agreements between local authorities across borders exist, and these 
can facilitate and streamline relationships between Central American countries. While cross-border 
efforts have been present for years, they have had limited impact in practice. This is due to the fact 
that 'there is no acknowledgement of municipalities as state actors by national governments'. This 
is reflected in insufficient decentralised competences, including in the financing of relevant projects.  

Nonetheless,  these  are  the  regions  that  are  subject  to  environmental  vulnerability  and/or  that 
experience poverty. Therefore they are also areas that tend to be deprived of the benefits of TSD 
provisions. 'Border territories can be described in most cases as sub-national areas left behind': they 
are not accounted for in some public policies because of their lesser political and economic weight, 
their  smaller  populations, their more  rural  and  peripheral  character,  the  big  distance  from urban 
centres, the composition of their populations being predominantly made up of indigenous or afro-
descendent peoples, low development levels (under national averages), and the fact that they are 
divided by different jurisdictions in an evident 'border effect'. Moreover, the unequal relationship, 
misbalances  and  conflicts  between  capitals/metropolises  and  border  populations  regarding  the 
(mis-)management of natural resources continues to hamper the development of border regions. 

A  key  cross-border  example  of  cooperation  on  sustainable  development  is  the  Gulf  of  Fonseca 
(shared among El Salvador, Honduras and Nicaragua), which demands joint management of natural 
resources or infrastructures. It is a region where many SICA efforts are concentrated. The provision 
of basic services is very unequal and usually covers only main cities or towns. A high percentage of 
rural households lacks drinking water, solid waste and household refuse collection and other basic 

97   European Parliament resolution of 25 November 2010 on human rights and social and environmental standards in 

international trade agreements. 

98   F. Hoffmeister, 'The Deep and Comprehensive Free Trade Agreements of the European Union', in M. Cremona and 
T. Takács (eds), Trade Liberalisation and Standardisation – New Directions in the 'Low Politics' of EU Foreign Policy, EUI 
Working Paper AEL 2014/1, Academy of European Law, European University Institute, San Domenico di Fiesole, 2014, 
p. 15-26. 

99   Association of European Border Regions (AEBR), EU – Central America Cooperation Support to the Central American 
Integration System's (SICA) cross-border cooperation actions, Final report, Prepared for the Directorate-General for 
Regional and Urban policy (DG REGIO), European Commission, 19 December 2014, p. 20.  

36 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

services, such as electricity. This contributes to pollution in the Gulf and to several general public 
health problems (lack of sanitation).100 

Notwithstanding,  there  have  also  been  examples  of  positive  results.  One  of  the  most  relevant 
achievements is the Trifinio border regional development plan, which has been in operation since 
1989 in the region shared by El Salvador, Guatemala and Honduras.101 Its achievements include the 
consolidation of a tri-national commission to develop concrete action aiming to make sustainable 
agriculture  models  possible,  strengthen  commercial  links  between  border  municipalities  in  the 
three  countries  and,  most  importantly,  increase  the  participation  of  civil  society  through  the 
Asociación del Trifinio para el Desarrollo Sostenible (ATRIDEST, Trifinio association for sustainable 
development), a civil organisation of farmers, teachers, cooperatives and development entities. The 
operation of  a  tripartite  commission,  pursuant  to  a treaty  signed  between  the  three  countries  in 
1997 with the force of law in each of the three countries, coupled with a strategy for the 2010 to 
2020  Trifinio  plan,  has  enabled  the  implementation  of  a  large  number  of  trilateral  projects  with 
cross-border integrated management, free from the administrative, institutional and bureaucratic 
problems that usually hinder these efforts. 

However,  beyond  the  positive  results  with  regard  to  the  management  of  natural  resources,  the 
decision-making and implementation process, which is substantially vertical, has been questioned, 
while the participation of local communities has been weak. Moreover, the objectives and content 
of  the  projects,  most  of  which  refer  to  environmental  conservation  and  water  resource 
management,  have  had  a  limited  impact  on  the  living  conditions  of  border  communities,  which 
hope  for  momentous  change  stemming  from  the  operation  of  the  Tri-Border  Commonwealth 
Lempa River.102  

These  examples  show  that  tripartite  border  integration  is  an  option  for  the  region,  but  must  be 
adapted to the natural vocation of the areas, the enhancement of the more or less strategic location 
of the three countries for their shared goals, varying population density, and the economic activities 
and  other  peculiarities  of  those  areas.  Nevertheless,  it  is  mainly  an  opportunity,  and  taking 
advantage of it will depend on the will and priorities for development and integration of the national 
governments, with the participation of political entities and regional and local civil society. The area 
lacks regulation and implementation of regulation to guarantee the sustainable use of resources 
and sustainable development.103 

4.3. Weak coordination 

The EU-Central America agreement is not implemented in a vacuum. Rather it coexists, feeds into 
and feeds from other EU, Member State and international efforts. For example, ILO projects under 
way  in  Guatemala,  El  Salvador  and  Panama  aim  at  supporting  the  implementation  of  ILO 

100   Analysis for Economic Decisions (ADE), Evaluation of the EU's Cooperation with Central America, Final Report, Volume 
I – Main report, (Evaluation commissioned by the European Commission), Louvain-la-Neuve, July 2015, pp. 34-35. 
101   The Trifinio region between El Salvador, Guatemala and Honduras, is a mountain area that establishes the political 
boundaries between those three States. It numbers only 3 % of their populations, but is strategically important since 
it is at the head of the three most important rivers in Central America, the Úlua, the Motagua, and the Lempa. 

102   Association of European Border Regions (AEBR), EU - Central America Cooperation Support to the Central American 
Integration System's (SICA) cross-border cooperation actions, Final report, Prepared for the Directorate-General for 
Regional and Urban policy (DG REGIO), European Commission, 19 December 2014. 

103   Latin American and Caribbean Economic System (Sistema Económico Latinoamericano y del Caribe, SELA), Regional 
Cooperation  in  the  area  of  Border  Integration,  SP/XXIV-RDCIALC/DT  No  2-13,  XXIV  Meeting  of  International 
Cooperation Directors for Latin America and the Caribbean. Regional Cooperation in the area of Border Integration, 
in El Salvador, San Salvador, 30 and 31 May 2013, Permanent Secretariat of SELA, Caracas, Venezuela, pp. 22, 45. 

37 

 
                                                             
EPRS | European Parliamentary Research Service 

fundamental conventions with a focus on freedom of association, collective bargaining and non-
discrimination, and child labour).104  

However, the crowded international scene is not devoid of problems, as a result in part of intra-EU 
difficulties.  The  EU  is  represented  in  Central  America  through  its  delegations  in  Costa  Rica,  El 
Salvador,  Guatemala,  Honduras,  Nicaragua  and  Panama.  A  2015  evaluation  prepared  for  the 
European  Commission  also  concluded  that  'personnel  reductions  in  the  EU  delegation  between 
2008 and 2013 eventually left the Regional Unit too understaffed in relation to the ambitious goals 
of  the  EU.  Regional  cooperation  has  hence  lagged  behind  its  actual  potential'.  Moreover,  the 
predominant  reliance  on  EU-paid  contractors  in  cooperation  programmes,  coupled  with  an 
insufficient number of staff in the EU delegation to supervise these complex interventions, made it 
difficult  for  the  EU  to  anticipate  and  react  adequately  to  organisational  dynamics  and  political 
bottlenecks that were affecting programme progress and results.105  

When it comes to working with other international donors, weak coordination between the various 
initiatives  supported  and  financed  by  international  institutions,  including  the  EU,  is  one 
shortcoming  encountered.  For  example,  some  calls  for  projects  in  Central  America  with  a  cross-
border  approach  within  the  EU  Development  Cooperation  Instrument  are  neither  sufficiently 
informed nor coordinated with the relevant institutions (namely the SICA and the local and national 
authorities involved).106 

In  addition,  the  2015  European  Commission  evaluation  of  EU  cooperation  with  Central  America 
found that the EU's strategic approach to the region did not take sufficient account in its approach 
of the fact that SICA member states, as owners of the overall regional integration process in Central 
America,  needed  to  own  and  commit  to  any  institutional  reform  initiative  or  technical  reform 
proposal  on  regional  integration.  Instead  it  chose  to  direct  its  support  primarily  towards  the 
executive  agencies  of  the  SICA.107  This  approach  hindered  the  implementation  of  cooperation 
provisions. Overall, the EU's regional cooperation strategy did not fully respond to the commitment 
of the EU to combine supporting regional economic integration with helping regional and national 
stakeholders  to  design  and  implement  sound  trade,  integration  and  economic  development 
policies to foster trade-induced equitable development and help to reduce poverty. The regional 
strategy had assigned the task of providing 'wider aid for trade', SME support and the development 
of productive capacity primarily to bilateral cooperation with countries in the region. As only some 
of  the  EU's  bilateral  cooperation  programmes  actually  financed  cooperation  in  this  area,  the  EU 
provided the region with only slightly 'wider aid for trade'.108 

When implementing cooperation with SICA, the above-mentioned evaluation also found that while 
the EU helped sustain regional integration in Central America and lend more legitimacy to SICA, EU 
development  of  tools  and  proposals  for  advancing  Central  America's  economic  and  political 
integration  took  too  long.  Therefore,  the  prospect  that  increased  trade  would  translate  into 
equitable  economic  growth  and  reduced  poverty  in  the  region,  'that  could  help  to  broaden  the 
range of producers that would benefit from more trade opportunities, also including micro, small 
and medium-sized enterprises', has been compromised. SMEs in a number of the Central American 

104   See Trade and Sustainable Development - 6 Years in a Snapshot, TSD Implementation -Achievements, not dated. 
105   Analysis for Economic Decisions (ADE), Evaluation of the EU's Cooperation with Central America, Final Report, Volume 

I – Main report, (Evaluation commissioned by the European Commission), Louvain-la-Neuve, July 2015, pp. ii and v. 

106   Association of European Border Regions (AEBR), EU - Central America Cooperation Support to the Central American 
Integration System's (SICA) cross-border cooperation actions, Final report, Prepared for the Directorate-General for 
Regional and Urban policy (DG REGIO), European Commission, 19 December 2014. 

107   Analysis for Economic Decisions (ADE), Evaluation of the EU's Cooperation with Central America, Final Report, Volume 

I – Main report, (Evaluation commissioned by the European Commission), Louvain-la-Neuve, July 2015, p. iv. 

108  

Ibid., pp. 75-76. 

38 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

signatories do not have the capacity and facilities to adhere to the TSD provisions and therefore 
require technical assistance from the EU and support from their respective governments. Contrary 
to  the  stated  EU  objectives  of  sustainably  strengthening  SICA's  own  autonomous  organisational 
capacity  for  fulfilling  its  mandate,  EU  development  programmes  were  designed  primarily  to 
temporarily enable SICA to provide specific services and inputs to third party organisations. 

4.4. Representativeness of civil society  

The difficult exercise of legitimacy that justifies the (arguably rightful) participation of civil society is 
a  two-edged  sword.  On  the  one  hand,  social  dialogue  between  non-governmental  actors  and 
government  adds  legitimacy  to  the  decision-making  process  ensuring  that  trade  is  an  inclusive 
process that is grounded in the experiences and interests of all relevant stakeholders. On the other, 
however, questions have been repeatedly raised as to who sits around the table. In Section 3.5 on 
Civil  society  consultation,  the  issue  of  the  diversity  and  representativeness  of  social  partners  is 
further explained, as is the lack of transparency on these issues. How partners are recruited and who 
sits  in  the  meetings,  as  well  as  what  limits  their  participation  (e.g.  distance  from  urban  centres, 
administrative  capacity,  access  to  the  internet  and  necessary  facilities  for  videoconferencing, 
financial resources for participating in consultations and mobility) should be taken more seriously 
into  account  by  the  European  Commission  and  the  governments  of  the  six  Central  American 
signatories to the AA. 

Equally, overall, unions are still weak in Central America. Iranzo and Patruyo, who have researched 
unionism in Latin America, argue that privatisation has played a key role in the shifting of relations 
between government and trade unions. 'As part of the transformation of the state, privatisation has 
deprived  trade  unionism  of  its  principal  areas  of  strength,  where  it  had  achieved  most  of  its 
successes'. It is claimed, for instance, that privatisation has resulted in fewer jobs in the formal sector, 
decreasing the number of unionised workers and weakening the credibility of unions. In that sense, 
the privatisation of state-owned companies has been therefore seen more as a political measure 
than a strictly economic one.109 

The EESC has also called for the inclusion of consumer organisations, which are not actually party to 
the AA, in this civil dialogue. 'The EESC regrets the narrow approach of TSD chapters when it comes 
to consumers' interests and would welcome a consumer-specific chapter within the TSD framework, 
incorporating  relevant  international  consumer  standards  and  strengthening  cooperation  on  the 
enforcement of consumer rights'.110 While this recommendations seems to be in line with the logic 
of an inclusive process, it could equally be argued that consumers, as citizens, are represented in 
this dialogue by the European Parliament (on the EU side) and the respective national parliaments 
in Central America. 

109   C. Iranzo and T. Patruyo, 'Trade Unionism and Globalisation: Thoughts from Latin America', Current Sociology, Vol 50(1), 

January 2002, pp. 59-61. 

110   Trade and Sustainable Development Chapters in EU Free Trade Agreements, OJ C 227, 28 June 2018, pp. 27–34. 

39 

 
                                                             
EPRS | European Parliamentary Research Service 

5. Options for the future 

In the context of the current debate on how to improve TSD chapters, the European Commission 
has asserted that 'the ultimate objective is to foster real and lasting change on the ground, through 
the effective application of enhanced social and environmental standards, to the direct benefit of 
the citizens of our FTA partners'.111 At the same time it admits that, in general terms, 'the work on 
TSD  has  yet  to  realise  its  full  potential'  and  that  more  is  needed  to  'further  improve  labour  and 
environmental policies, while respecting international commitments and aiming at a high level of 
protection'.112  While  a  debate  between  the  European  Commission  and  Parliament  on  the 
functioning of the TSD chapter in EU FTAs is ongoing,113 the following options could be considered 
as emanating from the implementation of that particular chapter in the EU-Central America AA. 

5.1. Completing the ratification process 

By signing a free trade agreement with Central America, the EU aimed to counter-balance the USA, 
which had signed its own Central America Free Trade Agreement (CAFTA, later renamed CAFTA-DR 
when the Dominican Republic joined in 2009). The EU, however, went a step further by signing a 
fully-fledged association agreement encompassing political dialogue and cooperation.114 Pending 
ratification of the EU-Central American Association Agreement, cooperation in the framework of the 
EU-Central  America  AA  centres  on  implementing  the  trade  pillar.  Nevertheless,  the  political  and 
cooperation  pillars  could  play  a  primordial  role  in  pushing  for  territorial  cohesion,  which  could 
address the concerns of intra-regional cross-border cooperation (see Section 4.2) and the challenges 
of coordination (see Section 4.3). In that sense, pushing for the ratification of the agreement by the 
four remaining EU Member States (Austria, Belgium, Greece and the UK) is key. 

There is consensus among European partners that engagement is the best way to assist, promote 
and  encourage  these  countries  to  engage  in  the  necessary  reforms  for  human  rights  protection. 
Political engagement and partnership, with the cooperation that has entailed, has provided Central 
America with the incentives to move forward on necessary reforms linked to the implementation of 
the TSD chapter. In this light, diverse activities exist to help push this forward. For example, the SICA 
has initiated a process to exchange information with European partners to develop the concept of 
border areas with shared competences between national and sub-national governments. The main 
elements of interest identified by local players are security, environmental protection and human 
development,  elements  linked  to  sustainable  development.115  Such  initiatives  cannot,  however, 
replace the impact that political unity behind a goal can have and that will become clear when the 
EU-Central America AA is ratified by all EU Member States. 

111   European Commission, Feedback and way forward on improving the implementation and enforcement of Trade and 
Sustainable  Development  chapters  in  EU  Free  Trade  Agreements,  Non  paper  of  the  Commission  services, 
26 February 2018. 

112   European  Commission,  Report  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions on Implementation of Free Trade Agreements, 1 
January 2016-31 December 2016, COM(2017) 654 final, Brussels, 9 November 2017, p. 28.  

113  

In  February  2018,  the  European  Commission  published  15  proposals  to  improve  the  enforcement  of  trade  and 
sustainable development (TSD) chapters in EU free trade agreements (FTAs). See footnote 77. 

114   J. Selleslaghs, Managing Global Interdependence on the central American Isthmus: EU-Central America Interregional 
Relations, UNU-CRIS Working Papers W-2014/8, Institute on Comparative Regional Integration Studies, United Nations 
University, Brugge, 2014, p. 24. 

115   Association of European Border Regions (AEBR), EU – Central America Cooperation Support to the Central American 
Integration System's (SICA) cross-border cooperation actions, Final report, Prepared for the Directorate-General for 
Regional and Urban policy (DG REGIO), European Commission, 19 December 2014, p. 22. 

40 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

Implementation of the TSD chapter is ultimately linked to the political commitment of partners in 
Central America towards their citizens. In that sense, the EU's influence has its limits and pressure 
needs to come at the level of the Association Council and the Association Committee to encourage 
the  authorities  to  commit  to  the implementation of  these  important  provisions.  At  the  moment, 
labour rights and environmental protection hardly figure in discussions at high political level. 

5.2. Strengthening communication 

To guarantee valuable contributions from civil society and social partners to monitoring processes, 
it  is  indispensable  to  improve  information  and  sponsor  awareness  campaigns,  something  that 
should be strengthened at local level in Central America via the EU delegations.116 The European 
Commission itself admits in its 2016 annual report that 'Communication efforts on both sides of the 
Atlantic are necessary to increase the knowledge of the benefits that the Agreement can bring. The 
Commission is engaged in actions aimed at increasing the awareness of the economic operators as 
regards  the  opportunities  presented  by  the  Agreement'.117  For  example,  within  several  projects 
implemented with the support of DG REGIO, a great amount of information about Latin American 
and European cross-border cooperation experiences has been produced and systematised, and it is 
available online in an ad hoc forum.118  

Civil  society  representatives  recommend  establishing  face-to-face  political  contacts  between 
European politicians engaged in cross-border cooperation and the competent authorities in target 
countries.  This  would  pave  the  way  for  a  productive  exchange  of  information  and  staff.  Experts 
meeting from both sides in order to identify, articulate, implement and monitor successful cross-
border activities often need to take the form of person-to-person contacts, especially in the early 
stages  of  processes.119  The  EU-Central  American  civil  society  meetings  in  May  2015  are  a  case  in 
point.  The  alternative  of  a  videoconference  was  provided  in  all  EU  delegations  on  the  Central 
American side to facilitate contacts between the DAGs in the region. However, this initiative had 
only  limited  success  as only  a  few organisations made use of  this  possibility. On  the other  hand, 
videoconferencing  has  been  seen  as  a  way  to  include  more  DAG  participants  in  the  regional 
conversations.120 EU Member States and their business organisation also have a crucial role to play 
in disseminating information on the agreement 'to their stakeholders, in particular SMEs, who often 
require information in a local language and locally in different regions'.121 

At the same time, European Commission officials list a number of reasons to explain why fewer trips 
are being organised to the region and therefore fewer face-to-face meetings can take place. These 
include:122 

116   Friedrich Ebert Stiftung, Response to the Non-Paper of the European Commission on Trade and Sustainability in Trade 

Agreements, January 2018, p. 2. 

117   European Commission, Report from the Commission to the European Parliament and the Council, Annual Report on 
the Implementation of 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(2016) 73 final, Brussels, 18 February 2016, 
p. 12. 

118   See the website of the Association European Border Regions.  
119   J. Orbie et al, op. cit. 
120   J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, Cleer 
Papers 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016, pp. 22 
and 48. 

121   M. Hannonen, 'Implementation of EU Free Trade Agreements', Global Trade and Customs Journal, Volume 12, Issues 

11 and 12, 2017, p. 425. 

122  

Interview with DG TRADE, European Commission, 23 July 2018. 

41 

 
                                                             
EPRS | European Parliamentary Research Service 

  the  limited  resources  that  put  pressure on  the  EU institutions  to  prioritise  and  target 

action; 

  the increasing use of and facilities offered by digital communication; 
  the increasing need for efficiency (value for money) and effectiveness (best use of time); 
  the presence of bilateral EU delegations in the Central American countries that are Party 

to this agreement, and the EU regional delegation. 

5.3. Enhancing coordination 

It is the complementarity and parallel use of the different instruments that the EU has at its disposal, 
rather than the effects of the EU trade agreement per se that has pushed forward the sustainable 
development agenda in Central America. European Commission bilateral development financing to 
support  concrete  projects  in  individual  countries  has  played  a  key  role  to  facilitating  the 
implementation of political processes and declarations.  

Moreover, EU delegations in the FTA partner countries have a key role to play in FTA implementation 
work, including the TSD provisions. They are the ones carrying out activities in the partner countries, 
disseminating information about the AA and planning joint activities to support implementation of 
the agreement.123 It is the EU delegations that are best placed to monitor domestic developments 
that are relevant to the effective operation of an FTA. They have close contacts with Member States' 
representatives, local business associations and other stakeholders, with whom they set up market 
access  teams  to  follow  up  the  removal  of  trade  barriers.  In  FTA  partner  countries,  market  access 
teams  focus  on  FTA  implementation  as  a  priority.  The  EU  delegations  are  also  essential  when  it 
comes to following up on implementation roadmaps.124  

Better coordination also implies coherence in the interpretation of the environmental and labour 
provisions in the different trade agreements that Central America has signed (beyond the one with 
the EU) and the relevant international environmental and labour conventions. This could be done 
by requiring that the relevant dispute settlement bodies take into account the jurisprudence of the 
competent international bodies, e.g. of the ILO, similar to the way in which certain bilateral trade 
agreements require arbitral panels to take into account the multilateral case-law of the WTO Dispute 
Settlement  Body  (see  for  instance  Article  14(16)  of  the  EU-Korea  FTA).  Mechanisms  for  ad-hoc 
consultations with those bodies could also be considered.125 As was explained in Section 4.2, the 
SICA is making considerable efforts to define the role of municipalities in the integration process, 
taking into account local and national institutionalism, but more needs to be done.  

Building  stronger  regional  policies  in  favour  of  social  and  environmental  protection  is  key.  The 
European Commission's efforts to establish exchange of knowledge, expertise and good practices 
at  regional  level  has  been  key  to  pushing  forward  on  social  policy  reform.  These  efforts,  mostly 
financed through EU regional development aid programmes, should be maintained and boosted, 
not least since they can help to further develop intra-regional cooperation. It is also important to 
acknowledge the support of other international donors in this and the overall international pressure 
on  local  authorities  to  respect  and  apply  the  TSD-related  conventions.126  These  efforts  should 
continue and be further reinforced, given their positive contribution. Nevertheless, there is a need 
for  programmes  and  structures  to  strengthen  social,  economic  and  territorial  cohesion,  without 
duplication  of  objectives  and  functions  between  new  and  already  existing  initiatives  and 

Interview with DG TRADE, European Commission, 23 July 2018. 

123  
124  
125   A. Marx, Dispute Settlement in the Trade and Sustainable Development Chapters of EU Trade Agreements, Leuven 

Interview with DG TRADE, European Commission, 23 July 2018. 

Centre for Global Governance Studies, Leuven, 2017, p. 91. 

126  

It is beyond the scope of this study to evaluate the contribution of other international donors that are active in the 
Central American countries, but some of the challenges are analysed in Section 4.3 on Weak coordination. 

42 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

institutions. In general, local and national authorities in Central America have strongly welcomed 
the initiatives that promote the exchange of practices and transferable knowledge with Europe on 
cross-border cooperation processes.127 

5.4. Better monitoring of compliance 

It  is  important  to  secure  substantive  (and  not  only  substantial)  civil  society  participation  in  the 
monitoring  of  the  EU-Central  America  agreement.  Although  joint  consultative  structures  that 
include  local  partners  and  civil  society  in  monitoring  the  implementation  of  the  sustainable 
development chapters are in place, it is not clear to what extent their contribution actually feeds 
into policy-making. This is trickier than in the case of bilateral agreements that the EU can have with 
third  partners  because  of  the  freedom  that  is  left  to  national  governments  to  take  or  leave 
stakeholders' recommendations, without an explicit explanation for the choice that is made. The 
EEAS has also expressed concern at the 'lack of response by the European Commission to complaints 
raised  by  the  DAG  regarding  violations  of  TSD  commitments'.  Accordingly,  it  calls  for  the 
establishment of 'a more transparent and streamlined complaint mechanism'.128 

The involvement of civil society in the current TSD system remains limited. Even though CSOs seem 
to  be  based  on  the  same  template,  a  closer  look  at  the  treaty  provisions  (de  jure)  and  their 
implementation  (de  facto)  reveals  a  remarkable  degree  of  variation.  Based  also  on  research  into 
CSOs' contribution to monitoring the EU-Central America Association Agreement, Orbie et al. argue 
that  'existing  assessments  diverge  starkly  from  providing  a  promising  avenue  for  civil  society 
empowerment to being no more than a fig leaf'.129 The same researchers explain that the confusion 
concerning different evaluations can be traced back to fundamentally different views on the role of 
civil society in the context of trade, democracy and development, the three overlapping areas within 
which  sustainable  development  is  anchored.  Furthermore,  even  among  those  stakeholders  who 
favour civil society involvement, differing viewpoints exist on what the purposes of such meetings 
should be. Consequently, there have been widely diverging evaluations of social dialogue meetings 
– ranging from being a 'talking shop' legitimising free trade to 'empowering' marginalised groups – 
without however clarifying the underlying assumptions of such assessments.130 

Not only do the recruitment and composition of DAGs needs to be re-visited (especially on the side 
of the Central American members), but also DAGs need to be strengthened by providing them with 
a clear mandate, task and authority backed up by human and financial resources.131 In some cases, 
DAG participants mentioned that no real communication took place between civil society and the 
governmental  actors.  This  was  for  example  the  case  in  the  first  EU-Central  America  civil  society 
meeting in Nicaragua in 2014.132 

In addition, there is evidence of the benefits of providing for capacity-building projects (for example, 
on labour inspections) in third countries to help the relevant national and local authorities in the 
Central American countries in their efforts to monitor, apply and enforce environmental and social 

127   Association of European Border Regions (AEBR), EU - Central America Cooperation Support to the Central American 
Integration System's (SICA) cross-border cooperation actions, Final report, Prepared for the Directorate-General for 
Regional and Urban policy (DG REGIO), European Commission, 19 December 2014, p. 23. 

128   Trade and Sustainable Development Chapters in EU Free Trade Agreements, OJ C 227, 28 June 2018, pp. 27–34. 
129   J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, Cleer 
Papers 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016, p. 10.  

Ibid., pp. 10-11. 

130  
131   Friedrich Ebert Stiftung, Response to the Non-Paper of the European Commission on Trade and Sustainability in Trade 

Agreements, January 2018, p. 1. 

132   J. Orbie et al., Civil Society Meetings in European Union Trade Agreements: Features, Purposes, and Evaluation, Cleer 

Papers 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, The Netherlands, 2016, p. 44. 

43 

 
                                                             
EPRS | European Parliamentary Research Service 

obligations.  They  bear  primary  responsibility  for  compliance  with  international  standards  and 
norms. In this context, focus must be put on issues identified as a shared priority by partners (for 
example the circular economy, responsible value chains, etc.).  

Appropriate  funding  and  other  means  should  be  provided  by  partners  when  relevant.  In  that 
context, it would be useful to consider strengthening the role of the private sector. Investments for 
development are key: companies bring their experience, technologies and expertise to help their 
partners – including SMEs – to become more competitive, expand their product and client range 
and also become more export-oriented, as they open up opportunities to join global value chains. 
Business  can  also  support  employment,  create  high  quality  jobs,  promote  skills  diversification, 
gender  balance  and  social  inclusion  in  the  EU  and  partner  countries.133  At  the  same  time,  the 
business community cautions against objectives that are unrealistic when it comes to initiatives to 
encourage companies to take further action to monitor social, environmental, consumer protection 
and human rights aspects comprehensively along the supply chain. 'While large companies may be 
equipped for complying with a number of different reporting requirements, the same is not usually 
true for the vast majority of SMEs'.134 

Last  but  not  least,  participative  methods  of  evaluating  the  EU-Central  America  AA  that  engage 
directly  with  local  partners  in  Central  America  (i.e.  not  only  national  authorities,  but  also  local 
authorities and social partners) would not only provide for better quality evaluations but would also 
boost  commitment  to  reforms  that  are  necessary  for  ensuring  the  implementation  of  the  TSD 
provisions. That would entail including all relevant stakeholders in every stage of the evaluation: its 
design  with  the  identification  of  clear  benchmarks  for  measuring  progress;  consistent  data 
collection for the evaluation; the conduct of the evaluation; and dissemination of the results of the 
evaluation. 

Methodologically, combining top-down and bottom-up evaluation allows for cross-checking of the 
results achieved and can lead to higher accuracy and/or lower costs. Both in bottom-up and top-
down  evaluation,  so-called  correction  factors  have  to  be  taken  into  account  that  may  bring 
additional  uncertainty  to  the  results.  Politically,  participative  evaluations  help  civil  society 
stakeholders to buy in, providing they are not just consulted during the evaluation process but are 
also  actors  in  the  process.  This  recommendation  could  be  considered  in  the  light  of  the  interim 
evaluation of the trade pillar of the EU-Central America AA that is scheduled for 2019.135 

5.5. Strengthening the enforcement mechanism 

Evidence suggests that an approach based on dialogue and a deep cooperation mechanism is best 
suited when it comes to complex and intertwined issues such as supporting necessary institutional 
and legislative reforms on labour rights and environmental protection, where sensitivity to context 
and flexibility are required. Experts argue that sanctions or fines can do little to increase the targeted 
country's  commitment  to  social  rights  over  time,  to  build  demand  for  such  rights,  or  to  train 
governments  in  how  to  respect  TSD-related  commitments.136  Therefore,  ideally,  an  efficient 
approach to TSD enforcement mechanisms is based on the creation of incentives to implementation 

133   BusinessEurope, Trade and Sustainable Development Chapters in EU FTAs, Position Paper, Brussels, 6 November 2017, 

p. 6. 

134  

 BusinessEurope,  Trade  and  Sustainable  Development  Chapters  in  EU  FTAs,  Position  Paper,  Brussels,  6  November 
2017, p. 2. 

135   European Commission, Commission's Forward Planning of Evaluations and Studies: 2017 and beyond, 2017. 
136   See  B.  Melo  Araujo,  'Labour  Provisions  in  EU  and  US  Mega-Regional  Trade  Agreements:  Rhetoric  and  Reality', 
International and Comparative Law Quarterly, Volume 67, January 2018, p. 236; S. Ariel Aaronson, Chapter 21 – 'Human 
Rights',  in  Jean-Pierre  Chauffour  and  Jean-Christophe  Maur  (eds),  Preferential  Trade  Agreements  Policies  for 
Development: A Handbook, World Bank, Washington, DC, June 2011, p. 446. 

44 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

rather than on the sanctioning of non-compliance, thus building on engagement, cooperation and 
capacity-building with the trading partners.137 Some researchers recommend both – the consistent 
and forceful application of the existing mechanisms combined with promotional and conditional 
approaches.138 

For  its  part,  the  European  Commission  recognises  that  more  effective  ways  of  ensuring  the 
implementation  of  the  TSD  chapter  are  needed.  In  this  context,  at  the  fourth  meeting  of  the  bi-
regional CSDF with the TSD Board for the EU-Central America AA that took place in June 2018, some 
argued  in  favour  of  a  mechanism  with  the  possibility  of  sanctions.  Nonetheless,  the  European 
Commission eventually concluded that the current model should be retained, but at the same time 
implementation of TSD chapters should be strengthened. In this light, it presented to the Board its 
aforementioned 15-point action plan on TSD, which − among other points − calls for more assertive 
use of the mechanisms of consultation and expert panels in cases of serious non-compliance.139 

A number of think tanks and academics argue in favour of stronger enforcement mechanisms with 
last-resort  sanctions  on  the  TSD  chapters.  For  example,  the  Friedrich  Ebert  Foundation,  in  its 
response  to  the  European  Commission's  consultation  on  TSD  chapters,  suggests  establishing  a 
'collective  complaint  mechanism'  that  would  enable  civil  society  and  social  partners  – 
independently from their governments – to initiate a complaint procedure. This independent body 
(i.e. a panel of experts) could be established and be empowered to evaluate complaints that were 
brought forward either by a state party or by another stakeholder (such as the social partners). This 
could be done by the DAG (and potentially by the CSDF). A two-thirds majority in the DAG should 
be  necessary  to  file  a  complaint  with  the  independent  body  (panel  of  experts).  Arguably,  this 
'collective complaint mechanism' would lead to an overall empowering of civil society and trade 
unions in countries where they so far have weak structures (mostly on account of limited rights). 
They argue that an enforcement mechanism involving the stakeholders that are directly affected 
would help to address labour rights violations more effectively.140  

Other experts have called for application of paragraph 161 of the landmark opinion of the European 
Court  of  Justice  (published  in  May  2017)  on  the  powers  to  conclude  the  EU-Singapore  FTA 
(EUSFTA).141 While an opinion is not binding, it is seen as a way to inform the EU's future trade policy. 
Paragraph  161  implies  that  sustainable  development  provisions  fall  within  the  scope  of 
'conditionality',  implying  that  stronger  enforcement  of  these  provisions  is  possible  through 
international law. The opinion affirms that if one party fails to implement the environmental and 
social provisions in a free trade agreement the other party can retaliate by terminating liberalisation 
of trade in certain products.142  

Yet others, focus on dispute settlement in a wider context and the empowerment of stakeholders 
to  enforce  compliance  with  international  rules.  For  example,  the  2011  UN  Guiding  Principles  on 

137  

I.  Ioannides,  The  effects  of  human  rights  related  clauses  in  the  EU-Mexico  Global  Agreement  and  the  EU-Chile 
Association Agreement, EPRS, European Parliament, February 2017. 

138   Transport  &  Environment,  Trade  and  Sustainable  Development:  A  Chance  for  Innovative  Thinking,  Brussels, 
October 2017,  p.  7;  C.  Scherrer,  and  M.  Moore,  Conditional  or  Promotional  Trade  Agreements—Is  Enforcement 
Possible?, Friedrich Ebert Foundation, June 2017. 

139   European Commission, Report to the Civil Society Forum of the Fourth Meeting of the Board of Trade and Sustainable 
Development Association Agreement between Central America and the European Union, Brussels, 13 June 2018. 
140   See Friedrich Ebert Stiftung, Response to the Non-Paper of the European Commission on Trade and Sustainability in 
Trade  Agreements,  January  2018.  To  be  effective,  this  mechanism  requires  the  existence  of  independent  social 
partners and civil society. 

141   Court of Justice of the European Union, Opinion 2/15: Opinion of the Court (Full Court) of 16 May 2017 – European 

Commission (2017) C 239/03. 

142   Eurogroup for Animals, Animal Welfare, Trade and Sustainable Development, Brussels, 2018, pp. 14-16. 

45 

 
                                                             
EPRS | European Parliamentary Research Service 

Business and Human Rights143 is built around three components, of which access to remedies (via 
dispute systems) is one. Additionally, academic research on, for example, the context of voluntary 
standards,  has  pointed  towards  the  importance  of  dispute  mechanisms  and  'retrospective 
accountability'144 for the effective enforcement of private social and environmental standards.145 In 
that  spirit,  civil  society  has  proposed  using  a  key  performance  indicator  scorecard,  especially  for 
measuring  compliance  of  environmental  standards,  inspired  by  the  indicators  used  under  the 
Generalised Scheme of Preferences (GSP+).146 

In  the  spirit of  stronger  enforcement mechanisms, it is  also  suggested  that  EU  trade  agreements 
include a specific dispute settlement mechanism for the TSD chapter, to make use of information 
on compliance from the ILO (and other international monitoring bodies) in order to hold states to 
account while at the same time introducing voluntary sustainability standards or OECD guidelines 
that could address (multinational) firms more directly. As Marx et al. demonstrate, linking the TSD 
chapters  to  a  binding  dispute  settlement  mechanism  might  be  one  approach.  The  shadow  of 
disputes, complaints and possible sanctions might provide additional incentives to comply with the 
requirements of the TSD chapters. The experts recommend that such robust sanctions be used as a 
measure of last resort, which could involve trade sanctions or other economic sanctions, such as 
fines. There is a need to reflect upon how these sanctions can be designed in a way that avoids harm 
against  vulnerable  parts  of  the  population  or  sanctions  that  would  be  disproportionate,  or  that 
would result in trade diversion, i.e. countries redirecting their trade flows towards other countries.147 

Interestingly, the need for sanctions in trade agreements has been explicitly identified by the EU for 
the first time in the context of the future Brexit negotiations. Specifically, when presenting the level-
playing  field,  the  European  Commission  has  indicated  that  it  will  be  necessary  to  adopt  a  'non-
regression' clause in the EU-UK trade agreement, and that this clause, which reads like the provision 
usually contained in a TSD chapter (parties should not lower standards in order to attract trade), 
should  be  accompanied  by  a  sanctions  regime  (that  could  include  'suspension  of  obligations, 
temporary compensations, financial sanctions, cross retaliation, 'guillotine clause', etc.').148 

143   United Nations Human Rights Office of the High Commissioner, Guiding Principles on Business and Human Rights: 

Implementing the United Nations 'Protect, Respect and Remedy' Framework, New York and Geneva, 2011. 

144   N.  Hachez  and  J.  Wouters,  'A  Glimpse  at  the  Democratic  Legitimacy  of  Private  Standards:  Assessing  the  Public 

Accountability of GLOBALG.A.P', Journal of International Economic Law, Vol. 14(3), 2011, pp. 677–710. 

145   L.  H.  Gulbrandsen,  'Accountability  Arrangements  in  Non-state  Standards  Organizations:  Instrumental  Design  and 

Imitation', Organization, Vol. 15(4), 2008, pp. 563–583. 

146   Transport & Environment, Trade and Sustainable Development: A Chance for Innovative Thinking, Brussels, October 

2017, pp. 3 and 9. 

147   A.  Marx  et  al.,  Dispute  Settlement  in  the  Trade  and  Sustainable  Development  Chapters  of  EU  Trade  Agreements, 

Leuven Centre for Global Governance Studies, Leuven, 2017, p. 91. 

148   European Commission,  Internal EU27  preparatory  discussions  on  the framework  for  the  future relationship:  'Level 

Playing Field', Commission to EU 27, 31 January 2018.  

46 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

6. Conclusions 

This  evaluation  has  shown  that  the  EU  has  had  some  positive  results  in  promoting  labour  and 
environmental rights in Central America through the trade pillar of its Association Agreement. It is 
important to acknowledge the positive albeit limited role of the civil society meetings in monitoring 
the TSD chapter in the EU-Central America agreement. Government-to-civil society meetings have 
been key in airing civil society concerns to government-to-government discussions. However, the 
extent to which these concerns are taken on board at government level is unclear, as there is no 
concrete incentive for enforcement; rather, it depends on political will. Accordingly, these meetings 
have at best had an indirect impact on monitoring the implementation of the TSD chapter of the 
EU-Central America AA. 

Elements hindering stronger and more extensive positive results include: 

  the  fact  that  the  legal  provisions  were  drafted  in  a  conservative  way  leaving  ample 
flexibility for the signatories to the agreement when it comes to implementation of the 
chapter;  

  challenged cross-border cooperation within the Central American integration process 
in regions that are environmentally vulnerable, fragile to natural disaster and suffering 
from  high  levels  of  poverty.  These  are  areas  where  the  implementation  of  the  TSD 
chapter is most needed; 

  weak coordination in the crowded international scene both within the EU (especially 
when  it  comes  to  capitalising  on  the  potential  of  EU  delegations,  using  its  available 
instruments in a complementary manner) and between the EU and other donors; 

  the fact that while social dialogue between non-governmental actors and governments 
adds  legitimacy  to  the  decision-making  process  ensuring  that  trade  is  an  inclusive 
process that is grounded in the experiences and interests of all relevant stakeholders, 
questions  have  been  repeatedly  raised  as  to  who  sits  around  the  table,  how  DAG 
members are recruited, and on their diversity and representativeness. 

The TSD Board engages leaders of the Central American region on rather legalistic and technical 
matters linked to the TSD chapter, namely the ratification and, to some extent, the progress made 
in implementing ILO conventions and other environmental obligations. It does not clearly engage 
parties, however, on the consequences of the non-implementation of international conventions. It 
therefore  does  not  respond  sufficiently  to  the  concerns  outlined  by  the  European  Parliament, 
namely  on  human  rights  violations,  and  the  need  to  tackle  organised  crime  and  promote 
environmental rights and sustainability. 

The EU-Central America AA may be useful in nurturing intra-regional integration − even in the field 
of  sustainable  development  −  but  its  clout  remains  limited  when  it  comes  to  pushing  for  the 
implementation of ILO core conventions and domestic labour law reforms in the short term. Experts 
have not been able to provide conclusive information on whether long-term promotional labour 
clauses could reduce breaches of labour rights.149 

Coordination  between  the  various  EU  instruments  has  been  key  in  ensuring  that  the  EU  has  an 
impact  on  sustainable  development  issues  in  Central  America.  National  governments  have  their 
own role to play in ensuring that the necessary reforms on sustainable development are not only 
agreed on but actually implemented. In general, the EU has been reluctant − apart in the case of 

149   J. Orbie et al., 'The Impact of Labour Rights Commitments in EU Trade Agreements: The Case of Peru', Politics and 

Governance, Vol. 5(4), 2017. 

47 

 
                                                             
EPRS | European Parliamentary Research Service 

Nicaragua where violations of labour laws and the general human rights situation has been visibly 
challenging − to take firm action against trading partners' violations.  

Engagement with civil society organisations, including workers' and employers' representatives, is 
an important part of this process. It is too early to dismiss its potential impact in the future, but more 
needs to be done to ensure that the contribution of social dialogue is taken seriously into account 
by policymakers and decision-makers and that, when relevant, it is taken on board. In that respect, 
the social partners and civil society should play an ever greater role in monitoring and − according 
to some experts − even enforcing implementation. 

Other ideas put forward for more effective compliance include boosting capacity-building projects 
(e.g., labour inspections) in the six Central American signatories, increasing funding (also through 
public-private partnerships), and using participatory methods in the evaluation of TSD compliance 
(where  all  local  stakeholders,  including  local  authorities  and  civil  society,  can  be  involved  in  the 
design, carrying out and dissemination of evaluation results). 

While evidence points to cooperation and dialogue being more effective than sanctioning when it 
comes to ensuring the implementation of TSD provisions, experts and policymakers call for clearer 
and  stronger  enforcement  mechanisms.  These  could  include  a  combination  of  promotional  and 
conditional approaches. Ideas put forward by experts include: the creation of a 'collective complaint 
mechanism'  that  would  further  empower  civil  society;  mobilising  the  landmark  opinion  of  the 
European Court of Justice on the powers to conclude the EU-Singapore FTA; creating performance 
indicator scorecards (as in the GSP+); and including a specific dispute settlement mechanism for the 
TSD chapter that uses information on compliance from the ILO (and other international monitoring 
bodies)  to  hold  states  to  account  while  at  the  same  time  introducing  voluntary  sustainability 
standards or OECD guidelines that could address (multinational) firms more directly. 

Ultimately implementation of TSD commitments depends on a long-term engagement with trading 
partners and on close coordination between the various tiers of authority responsible for policies in 
areas such as labour and the environment. On the EU side this will become clearer once all the EU 
Member States have ratified the EU-Central America AA. On the partners' side, the message will be 
clearer when the reforms necessary for safeguarding the TSD provisions are not only ratified but also 
fully implemented. 

48 

 
The Trade Pillar in the EU-Central America Association Agreement 

References 

Official documents 
Agreement establishing an Association between the European Union and its Member States, on the one 
hand, and Central America on the other, Official Journal L 346, 15 December 2012. 
Regulation  (EU)  No  20/2013  of  the  European  Parliament  and  of  the  Council  of  15  January  2013 
implementing  the  bilateral  safeguard  clause  and  the  stabilisation  mechanism  for  bananas  of  the 
Agreement establishing an Association between the European Union and its Member States, on the one 
hand, and Central America on the other, Official Journal L 17, 19 January 2013. 

European Parliament reports and resolutions 
European Parliament resolution of 31 May 2018 on the situation in Nicaragua (2018/2711(RSP)), P8_TA-
PROV(2018)0238. 
European  Parliament,  Delegation  for  relations  with  the  countries  of  Central  America,  Minutes  of  the 
Meeting of 12 October 2017, DCAM_PV(2017)1012_1. 
European  Parliament  resolution  of  13  September  2017  on  EU  political  relations  with  Latin  America 
(2017/2027(INI)), A8-0268/2017. 
European Parliament, Mission Report – Report by Delegation Chair, Sofia Sakorafa, on the visit to Costa 
Rica and Panama, 28 March to 1 April 2016, San José (Costa Rica) and Panama City (Panama), Delegation 
for relations with the countries of Central America, 9 June 2016. 
European  Parliament,  Working  Document  on  the  Draft  Rules  of  Procedure  of  the  Joint  Parliamentary 
Committee European Union-Central America, PE470.378v04-00, 8 September 2015. 
European Parliament, Report by Delegation Chair Sofia Sakorafa on the visit to Guatemala and Honduras, 
16  to  20  February  2015,  Guatemala  City  (Guatemala)  and  Tegucigalpa  (Honduras),  Delegation  for 
relations with the countries of Central America, PE559.458v01-00. 
European Parliament decision of 3 April 2014 on discharge in respect of the implementation of the 
general budget of the European Union for the financial year 2012, Section X – European External Action 
Service (COM(2013)0570 – C7-0282/2013 – 2013/2205(DEC)), P7_TA(2014)0292. 
European Parliament, Report by Emine Bozkurt, Chair of the Delegation for Relations with the countries 
of Central America, on the visit by a Delegation Working Group to Nicaragua and El Salvador, 28 October 
–  1  November  2013,  Nicaragua  and  El  Salvador,  PE470.372v01-00,  Delegation  for  relations  with  the 
countries of Central America, 9 January 2014. 
European Parliament resolution of 11 December 2012 on the draft Council decision on the conclusion of 
the Agreement establishing an Association between the European Union and its Member States, on the 
one hand, and Central America, on the other, A7-0360/2012. 
European Parliament, MEPs back two major pacts with Latin America, Press release, 20121207IPR04407, 
Plenary sessions, 11 December 2012. 
European  Parliament,  Resolution  of  21 October  2010  on  the  European Union's  Trade  Relations  with  Latin 
America, T7-0387/2010, 21 October 2010. 
European Parliament resolution of 25 November 2010 on human rights and social and environmental 
standards in international trade agreements (2009/2219(INI)), P7_TA(2010)0434. 
European Parliament, Resolution of 24 April 2008 on the Fifth Latin America and Caribbean-European 
Union Summit in Lima, T6-0177/2008, 24 April 2008. 

Other EU documents 
Court of Justice of the European Union, Opinion 2/15: Opinion of the Court (Full Court) of 16 May 2017 – 
European Commission (2017) C 239/03, Document 62015CV0002(01). 
European  Commission,  EU-Central  America  Association  Agreement,  Summary  Report  of  the  fourth 
meeting of the Association Committee - Trade part: Brussels, 14 June 2018, 2018. 

49 

 
 
 
EPRS | European Parliamentary Research Service 

European Commission, Report to the Civil Society Forum of the Fourth Meeting of the Board of Trade 
and  Sustainable  Development  Association  Agreement  between  Central  America  and  the  European 
Union, Brussels, 13 June 2018. 
European Commission, European Union, Trade in goods with Central America 6, Directorate-General for 
Trade, 16 April 2018. 
European Commission, Decent Work, Corporate Responsibility and the EU-Central America Association 
Agreement: Contributing to Sustainable Economic Growth, Directorate General for Trade, 28 March 2018. 
European Commission, Feedback and way forward on improving the implementation and enforcement 
of  Trade  and  Sustainable  Development  chapters  in  EU  Free  Trade  Agreements,  Non  paper  of  the 
Commission services, 26 February 2018. 
European  Commission,  Internal  EU27  preparatory  discussions  on  the  framework  for  the  future 
relationship: "Level Playing Field", TF50 (2018) 27 - Commission to EU 27, 31 January 2018. 
European Commission, Responsible Global Value Chains: Case of EU-Central America Trade, Directorate 
General for Trade, 7 April 2017. 
European Commission, Commission's Forward Planning of Evaluations and Studies: 2017 and beyond, 
2017. 
European  Commission,  Report  from  the  Commission  to  the  European  Parliament,  the  Council,  the 
European Economic and Social Committee and the Committee of the Regions on Implementation of Free 
Trade Agreements, 1 January 2016-31 December 2016, COM(2017) 654 final, Brussels, 9 November 2017. 
European Commission, Report from the Commission to the European Parliament and the Council, Third 
Annual Report on the Implementation of 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(2017) 160 final, Brussels, 5 April 2017. 
European Commission, Report from the Commission to the European Parliament and the Council, Annual 
Report  on  the  Implementation  of  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(2016) 
73 final, 18 February 2016. 
European Commission, Report from the Commission to the European Parliament and the Council, Annual 
Report on the Implementation of Part IV of the EU-Central America Association Agreement, COM(2015) 
131 final, 18 March 2015. 
European Commission, EU Communication on the Agenda for Change, 2011. 
European  Commission,  Highlights  of  the  trade  pillar  of  the  Association  Agreement  between  Central 
America and the European Union, Press release, 20 June 2011. 
European  Commission,  Trade  for  All:  Towards  a  More  Responsible  Trade  and  Investment  Policy, 
COM(2015) 497, 14 October 2014. 
Trade and Sustainable Development Chapters in EU Free Trade Agreements, OJ C 227, 28 June 2018, 
pp. 27–34. 
Trade and Sustainable Development - 6 Years in a Snapshot, TSD Implementation -Achievements, not 
dated. 

Other governmental bodies 
Dutch Ministry of Foreign Affairs, Investing in Global Prospects, Policy Document on Foreign Trade and 
Development Cooperation, May 2018. 
Latin  American  and  Caribbean  Economic  System  (Sistema  Económico  Latinoamericano  y  del  Caribe, 
SELA),  Regional  Cooperation  in  the  area  of  Border  Integration,  SP/XXIV-RDCIALC/DT  N°  2-13,  XXIV 
Meeting  of  International  Cooperation  Directors  for  Latin  America  and  the  Caribbean.  Regional 
Cooperation  in  the  area  of  Border  Integration,  in  El  Salvador,  San  Salvador,  30  and  31  May  2013, 
Permanent Secretariat of SELA, Caracas, Venezuela. 

50 

 
 
The Trade Pillar in the EU-Central America Association Agreement 

United  Nations  Human  Rights  Office  of  the  High  Commissioner,  Guiding  Principles  on  Business  and 
Human Rights: Implementing the United Nations 'Protect, Respect and Remedy' Framework, New York 
and Geneva, 2011. 

in  EU  FTAs,  Position  Paper, 

for  Regional  and  Urban  policy 

Other sources 
ADE,  Evaluation  of  the  EU's  Cooperation  with  Central  America,  Final  Report,  Volume  I  –  Main  report, 
Analysis for Economic Decisions (ADE), (Evaluation commissioned by the European Commission). 
Ariel Aaronson, S., Chapter 21 - 'Human Rights', in Chauffour, J.-P. and Maur, J.-C. (eds), Preferential Trade 
Agreements Policies for Development: A Handbook, World Bank, Washington, DC, June 2011. 
Association of European Border Regions (AEBR), EU - Central America Cooperation Support to the Central 
American  Integration  System's  (SICA)  cross-border  cooperation  actions,  Final  report,  Prepared  for  the 
(DG  REGIO),  European  Commission, 
Directorate-General 
2012.CE.16.0.AT.080, 19 December 2014. 
Bartels, L., 'Human Rights and Sustainable Development Obligations in EU Free Trade Agreements', Legal 
Issues of Economic Integration Law, Vol. 40(4), 2013. 
Beke, L. et al., Report on the Integration of Human Rights in EU Development and Trade Policies, Large-
Scale FP7 Collaborative Project GA No 320000: Fostering Human Rights among European Policies, Work 
Package No 9 – Deliverable No 1, Leuven Centre for Global Governance Studies, Leuven, September 2014. 
Bürgi Bonanomi, E., EU Trade Agreements and Their Impacts on Human Rights, Study commissioned by 
the German Federal Ministry for Economic Cooperation and Development (BMZ), CDE Working Paper No 
1, Centre for Development and Environment, University of Bern, Switzerland, 2014. 
BusinessEurope,  Trade  and  Sustainable  Development  Chapters 
6 November 2017. 
Ecorys and Corporate Solutions, Trade Sustainability Impact Assessment of the Association Agreement 
to  be  negotiated  between the  EU  and  Central America,  TRADE08/C1/C14  &  C15 -  Lot  2,  Final  Report, 
(Evaluation commissioned by the Directorate General on Trade, European Commission), 18 September 
2009. 
EU - Central America Association Agreement - Free Trade Chapter, Policy Briefing, Directorate-General 
for external Policies of the Union Policy Department, European Parliament, May 2011. 
Eurogroup for Animals, Animal Welfare, Trade and Sustainable Development, Brussels, 2018. 
Friedrich  Ebert  Stiftung,  Response  to  the  Non-Paper  of  the  European  Commission  on  Trade  and 
Sustainability in Trade Agreements, January 2018. 
Gulbrandsen,  L.  H.,  'Accountability  Arrangements  in  Non-state  Standards  Organizations:  Instrumental 
Design and Imitation', Organization, Vol. 15(4), 2008, pp. 563–583. 
Hachez, N. and Wouters, J., 'A Glimpse at the Democratic Legitimacy of Private Standards: Assessing the 
Public Accountability of GLOBALG.A.P', Journal of International Economic Law, Vol. 14(3), 2011, pp. 677–
710. 
Hafner-Burton, E. M., Making Human Rights a Reality, Princeton University Press, Princeton, NJ, 2013. 
Harrison,  James  et  al.,  'Governing  Labour  Standards  through  Free  Trade  Agreements:  Limits  of  the 
European  Union's  Trade  and  Sustainable  Development  Chapters',  Journal  of  Common  Market  Studies, 
2018, pp. 1-18. 
Hoffmeister,  F.,  'The  Deep  and  Comprehensive  Free  Trade  Agreements  of  the  European  Union',  in 
Cremona,  M.  and  Takács,  T.  (eds),  Trade Liberalisation and Standardisation – New Directions in the 'Low 
Politics'  of  EU  Foreign  Policy,  EUI  Working  Paper  AEL  2014/1,  Academy  of  European  Law,  European 
University Institute, San Domenico di Fiesole, 2014, p. 15-26. 
Ioannides, I., The effects of human rights related clauses in the EU-Mexico Global Agreement and the EU-
Chile Association Agreement, PE 558.764, EPRS, European Parliament, February 2017. 
Ioannides, I., The Inclusion of Financial Services in EU Free Trade and Association Agreements: Effects on 
Money Laundering, Tax Evasion and Avoidance, Ex-Post Impact Assessment, PE 579.326, EPRS, European 
Parliament, June 2016. 

51 

 
 
EPRS | European Parliamentary Research Service 

Hannonen, M., 'Implementation of EU Free Trade Agreements', Global Trade and Customs Journal, Vol. 
12(11 & 12), 2017, pp. 422-425. 
Iranzo,  C.  and  Patruyo,  T.,  'Trade  Unionism  and  Globalisation:  Thoughts  from  Latin  America',  Current 
Sociology, Vol. 50(1), January 2002, pp. 57-74.  
Lerch,  M.,  The  European  Year  for  Development:  Human  Rights,  PE  570.451,  Policy  Department, 
Directorate  General  for  External  Policies,  and  European  Parliamentary  Research  Service,  European 
Parliament, Brussels, 1 December 2015. 
Melo Araujo, B., 'Labour Provisions in EU and US Mega-Regional Trade Agreements: Rhetoric and Reality', 
International and Comparative Law Quarterly, Vol. 67, January 2018, pp. 233-253. 
Marx,  A.  et  al.,  Dispute  Settlement  in  the  Trade  and  Sustainable  Development  Chapters  of  EU  Trade 
Agreements, Leuven Centre for Global Governance Studies, Leuven, 2017. 
Marx,  A.  et  al.,  'The  Protection  of  Labour  Rights  in  Trade  Agreements:  The  Case  of  the  EU-Colombia 
Agreement', Journal of World Trade, Vol. 50(4), 2016, pp. 587-610. 
Marx,  A.  et  al.,  'Does  Integrating  Labour  Provisions  in  Free  Trade  Agreements  Make  a  Difference?  An 
exploratory analysis of freedom of association and collective bargaining rights in 13 EU Trade Partners', 
in Wouters, J. et al. (eds.) Global Governance through Trade, Cheltenham: Edward Elgar Publishing, 2015, 
pp. 13-41. 
Orbie,  J.  et  al.,  Civil  Society  Meetings  in  European  Union  Trade  Agreements:  Features,  Purposes,  and 
Evaluation, Cleer Papers 2016/3, Centre for the Law of EU External Relations, Asser Institute, The Hague, 
The Netherlands, 2016. 
Orbie, J. et al., 'The Impact of Labour Rights Commitments in EU Trade Agreements: The Case of Peru', 
Politics and Governance, Vol. 5(4), 2017. 
Scherrer, C. and Moore, M., Conditional or Promotional Trade Agreements—Is Enforcement Possible?, 
Friedrich Ebert Foundation, June 2017. 
Selleslaghs, J., Managing Global Interdependence on the central American Isthmus: EU-Central America 
Interregional  Relations,  UNU-CRIS  Working  Papers  W-2014/8,  Institute  on  Comparative  Regional 
Integration Studies, United Nations University, Brugge, 2014. 
Silva Ávalos, H., US Report Shows Revitalized Central America Cocaine Corridor, Insight Crime, 9 March 
2017. 
Transport  &  Environment,  Trade  and  Sustainable  Development:  A  Chance  for  Innovative  Thinking, 
Brussels, October 2017. 
Van  den  Putte,  L.  and  Orbie,  J.,  'EU  Bilateral  Trade  Agreements  and  the  Surprising  Rise  of  Labour 
Provisions', International Journal of Comparative Labour Law and Industrial Relations, Vol. 31(3), 2015. 
Velluti,  S.,  'The  Promotion  and  Integration  of  Human  Rights  in  EU  External  Trade  Relations',  Utrecht 
Journal of International and European Law, Vol. 32(83), 2016. 
Velluti, S., 'The EU's Social Dimension and its External Trade Relations', in Marx, Axel et al. (eds.), Global 
Governance of Labour Rights: Assessing the Effectiveness of Transnational Public and Private Policy Initiatives, 
Cheltenham, 2015, pp. 42-62. 
Vogt,  J.,  'The  evolution  of  Labor  Rights  and  Trade  -  A  Transatlantic  Comparison  and  Lessons  for  the 
Transatlantic Trade and Investment Partnership', Journal of International Economic Law, Vol. 18(4), 2015, 
pp. 827-860. 

Websites 
European Commission, Regional cooperation with Central America, Directorate-General for International 
Cooperation and Development. 
European Commission, Sustainable development, Directorate General for Trade, 9 April 2018 (accessed 
17 July 2018). 
The EU-Central America Domestic Advisory Group, EESC.  
Central America, EESC. 

52 

 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

Annex 1 – The TSD chapter in the EU-Central America Association 
Agreement  

PART IV - TRADE 

TITLE VIII - TRADE AND SUSTAINABLE DEVELOPMENT 

ARTICLE 284: Context and Objectives 

1. The Parties recall Agenda 21 on Environment and Development of 1992, the Johannesburg Plan 
of Implementation on Sustainable Development of 2002 and the 2006 Ministerial Declaration of the 
UN Economic and Social Council on Full Employment and Decent Work. The Parties reaffirm their 
commitment to promoting the development of international trade in such a way as to contribute to 
the  objective  of  sustainable  development  and  to  ensuring  that  this  objective  is  integrated  and 
reflected at every level of their trade relationship. To this end, the Parties recognise the importance 
of  taking  into  account  the  economic,  social  and  environmental  best  interests  of  not  only  their 
respective populations but also of future generations.  

2.  The  Parties  reaffirm  their  commitment  to  achieving  sustainable  development,  whose  pillars  – 
economic development, social development and environmental protection – are interdependent 
and mutually reinforcing. The Parties underline the benefit of considering trade related social and 
environmental issues as part of a global approach to trade and sustainable development. 

3. The Parties agree that this Title embodies a cooperative approach based on common values and 
interests, taking into account the differences in their levels of development and the respect of their 
current and future needs and aspirations. 

4.  The  Parties  shall  not  have  recourse  to  dispute  settlement  procedures  under  Title  X  (Dispute 
Settlement) of Part IV of this Agreement and to the Mediation Mechanism for Non-Tariff Measures 
under  Title  XI  (Mediation  Mechanism  for  Non-Tariff  Measures)  of  Part  IV  of  this  Agreement  for 
matters arising under this Title. 

ARTICLE 285: Right to Regulate and Levels of Protection 

1. The Parties reaffirm the respect for their respective Constitutions and for their rights there under 
to regulate in order to set their own sustainable development priorities, to establish their own levels 
of domestic environmental and social protection, and to adopt or modify accordingly their relevant 
laws and policies. 

2. Each Party shall strive to ensure that its laws and policies provide for and encourage high levels of 
environmental  and  labour  protection,  appropriate  to  its  social,  environmental  and  economic 
conditions and consistent with the internationally recognised standards and agreements referred 
to in Articles 286 and 287 to which it is a party, and shall strive to improve those laws and policies, 
provided  that  they  are  not  applied  in  a  manner  that  would  constitute  a  means  of  arbitrary  or 
unjustifiable discrimination between the Parties or a disguised restriction on international trade. 

ARTICLE 286: Multilateral Labour Standards and Agreements 

1.  Recalling  the  2006  Ministerial  Declaration  of  the  UN  Economic  and  Social  Council  on  Full 
Employment  and  Decent  Work,  the  Parties  recognise  that  full  and  productive  employment  and 
decent work for all, which encompass social protection, fundamental principles and rights at work 
and social dialogue, are key elements of sustainable development for all countries, and therefore a 
priority  objective  of  international  cooperation.  In  this  context,  the  Parties  reaffirm  their  will  to 
promote  the  development  of  macroeconomic  policies  in  a  way  that  is  conducive  to  full  and 
productive employment and decent work for all, including men, women and young people, with 

53 

 
EPRS | European Parliamentary Research Service 

full  respect  for  fundamental  principles  and  rights  at  work  under  conditions  of  equity,  equality, 
security and dignity. 

The Parties, in accordance with their obligations as members of the ILO, reaffirm their commitments 
to  respect,  promote,  and  realise  in  good  faith  and  in  accordance  with  the  ILO  Constitution,  the 
principles  concerning  the  fundamental  rights,  which  are  the  subject  of  the  fundamental  ILO 
Conventions, namely: 

a.  the freedom of association and the effective recognition of the right to collective bargaining; 

b.  the elimination of all forms of forced or compulsory labour; 

c.  the effective abolition of child labour; and 

d.  the elimination of discrimination in respect of employment and occupation. 

2.  The  Parties  reaffirm  their  commitment  to  effectively  implement  in  their  laws  and  practice  the 
fundamental  ILO  Conventions  contained  in  the  ILO  Declaration  of  Fundamental  Principles  and 
Rights at Work of 1998, which are the following: 

a.  Convention 138 concerning Minimum Age for Admission to Employment; 

b.  Convention 182 concerning the Prohibition and Immediate Action for the Elimination of the 

Worst Forms of Child Labour; 

c.  Convention 105 concerning the Abolition of Forced Labour; 

d.  Convention 29 concerning Forced or Compulsory Labour; 

e.  Convention 100 concerning Equal Remuneration for Men and Women Workers for Work of 

Equal Value; 

f.  Convention 111 concerning Discrimination in Respect of Employment and Occupation; 

g.  Convention 87 concerning Freedom of Association and Protection of the Right to Organise; 

and 

h.  Convention 98 concerning the Application of the Principles of the Right to Organise and to 

Bargain Collectively. 

3. The Parties will exchange information on their respective situation and advancements as regards 
the ratification of the other ILO Conventions. 

4.  The  Parties  stress  that  labour  standards  should  never  be  invoked  or  otherwise  used  for 
protectionist  trade  purposes  and  that  the  comparative  advantage  of  any  Party  should  not  be 
questioned. 

5.  The  Parties  commit  to consult  and  cooperate  as appropriate, on  trade-related  labour  issues of 
mutual interest. 

ARTICLE 287: Multilateral Environmental Standards and Agreements 

1.  The  Parties  recognise  that  international  environmental  governance  and  agreements  are 
important elements to address global or regional environmental problems and stress the need to 
enhance the mutual supportiveness between trade and environment. The Parties commit to consult 
and cooperate as appropriate on trade-related environmental issues of mutual interest. 

2.  The  Parties  reaffirm  their  commitment  to  effectively  implement  in  their  laws  and  practice  the 
multilateral environmental agreements to which they are parties including: 

54 

 
The Trade Pillar in the EU-Central America Association Agreement 

a.  the Montreal Protocol on Substances that Deplete the Ozone Layer; 

b.  the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and 
their Disposal; 

c.  the Stockholm Convention on Persistent Organic Pollutants; 

d.  the  Convention  on  International  Trade  in  Endangered  Species  of  Wild  Fauna  and  Flora 
(hereinafter referred to as 'CITES'); 

e.  the Convention on Biological Diversity; 

f.  the Cartagena Protocol on Biosafety to the Convention on Biological Diversity; and 

g.  the Kyoto Protocol to the United Nations Framework Convention on Climate Change.  

3.  The  Parties  undertake  to  ensure  that  they  have  ratified  by  the  date  of  entry  into  force  of  this 
Agreement, the Amendment to Article XXI of CITES, adopted at Gaborone (Botswana), on 30 April, 
1983. 

4.  The  Parties  also  undertake,  to  the  extent  they  have  not  yet  done  so,  to  ratify  and  effectively 
implement, at the latest by the date of entry into force of this Agreement, the Rotterdam Convention 
on  the  Prior  Informed  Consent  Procedure  for  Certain  Hazardous  Chemicals  and  Pesticides  in 
International Trade. 

5. Nothing in this Agreement shall be construed to prevent the adoption or enforcement by any 
Party  of  measures  to  implement  the  agreements  referred  to  in  this  Article,  provided  that  such 
measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable 
discrimination between countries where the same conditions prevail, or a disguised restriction on 
international trade. 

ARTICLE 288: Trade Favouring Sustainable Development 

1. The Parties reconfirm that trade should promote sustainable development in all its dimensions. 
In this context, they recognise the value of international cooperation in support of efforts to develop 
trade  schemes  and  trade  practices  favouring  sustainable  development,  and  they  agree  to  work 
together in the framework of Articles 288, 289 and 290 with the aim of developing collaborative 
approaches, as appropriate. 

2. The Parties shall endeavour to: 

a.  consider those situations in which the elimination or the reduction of obstacles to trade would 
benefit trade and sustainable development, taking into account, in particular, the interactions 
between environmental measures and market access; 

b.  facilitate  and  promote  trade  and  foreign  direct  investment  in  environmental  technologies 
and services, renewable-energy and energy-efficient products and services, including through 
addressing related non-tariff barriers; 

c.  facilitate  and  promote  trade  in  products  that  respond  to  sustainability  considerations, 
including products that are the subject of schemes such as fair and ethical trade schemes, eco-
labelling,  organic  production,  and  including  those  schemes  involving  corporate  social 
responsibility and accountability; and 

d.  facilitate  and  promote  the  development  of  practices  and  programmes  aiming  at  fostering 
appropriate economic returns from the conservation and sustainable use of the environment, 
such as ecotourism. 

55 

 
 
EPRS | European Parliamentary Research Service 

ARTICLE 289: Trade in Forest Products 

In order to promote the sustainable management of forest resources, the Parties commit to work 
together  to  improve  forest  law  enforcement  and  governance  and  to  promote  trade  in  legal  and 
sustainable forest products through instruments that may include, inter alia: effective use of CITES 
with  regard  to  endangered  timber  species;  certification  schemes  for  sustainably  harvested  forest 
products; regional or bilateral Forest Law Enforcement Governance and Trade ("FLEGT") Voluntary 
Partnership Agreements. 

ARTICLE 290: Trade in Fish Products 

1.  The  Parties  recognise  the  need  to  promote  sustainable  fisheries  so  as  to  contribute  to  the 
conservation of fish stocks and to the sustainable trade of fishery resources.  

2. To this end, the Parties undertake to: 

a.  adhere to and effectively implement the principles of the Agreement for the Implementation 
of the Provisions of the United Nations Convention on the Law of the Sea of 10 December, 1982 
relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory 
Fish  Stocks,  in  relation  to:  sustainable  use,  conservation  and  management  of  straddling  fish 
stocks and highly migratory fish species; international cooperation between States; support of 
scientific advice and research; implementation of effective monitoring, control and inspection 
measures; and the duties of the flag and port States, including compliance and enforcement; 

b.  cooperate, 
including  with  and  within  the  relevant  Regional  Fisheries  Management 
Organisations, in order to prevent Illegal, Unreported and Unregulated ('IUU') fishing, including 
by  adopting  effective  tools  to  implement  control  and  inspection  schemes  to  ensure  full 
compliance with conservation measures; 

c.  exchange  scientific  and  non-confidential  trade  data,  to  exchange  experiences  and  best 
practices  in  the  field  of  sustainable  fisheries  and,  more  generally,  to  promote  a  sustainable 
approach to fisheries. 

3. The Parties, to the extent they have not yet done so, agree to adopt port State measures in line 
with the United Nations Food and Agriculture Organisation Agreement on Port State Measures to 
Prevent,  Deter  And  Eliminate  Illegal, Unreported  And Unregulated Fishing,  to implement  control 
and inspection schemes, as well as incentives and obligations for a sound, sustainable management 
of fisheries and coastal environments in the long term. 

ARTICLE 291: Upholding Levels of Protection 

1. The Parties recognise that it is inappropriate to encourage trade or investment by lowering the 
levels of protection afforded in domestic environmental and labour laws. 

2. A Party shall not waive or derogate from, or offer to waive or offer to derogate from, its labour or 
environmental 
legislation  in  a  manner  affecting  trade  or  as  an  encouragement  for  the 
establishment, acquisition, expansion or retention of an investment or an investor in its territory. 

3. A Party shall not fail to effectively enforce its labour and environmental legislation in a manner 
affecting trade or investment between the Parties. 

4.  Nothing  in  this  Title  shall  be  construed  to  empower  a  Party's  authorities  to  undertake  law 
enforcement activities in the territory of the other Party. 

56 

 
 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

ARTICLE 292: Scientific Information 

The  Parties  recognise  the  importance,  when  preparing  and  implementing  measures  aimed  at 
protecting  the  environment  or  health  and  safety  at  work,  of  taking  account  of  scientific  and 
technical information, and relevant international standards, guidelines or recommendations, while 
acknowledging  that  when  there  are  threats  of  serious  or  irreversible  damage,  the  lack  of  full 
scientific certainty shall not be used as reason for postponing protective measures. 

ARTICLE 293: Sustainability Review 

The Parties commit to jointly reviewing, monitoring and assessing the contribution of Part IV of this 
Agreement, including cooperation activities under Article 302, to sustainable development. 

ARTICLE 294: Institutional and Monitoring Mechanism 

1.  Each  Party  shall  designate  an  office  within  its  administration  to  serve  as  Contact  Point  for  the 
purpose of implementing trade-related aspects of sustainable development. At the entry into force 
of this Agreement, the Parties shall submit to the Association Committee full contact information 
for their Contact Points. 

2. The Parties hereby establish a Board on Trade and Sustainable Development, which shall comprise 
high level authorities from within the administrations of each Party. Prior to each meeting of the 
Board the Parties will inform each other of the identity and contact information of their respective 
representatives. 

3. The Board on Trade and Sustainable Development shall meet within the first year after the date 
this Agreement enters into force, and thereafter as necessary, to oversee the implementation of this 
Title, including cooperative activities undertaken under Title VI (Economic and Trade Development) 
of Part III of this Agreement. The decisions and recommendations of the Board shall be adopted by 
mutual agreement between the Parties and shall be provided to the public, unless the Board decides 
otherwise. 

4.  Each  Party  shall  convene  new  or  consult  existing  Advisory  Groups  on  trade  and  sustainable 
development.  These groups shall be tasked with expressing views and making recommendations 
on  trade-related  aspects  of  sustainable  development  and  advising  the  Parties  on  how  to  better 
achieve the objectives of this Title. 

5. The Advisory Groups of the Parties shall comprise independent representative organisations, in a 
balanced  representation  of  economic,  social  and  environmental  stakeholders  including,  among 
others,  employers  and  workers  organisations,  business  associations,  non-governmental 
organisations and local public authorities. 

ARTICLE 295: Civil Society Dialogue Forum 

1. The Parties agree to organise and facilitate a bi-regional Civil Society Dialogue Forum for open 
dialogue, with a balanced representation of environmental, economic and social stakeholders. The 
Civil  Society  Dialogue  Forum  shall  conduct  dialogue  encompassing  sustainable  development 
aspects of trade relations between the Parties, as well as how cooperation may contribute to achieve 
the objectives of this Title. The Civil Society Dialogue Forum will meet once a year, unless otherwise 
agreed by the Parties.  

2. Unless the Parties agree otherwise, each meeting of the Board will include a session in which its 
members  shall  report  on  the implementation  of  this  Title  to  the  Civil  Society Dialogue  Forum.  In 
turn,  the  Civil  Society  Dialogue  Forum  may  express  its  views  and  opinions  in  order  to  promote 
dialogue on how to better achieve the objectives of this Title. 

57 

 
 
 
EPRS | European Parliamentary Research Service 

ARTICLE 296: Government Consultations 

1. A Party may request consultations with another Party regarding any matter of mutual interest 
arising under this Title, by delivering a written request to the Contact Point of the other Party. In 
order to enable the Party receiving the request to respond, the request shall contain information 
that  is  specific  enough  to present  the  matter  clearly  and  factually,  by identifying  the  problem  at 
issue and by providing a brief summary of the claims under this Title. Consultations shall commence 
promptly after a Party delivers a request for consultations. 

2. The consulting Parties shall make every attempt to arrive at a mutually satisfactory solution of the 
matter, taking into account the information exchanged by the consulting Parties and opportunities 
for cooperation on the matter. During consultations, special attention shall be given to the particular 
problems and interests of developing country Parties. The consulting Parties shall take into account 
the activities of the ILO or relevant multilateral environmental organisations or bodies to which they 
are  parties.  Where  relevant,  the  consulting  Parties  may,  by  mutual  agreement,  seek  advice  or 
assistance from those organisations and bodies, or from any person or body they deem appropriate 
in order to fully examine the matter at issue. 

3. If ninety days after the request of consultations, a consulting Party deems that the matter needs 
further discussion, and unless the consulting Parties agree otherwise, the matter shall be referred 
for  consideration  to  the  Board  on  Trade  and  Sustainable  Development  by  delivering  a  written 
request to the Contact Points of the other Parties. The Board on Trade and Sustainable Development 
shall  convene  promptly in  order  to  assist  in  reaching  a mutually  satisfactory  solution.  If  it  deems 
necessary,  the  Board  on  Trade  and  Sustainable  Development  may  seek  expert  assistance  in  the 
matter of interest, with the objective of facilitating its analysis. 

4.  Any  solution  reached  by  the  consulting  Parties on  the matter  shall  be  made  public unless  the 
Board on Trade and Sustainable Development otherwise decides. 

ARTICLE 297: Panel of Experts 

1.  Unless  the  consulting  Parties  agree  otherwise,  a  consulting  Party  may,  after  sixty  days  of  the 
referral  of  a  matter  to  the  Board  on  Trade  and  Sustainable  Development  or,  if  the  matter  is  not 
referred to the Board, after ninety days of the delivery of a request for consultation under Article 
296,  paragraphs  1  and  3  respectively,  request  that  a  Panel  of  Experts  be  convened  to  examine  a 
matter that has not been satisfactorily addressed through government consultations. The Parties to 
the procedure can make submissions to the Panel of Experts. 

2. At the entry into force of this Agreement, the Parties shall submit to the Association Committee 
for  endorsement  by  the  Council  at its  first  meeting,  a  list  of  seventeen  persons  with  at  least  five 
individuals who are not nationals of any Party, with expertise in environmental law, international 
trade or the resolution of disputes arising under international agreements; and a list of seventeen 
persons, with at least five individuals who are not nationals of any Party, with expertise in labour 
law, international trade or the resolution of disputes arising under international agreements. The 
experts  who  are  not  nationals  of  any  Party  would  be  available  to  serve  as  Chair  of  the  Panel  of 
Experts. The experts shall be (i) independent of, and not affiliated with or take instructions from, 
either Party or organisations represented in the Advisory Group(s); and (ii) chosen on the basis of 
objectivity, reliability and sound judgment. 

3. The Parties shall agree on replacements of experts who are no longer available to serve in panels, 
and they may otherwise agree to modify the list as and when they consider it necessary. 

ARTICLE 298 Composition of the Panel of Experts 

1. The Panel of Experts shall comprise three experts. 

58 

 
The Trade Pillar in the EU-Central America Association Agreement 

2. The Chairperson shall not be a national of any Party. 

3. Each Party to the procedure shall select one expert from the list of experts within thirty days of 
the receipt of the request for the establishment of a Panel of Experts. If one Party fails to select its 
expert within such period, the other Party to the procedure shall select from the list of experts a 
national of the Party to the procedure that has failed to select an expert. The two selected experts 
shall select the Chairperson by agreement or by lot, from among the experts who are not nationals 
of any Party. 

4. Individuals may not serve as experts with respect to a matter in which they, or an organisation to 
which  they  are  affiliated,  has  a  direct  or  indirect  conflict  of  interests.  Upon  selection  to  serve  as 
experts on a given matter, each expert is expected to disclose the existence or development of any 
interest, relationship or matter that that expert could reasonably be expected to know and that is 
likely to affect, or give rise to justifiable doubts as to that expert's independence or impartiality. 

5. If either Party to the procedure believes that an expert is in violation of the requirements set forth 
in paragraph 4, the Parties to the procedure shall promptly consult and, if they agree, the expert 
shall be removed and a new expert shall be selected in accordance with the procedures set out in 
paragraph 3 that were used to select the expert who was removed. 

6. Unless otherwise agreed by the Parties to the procedure in accordance with paragraph 2 of Article 
301, the Panel of Experts shall be established no later than sixty days of a Party's request. 

ARTICLE 299: Rules of Procedure 

1. The Panel of Experts shall elaborate a timetable, which shall ensure an opportunity for the Parties 
to the procedure to provide written submissions and relevant information. 

2.  The  Panel  of  Experts  and  the  Parties  shall ensure the  protection of  confidential information in 
accordance with the principles in Title X (Dispute Settlement) of Part IV of this Agreement. 

3. The terms of reference of the Panel of Experts shall be: 

'to examine whether there is a failure by a Party to comply with the obligations set out under Articles 
286,  paragraph  2,  287,  paragraphs  2,  3  and  4  and  291  of  this  Title,  and  to  make  non-binding 
recommendations  for  solution  of  the  matter.  In  case  of  matters  concerning  the  enforcement  of 
legislation, the terms of reference of the Panel of Experts shall be to determine if there is a sustained 
or recurring failure by a Party to effectively implement its obligations.' 

ARTICLE 300: Initial Report 

1. The Panel of Experts shall use the submissions and arguments presented by the Parties to the 
procedure  as  a  basis  for  its  report.  In  the  course  of  the  procedure,  the  Parties  shall  have  the 
opportunity to comment on documents or information that the Panel may consider relevant to its 
work. 

2. Within one hundred and twenty days as of the date of establishment of the Panel of Experts, the 
Panel shall present to the Parties to the procedure an initial report including its recommendations. 
When the Panel considers that it cannot provide its report within one hundred and twenty days, it 
shall inform the Parties to the procedure in writing of the reasons for the delay and it shall give an 
estimate of the period within which it will provide its report. 

3. The Panel's recommendations shall take into account the particular socio-economic situation of 
the Parties. 

4. The Parties to the procedure may submit written comments to the Panel on its initial report within 
thirty days of its presentation. 

59 

 
EPRS | European Parliamentary Research Service 

5. After receiving any written comments, the Panel, on its own initiative or on the request of either 
Party to the procedure, may: 

a.  where relevant, request the views of the Parties to the procedure on the written comments; 

b.  reconsider its report; or 

c.  make any further consideration that it considers appropriate. 

The Panel's final report shall include a discussion of any arguments included in the Parties' written 
comments. 

ARTICLE 301: Final Report 

1. The Panel shall present to the Parties to the procedure and to the Board on Trade and Sustainable 
Development a final report no later than one hundred and eighty days of the date the Panel was 
established.  The  Parties  shall  release  the  final  report  to  the  public  within  fifteen  days  of  its 
presentation. 

2.  The  Parties  to  the  procedure  may,  by  mutual  agreement,  decide  to  extend  the  timeframes 
established in paragraph 1, as well as those in Articles 298, paragraph 6, and 300, paragraph 4. 

3. The Parties to the procedure shall, taking into account the report and recommendations of the 
Panel of Experts, endeavour to discuss appropriate measures to be implemented including, where 
appropriate, possible cooperation to support implementation of such measures. The Party to which 
the recommendations are addressed shall inform the Board on Trade and Sustainable Development 
as  regards  its  intentions  concerning  the  report  and  recommendations  of  the  Panel  of  Experts 
including, where appropriate, by presenting an action plan. The Board on Trade and Sustainable 
Development shall monitor the implementation of the actions that the Party has determined. 

ARTICLE 302: Cooperation and Technical Assistance on Trade and Sustainable Development 

The cooperation and technical assistance measures related to this Title are established in Title VI 
(Economic and Trade Development) of Part III of this Agreement. 

***** 

60 

 
 
 
The Trade Pillar in the EU-Central America Association Agreement 

Annex 2 – Rules of procedure of the EU Advisory Group, created 
pursuant  to  Title  VIII  (Article  294)  of  the  EU-Central  America 
Association Agreement 

Main functions and objectives of the EU Advisory Group (AG) 

The EU AG shall express its opinions, make recommendations and advise on any issue related to the 
implementation  of  the  Trade  and  Sustainable  Development  Title  of  the  EU-Central  America 
Association Agreement (AA). 

Such opinions, recommendations or advise shall be provided on its own initiative or at the request 
of the European Commission (the Commission), the Board on Trade and Sustainable Development, 
joint meetings of the EU and Central American AGs or the Panel of Experts (referred to in Articles 
297-301 of the AA). The EU AG can also take into consideration recommendations of the Civil Society 
Dialogue Forum referred to in Article 295 of the AA. 

Composition and membership of the EU AG 

The EU AG shall be composed of full members and observers. The number of full members shall be 
12,150  including  three  EESC  members  and  nine  members  representing  European  civil  society 
organisations. The number of observers shall not exceed the number of full members. 

Observers  may  participate  in  the  work  of  the  EU  AG  except  with  respect  to  voting.  Requests  for 
participation  by  potential  additional  observers  shall  be  made  to  the  AG  Chair  either  directly  or 
through  the  secretariat.  The  AG  members  will  decide  on  authorisation  for  such  organisations  to 
participate as observers. 

The members of the EU AG shall be appointed for a two-and-a-half-year term (aligned with the EESC 
mandate)151 with the possibility of renewal for individual members. 

A balanced representation of economic, social and environmental stakeholders, including among 
others,  employers  and  workers  organisations,  business  associations  and  non-governmental 
organisations  should  be ensured.  The  members of  the  EU  DAG  shall  be  divided  accordingly into 
groups – business, labour, and NGOs. Representatives of local authorities may also be included. 

If a seat occupied by an EESC member becomes vacant, a new member will be appointed by the 
EESC according to its internal procedures.  

If a seat occupied by a non-EESC member becomes vacant a new member shall be appointed by the 
EU AG based on proposal made by the Chair after consultation of a relevant sub-group, taking into 
account the need for balanced representation within the EU AG.  

In case of repeated and not justified absence of one of the organisations in meetings and work of 
the  EU  AG,  the  Chair  will  consult  the  remaining  EU  AG  members  with  regard  to  replacing  the 
organisation in question with another one, belonging to the same sub-group. 

Organisations  belonging  to  a  sub-group  may  agree  on  a  rotation  between  full  members  and 
observers at the end of each mandate. 

150   Whenever the term 'EU AG member(s)' is used, the text refers to EU AG members having the right to vote. 
151   As an exception, the first term will be of a different length to allow for alignment with the EESC mandate and the two-

and-a-half-year period will be counted from October 2015 onwards. 

61 

 
                                                             
EPRS | European Parliamentary Research Service 

Under  the  authority  of  the  Chair,  meetings  of  the  EU  AG  may  be  open  to  the  EU  civil  society 
organisations that are not members of the EU AG, in particular for specific discussions that would 
benefit from additional expertise. 

Frequency of meetings 

The EU AG shall meet at least twice per year. 

Additional meetings may be called by: 

  the Chair on its own initiative; 
  at least six members of the EU AG; 
  DG Trade; 
  the Board on Trade and Sustainable Development 

Requests for additional meetings shall be addressed to the Chair and the secretariat that will check 
with DG Trade the availability of financial means. 

Chair of the EU AG 

The Chair of the EU AG shall be elected by a simple majority of its members for a two-and-a-half-
year term (aligned with the EESC mandate).152 The AG shall select a Chair from amongst its three 
sub-groups on a rotational basis.   

The remaining two sub-groups will elect from among full members two Vice-Chairs (one from each 
sub-group) to substitute the Chair if needed and to coordinate the work of the Group together with 
the  Chair  during  the  mandate.  The  Chair  will  accomplish  their  duties  after  consultation  and  in 
agreement with the Vice-chairs. 

At least one of the members of the Presidency (Chair and two Vice-Chairs) should be member of the 
EESC. 

The Chair: 

  convenes the meetings of the EU AG; 
  proposes agenda of the meetings; 
  moderates the meetings; 
  acts as spokesperson of the EU AG in contacts with third parties. 

Secretariat 

The External Relations Secretariat within the EESC shall act as secretariat of the EU AG. The main 
tasks of the secretariat shall be to support the work of the EU AG and its Chair, to ensure publicity 
and communication of the work of the EU AG and to liaise with the European Commission, the Board 
on Trade and Sustainable Development and the Central American AGs.  

The Secretariat will prepare and send out to EU AG the minutes of the meetings. Differences of views 
expressed during the meeting will be reflected in the minutes.  

The minutes will be sent at the latest 4 weeks before the next meeting to give the members time for 
comments, and submitted for approval by the EU AG members at the following meeting.  

152   As an exception, the first term will be of a different length to allow for alignment with the EESC mandate and the two-

and-a-half-year period will be counted from October 2015 onwards. 

62 

 
                                                             
The Trade Pillar in the EU-Central America Association Agreement 

The Secretariat shall also be responsible for coordinating on the EU side the organisation of joint 
meetings  of  the  EU  and  Central  American  AGs  and  shall  facilitate  inter-sessional  contacts  and 
cooperation between them.  

Preparation of agenda for EU AG meetings 

Agendas of EU AG meetings shall be drawn up and proposed by the Chair (after consultation with 
Vice-Chairs), and sent out to the EU AG members and observers at least three weeks before the EU 
AG meeting. The EU AG members may propose points to be included in the agenda. The observers 
may propose points to be included in the agenda, acting through their sub-groups or Vice-Chairs. 
The EU AG may also take into account proposals provided by the Commission Services or by the 
Board on Trade and Sustainable Development. 

EU AG communications, recommendations and other actions 

The EU AG may address communications and recommendations related to the implementation of 
the Trade and Sustainable Development Title of the EU-Central America AA to the Board on Trade 
and Sustainable Development, the parties to the AA, to a Panel of Experts - if it has been convened 
by the Board on Trade and Sustainable Development- to the EU institutions, as well as to the Central 
American AGs and the Civil Society Dialogue Forum or any other relevant body.  

To  prepare  its  communication,  the  EU  AG  may  appoint  rapporteurs.  It  may  consult  academics, 
international  organisations,  independent  experts  or  civil  society  organisations  with  relevant 
expertise that are not members of the EU AG.  

Unless  otherwise  decided,  the  EU  AG's  communications,  opinions  and  reports  shall  be  public 
documents. They shall be available in working languages of the EU AG defined at the beginning of 
the mandate. 

The EU AG may also publish other documents related to its work that are considered by the EU AG 
to be suitable for public dissemination.  

EU DAG recommendations, communications, opinions, reports and other documents will present 
the views of the Group reached either by consensus or by majority vote. Minority positions can be 
included if representing the views of a whole sub-group, at the request of that sub-group. 

The EU AG may organise other activities which it considers relevant, such as workshops or seminars, 
including in partnership with other institutions or organisations.  

Quorum 

A quorum shall exist if more than half of the members of the EU AG are present or represented and 
if at least one member representing each sub-group is attending. The quorum will be ascertained at 
the beginning of the meeting. 

Voting procedure 

The EU AG shall strive to take decisions by consensus. In case a vote is called for, decisions will be 
taken by a simple majority. In the event of a tie, the Chair shall have a casting vote.   

One organisation can delegate its vote to another one among the members of the same sub-group. 
The list of member organisations and agreed mutual delegation of votes (for a given mandate) shall 
be annexed to these rules of procedure. 

Members wishing to delegate their vote will inform the Chair before the beginning of each meeting. 
The secretariat will distribute a list of members and observers for each meeting. 

63 

 
 
EPRS | European Parliamentary Research Service 

Relations with the European Commission and other EU institutions 

The  Commission  shall  be  systematically  invited  to  participate  in  EU  AG  meetings  with  a  view  to 
participate in discussions or to make presentations on specific subjects but shall not be involved in 
decision-making. 

Depending on the agenda, representatives of the European External Action Service or other EU and 
international institutions may be invited. 

Financing of the EU AG meetings 

The financial aspects of the operation of the EU AG (namely transport, accommodation, logistics, 
interpretation  and  catering)  will  be  agreed  by  the  European  Commission  and  the  European 
Economic and Social Committee.  

Financial aspects related to participation of the non-EESC EU AG members and observers in joint 
meetings of the EU AG and Central American AGs and in the Civil Society Dialogue Forum will be 
decided by the Commission.  

Interaction with Civil Society from Central America 

The  EU  AG  will  aim  to  hold  joint  meetings  with  the  Central  American  AGs,  thereby  providing 
framework  for  a  structured  discussion  on  implementation  of  the  Trade  and  Sustainable 
Development Title of the AA and for cooperation between the AGs in this context.  

The  EU  AG  may  also  decide  (separately  or  jointly  with  the  Central  American  AGs)  about  their 
participation and / or contribution to the Civil Society Dialogue Forum.   

Adoption and amendment of the rules of procedure of the EU AG 

These  rules  of  procedure  shall  be  adopted  either  by  consensus  or  by  simple  majority  of  EU  AG 
members. 

These rules of procedure may be amended following a proposal of one third of the members of the 
EU AG. The proposed modification will be adopted by consensus or by simple majority. 

***** 

64 

 
The  EU-Central  America  Association  Agreement  was 
signed  in  June  2012,  and  its  trade  pillar  has  been 
provisionally 
in  force  since  December  2013.  This 
evaluation  specifically  assesses  the  implementation  of 
the ‘trade and sustainable development’ (TSD) chapter 
of  the  trade  pillar  of  the  agreement,  during  the  five 
years of its operation.   

Q
A
-
0
1
-
1
8
-
8
0
9
-
E
N
N

-

the 

study 

addresses 

interests  of  the 
After  briefly  outlining  the  trade 
sustainable 
agreement, 
development,  explaining  its  legal  foundations  in  the 
Association Agreement and reviewing the conclusions 
of the  ex-ante impact assessment on the issue. It then 
focuses  on  the  monitoring  mechanisms  of  the 
Association  Agreement, 
the  European 
Commission’s  annual  reports,  Parliament’s  oversight 
work,  the  civil  society  dialogue,  and  the  results  of  the 
meetings  of  the  specialised  committee  and  annual 
Association  Committee  and  Association  Council 
meetings.  

including 

in  the 

Through  this  review  it  identifies  both  strengths  and 
shortcomings 
implementation  of  the  TSD 
chapter,  and  concludes  in  setting  out  a  number  of 
options  for  enhancing  efforts  to  support  sustainable 
development in Central America. 

This is a publication of the Ex-Post Evaluation Unit 
EPRS | European Parliamentary Research Service 

This document is prepared for, and addressed to, the Members and staff of the European 
Parliament as background material to assist them in their parliamentary work. The content of 
the document is the sole responsibility of its author(s) and any opinions expressed herein should 
not be taken to represent an official position of the Parliament. 

ISBN 978-92-846-3308-1 
doi:10.2861/341125 
QA-01-18-809-EN-N