The EU-Central America agreement enters into force

The Association Agreement between the EU and Central America entered into force on 3 April. This agreement paves the way for the EU and the six countries of Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) to take their economic and political relations to the next level.

Under the trade deal (which has been provisionally applied since 2012), total trade between the EU and Central American countries has steadily increased from €8.7 billion in 2012 to a record high of €22 billion in 2023, a huge increase of 154% . The entry into force of the agreement will further deepen this mutually beneficial relationship, creating even more opportunities for businesses and civil society on both sides.

The Association Agreement consists of three pillars: political dialogue, cooperation and trade. The trade pillar has been provisionally applied since 2012. Following ratification by all 27 Member States, provisions under the political dialogue and cooperation pillars will now also be implemented to ensure an even stronger and inclusive relationship.

The EU-Central America Association Agreement was signed in June 2012, marking a milestone in the relationship between the two regions.

The trade pillar of the agreement was already implemented in 2012. The agreement was awaiting ratification by EU member states, a necessary condition for full entry into force.

Both regions have benefited from the agreement since it was signed in 2012; EU exports to Central American countries have increased by 139%, while Central American exports to the EU have increased by a whopping 165% in the same period.

Stronger trade relations

The agreement creates a transparent and predictable environment, providing legal certainty for European operators and investors in the region.

The trade pillar of the agreement includes a dedicated chapter addressing the interrelationship between trade and social and environmental policies. This has helped the EU and Central America to work together, promote and enforce labor rights and environmental standards. As part of this title on trade and sustainable development, the agreement contains strong provisions to ensure that labor rights are upheld and environmental protection is prioritized. By holding trading partners to international standards, the agreement helps promote sustainable and responsible trade practices.

The EU and Central America have identified joint priorities on trade and sustainable development, underpinned by numerous EU-funded cooperation projects on issues such as decent work, responsible business conduct and deforestation-free supply chains. The entry into force of the political and cooperation pillars will complement the related actions.

Furthermore, the agreement established a multi-level consultation system to facilitate open discussions on specific trade issues covered by the different parts of the trade pillar. The scope of the consultation system will be expanded after the entry into force of the agreement as the political and cooperation chapters come into force, allowing for structured dialogue in those areas.