on the negotiating mandate for an association agreement between the European Union and its Member States, of the one part, and the countries of Central America, of the other part

(2006/2222(INI))

The European Parliament,

–   having regard to the proposal for a recommendation to the Council by Willy Meyer Pleite on behalf of the GUE/NGL Group, on the guidelines for the negotiation of an Association Agreement between the European Union and Central America (B6-0417/2006),

–   having regard to paragraph 31 of the Vienna Declaration, which contains the decision taken by the European Union and Central America at the Fourth European Union – Latin America and Caribbean Summit, held in Vienna on 12 May 2006, to open negotiations on an Association Agreement, including the establishment of a free-trade area,

–   having regard to Title V of the Treaty on European Union,

–   having regard to its resolution of 15 November 2001 on a global partnership and a common strategy for relations between the European Union and Latin America(1),

–   having regard to its resolution of 27 April 2006 on a stronger partnership between the European Union and Latin America(2),

–   having regard to Rule 114(3) and Rule 83(5) of its Rules of Procedure,

–   having regard to the report of the Committee on Foreign Affairs and the opinions of the Committee on Development and the Committee on International Trade (A6-0026/2007),

A. whereas respect for democracy, the rule of law and full enjoyment of human rights by all individuals, as well as full respect for the civil and political rights of the citizens of both regions, are the basic conditions for the development of the Association between the parties, as was decided in Vienna,

B.  whereas a guarantee of full enjoyment of fundamental rights for all citizens, particularly those who are disadvantaged, such as those belonging to indigenous peoples, and boosting their participation in social life and politics, are fundamental elements of the Agreement,

C. whereas the guidelines for negotiation of the future agreement on economic association, political consensus and cooperation must accord with the parties’ wish, as expressed in paragraph 31 of the Vienna Declaration, to conclude a comprehensive association agreement – in other words, one which restates the firm belief that the relationship with Central America seeks to establish free trade, and implies a political and economic partnership with the region and its various countries which takes into account the asymmetry and inequalities between the two regions and amongst the various Central American countries, and which therefore includes key provisions on cooperation, development and social cohesion,

D. whereas the creation of the Euro-Latin American Parliamentary Assembly (EuroLat) has been a decisive step in reinforcing the democratic legitimacy and political dimension of relations between the EU and Latin America, and particularly between the EU and Central America, and whereas this Assembly will be a permanent forum for political dialogue between the two regions,

E.  whereas the guidelines for negotiation of the future agreement must take account of the economic, political and social circumstances which exist in most Central American countries, and the differences in development between the two regions, as well as the nature of economic relations in Central America: regional trade concentrated on a small number of countries, a high level of dependence on exports of traditional products and low levels of foreign direct investment by the EU in the region, and so on,

1.  Addresses the following recommendations to the Council:

     (a) expressly include in the negotiating mandate the legal basis on which the new association agreement is to be negotiated; that basis should be Article 310 of the EC Treaty, in conjunction with Article 300(2), first subparagraph, first sentence and Article 300(3), second subparagraph;

     (b) specify in the negotiating mandate that the objective of the Association Agreement between the EU and Central American includes the gradual liberalisation of trade in conditions of fairness and mutual benefit based on complementarity and solidarity, and political dialogue and cooperation, as well as consolidating democracy and the rule of law and full respect for human, civil and political rights, social cohesion, sustainable human development, and economic and social rights, not forgetting the cultural and environmental aspects of such rights;

     (c) provide in the negotiating guidelines for the mechanisms required to ensure that the terms of the future agreement are in perfect accordance with the EU Treaty mandate, pursuant to which the contribution to sustainable human development, as defined in the United Nations Development Programme 1996, promotion of international cooperation, the development and consolidation of democracy, and respect for human rights are basic objectives of the Union;

     (d) identify in the negotiating guidelines, taking account of the vulnerability that is characteristic of Central American socio-economic, environmental and democratic development, the central issues on which the agenda and political dialogue will focus, including the updating of aims and objectives in such issues as democratic governance, combating terrorism, the maintenance of peace and security and conflict management; include further new issues such as the reduction of poverty, support for social cohesion, migration and human exchanges, the fight against crime and especially violent crime with transnational connections (trafficking in drugs, arms and people, and the activities of organised gangs such as ‘las Maras’) and so on; and propose specific action for adopting common positions in international fora and at the United Nations in such a way as to achieve a genuine international political consensus between the two regions;

     (e) provide for the appointment of members of the European Union – Central America Joint Parliamentary Committee, which will be set up under the new association agreement, from among Members of the European Parliament and the Central American Parliament, from the national parliaments not yet belonging to any regional chamber and from Euro-Lat, as a practical expression of support for the regional integration process in Central American and for the EU-LAC Bi-regional Strategic Partnership;

     (f)  include specific references in the negotiating guidelines to the appropriate structured involvement of civil society in the new political dialogue, by proposing the holding of periodic conferences with representatives of civil society in both the EU and Central America, granting those representatives observer status at interministerial meetings, and taking action to facilitate the representatives’ active involvement in the relevant sectoral forums, committees and subcommittees at all stages in the discussion and negotiation of and follow-up to the process;

     (g) also allocate a key role to supporting the fight against impunity and corruption, and provide actions and programmes to strengthen the democratic institutions in Central America;

(h) provide in the negotiating guidelines for additional support from the EU for Central American integration and the reform and consolidation of its legislative framework and its institutions – including the Secretariat, Central American Parliament and Central American Court of Justice –, with the aim of improving their effectiveness, representativeness and legitimacy, in particular as regards the customs union, the free movement of persons, common policies, harmonising legislation and creating their own funding mechanism;

(i) include the aims of supporting regional integration – in particular, the integration of physical, transport, communications and energy infrastructure – among the aims of the forthcoming mandate for the European Investment Bank’s operation in Latin America, so that the Bank’s activity effectively complements the new agreement;

(j ) work with the countries of Central America to support their efforts to counter the illegal production and trade in drugs; part of those activities should involve extending aid programmes to farmers for introducing alternative crops, the marketing of which the EU could help effectively to ensure;

(k) ensure the inclusion and application of the democracy clause in the guidelines for the Association Agreement and establish mechanisms to safeguard the continuity of the system of employment and environmental incentives under the scheme of generalised preferences (GSP)(3), including the GSP Plus scheme, by means of clauses of a social or environmental nature; make express reference to the practical mechanisms that will enable them to be applied, and provide in particular for an annual report to Parliament on the follow-up carried out by the Commission in this area;

(l) take into account the fact that the GSP, including GSP Plus, is an autonomous EU regime benefiting the Central American countries on the basis of their levels of development;

(m) take account, with regard to the provisions on development cooperation in the new agreement, of the particular features of the Central American region and achievement of the Millennium Development Goals (MDGs) in the region, and start from the premise that the training of human resources and cultural and educational exchange are a priority for overcoming poverty in the region, so as to give special attention to education, research, science and technology and culture, also promoting an increase in exchanges in these areas;

(n) point out that the Association Agreement between the EU and Central America should be based on achieving the MDGs and also on the fight to eradicate poverty and reduce inequalities, which the EU has set as priorities for cooperation;

(o) ensure that cooperation and the economic instruments available to the EU will also be used to promote and preserve the environment in the Central American region;

(p) pay particular attention to tourism projects in Central America with a view to ensuring that they are developed sustainably, given that tourism provides an incentive for economic growth;

(q) also promote three-way and bi-regional cooperation – especially with the Caribbean – and the policy of South-South cooperation, once the association agreement has entered into force;

(r) promote a suitable support framework for small and medium-sized enterprises (SMEs) and their creation as an essential element for economic development, job creation and social wellbeing; consider what measures could be implemented to combat unemployment in SMEs (including fiscal measures) and develop support programmes for these enterprises in the area of research;

(s) support small-scale producers and SMEs in general, and urges that investment be made in small businesses since the opening-up of the European markets will essentially benefit larger-scale producers who are able to satisfy European sanitary and phytosanitary standards;

(t) conclude a comprehensive and balanced Association Agreement based on three pillars: a political and institutional chapter reinforcing democratic dialogue and political cooperation, a cooperation chapter promoting sustainable economic and social development, and a trade chapter establishing an advanced FTA with a broad agenda including, in addition to the gradual and reciprocal liberalisation of trade in goods and services, investment, public procurement, the protection of intellectual property rights, cooperation regarding competition and trade defence instruments, trade facilitation and an effective dispute settlement mechanism;

(u) provide in the negotiating guidelines for gradual and reciprocal trade liberalisation, progressive access to European markets for Central American products under competitive terms and conditions, so as to prevent the agreement from aggravating existing asymmetries; accordingly provide for special, variable and flexible treatment as regards the timetable that is established, depending on the commitments and improvements in the competitiveness achieved by the Central American countries, including EU support measures to promote changes in the production sector and the competitiveness of the Central American economies, such as technology transfer, the inclusion of requirements for home-country content in rules on origin, and the drawing up of cooperation and technical-assistance programmes, while at the same time promoting a stable legal environment and clear ground rules to guarantee the security of the parties’ investments and economic and trade relations;

(v) regard an EU-CA free trade agreement (FTA) as a priority strategic objective for the EU’s external relations in an international context characterised by increased interdependence, economic growth, the emergence of new economic powers, the expansion of US bilateral trade agreements, including CAFTA, and a series of global challenges which transcend national borders;

(w) join Parliament in asking the Commission to launch, as a matter of urgency, a trade sustainability impact assessment, which should be a preliminary step in the negotiation of a trade agreement, and to request that the Commission informs Parliament about initiatives taken in this regard;

(x) in particular, do not include any express or tacit subordination making conclusion of the future EU – Central America Agreement conditional on prior completion of the round of negotiations at the World Trade Organization (WTO), without prejudice to incorporating in the agreement in due course the results of the Doha working programme that are compatible with the ultimate aim of the EU – Central America Association; all this being a demonstration of tangible and decisive support for the regional integration process in Central America;

(y) commit to the establishment of an FTA in full compliance with the new WTO Transparency Mechanism and the rights and obligations arising out of the WTO, particularly Article XXIV of GATT and Article V of the General Agreement on Trade in Services (GATS), thus contributing to the strengthening of the multilateral trading system;

(z) negotiate a single and indivisible trade agreement which goes beyond the negotiating parties’ present and future WTO obligations and establishes over a transition period compatible with WTO requirements a FTA and which, without excluding any sector, takes account, in the least restrictive fashion possible, of the development dimension and the specific sensitivity of certain products;

(aa) take into account, as a very important step for the successful development of the negotiations, that Central America has endeavoured to fulfil its commitment, confirmed at the above mentioned Vienna Summit, to implement as planned the decisions taken by CA Heads of State on 9 March 2006 in Panama which aim at achieving an effective customs union, as well as to seek ratification of the signing of the Central American Treaty on Investment and Trade in Services and to develop a jurisdictional mechanism that could secure enforcement of regional economic legislation throughout the region;

(ab) take carefully into account that the joint EU-Central American assessment of Central America’s economic integration highlights a number of important specific conclusions to be drawn at the operational level (as regards the institutional framework for economic integration, the customs union, technical barriers to trade, the rules on sanitary and phytosanitary measures, regional liberalisation of services and investment, public procurement, intellectual property rights and the geographic information system (GIS), competition, and the trade defence instrument) so as to strengthen, develop, and complete the Central American customs union and the common internal market, which are essential in order to negotiate and implement a genuine FTA encompassing the two regions;

(ac) take into account that consolidating and strengthening the Central American common market, first and foremost by completing the customs union and developing the common market, among other things by establishing an external trade policy and genuinely free movement of imported goods, will serve to lower the barriers for economic operators and boost trade and investment flows between the two regions;

(ad) offer meaningful new opportunities for market access in agriculture, which is a crucial sector for Central America’s development, independently from progress made in other areas, such as access to the market in non-agricultural products (NAMA) and in services, as well as on agricultural issues other than market access;

(ae) ensure a far-reaching and balanced outcome to the NAMA negotiations so as to allow for new and real opportunities for market access across the whole trade spectrum, subject to the appropriate degree of flexibility regarding the timetable for the elimination of tariffs by Central America and also to enable fisheries-related activities to continue and expand;

(af) take carefully into account that fishing activity is an important and sensitive matter both for the EU and for Central America, given its contribution to economic development and job creation in that region, and the need to maintain fish stocks at sustainable levels through responsible fishing;

(ag) take into account the importance of guaranteeing universal access to essential services and of national rights to regulate, and therefore to proceed cautiously in negotiations on the liberalisation of trade in services, in conformity with Article V of GATS in order to ensure real improvements regarding the liberalisation commitments thus far agreed and applied and the need for a clear and predictable regulatory framework; to abstain from making offers or accepting requests in the areas of public health and education;

(ah) take into account the ever-increasing potential of the tourism sector for investment and economic development in the Central American countries, and the importance of promoting tourism between the two regions;

(ai) include as a general provision the need for both the EU and Latin America to seek, as a matter of principle, the eventual convergence of the various agreements in force or under negotiation between the two regions;

(aj) take into account that the dispute settlement procedures provided for in comparable existing agreements concluded by the Community and non-member countries are not effectively utilised; therefore request the Commission to put forward new proposals with a view to devising a more effective dispute settlement instrument to issue rulings on conflicts arising in any of the individual sectors to be covered by the FTA;

(ak) ensure that the Commission provides Parliament with exhaustive (and if necessary confidential) information on the draft negotiating guidelines as well as on the negotiating guidelines finally adopted;

2.  Instructs its President to forward this recommendation to the Council and, for information, to the Commission and the governments of the EU Member States.

(1) OJ C 140 E, 13.6.2002, p. 569. (2) Texts Adopted, P6_TA(2006)0155. (3) Council Regulation (EC) No 980/2005 of 27 June 2005 applying a scheme of generalised tariff preferences (OJ L 169, 30.6.2005, p. 1).

1. After having played a decisive role in the process of peace and democratisation of the Central American isthmus in the 1980s, there is no doubt that the EU’s political influence in the region is now clearly declining. This is all the more regrettable since the EU’s contribution to the gestation of the peace and democratisation process in the area during that decade and the progress of the San Jose ministerial dialogue launched in September 1984 were at the time one of the very few successes of what was known as European Political Cooperation, the antecedent of the current Common Foreign and Security Policy, and one of the few cases in which the EU maintained truly autonomous positions in relation to those held by the United States, at that time under the Reagan administration.

2. The EU’s role as a trading partner with Central America has also diminished, from representing 24% of Central American exports in 1990 to 13% in 2001. This despite the unilateral preferential treatment allowed by the EU through its Generalised System of Preferences. The reasons that are usually cited for this are a lack of knowledge on how to apply the rules of origin and obtain certificates, and the lack of competitiveness of Central American enterprises. In the other direction, trade with Central America hardly amounts to 0.6 % of EU exports.

3. Current relations between the European Union and the countries of Central America are conducted in the context of the limited Agreement on Political Dialogue and Cooperation signed in Rome in December 2003, with the basic objective of creating the conditions to negotiate a viable and mutually beneficial association agreement including a free trade agreement. The opening of negotiations on an association agreement, which Parliament had already proposed at the second and third EU-LAC summits in 2002 (Madrid) and 2004 (Guadalajara, Mexico) was finally decided at the fourth summit in Vienna.

4. Paragraph 31 of the Vienna decoration contains the decision of the parties to open negotiations on an association agreement, including the establishment of a free trade area. Central America thus undertook to apply the decisions adopted by the Heads of Central American States on 9 March 2006 in Panama, to seek ratification of the Central American Treaty on investments and services and to develop an enforcement mechanism to ensure that regional economic legislation would apply to the whole region. Panama will also participate in the process as soon as it has issued a formal decision on membership of the Central American economic integration process (SIECA).

Central America: much more than free trade

5. In the light of the new association agreement, your rapporteur considers that there is a more urgent need than ever to consolidate democratic processes in Central America, to reinforce the effectiveness and resources of democratic administrations and institutions, particularly the judiciary and its independence, to use all the instruments of the rule of law to tackle violence, corruption, impunity and human rights infringements, and to improve social cohesion and living conditions for all the region’s inhabitants. In other words, the new association agreement gives real responsibilities to both parties. For the EU moreover, this constitutes a genuine moral responsibility. It is now a matter of helping to consolidate the expectations of peace and justice awakened in the region’s countries and peoples, and ensuring the final success of a series of support measures which, from the EU point of view, far from culminating in the holding of the first electoral processes, also required it to give a real impetus to improving the economic and social conditions of Central American society and its citizens. The Central American countries need to uphold and fulfil their undertakings with regard to peacemaking, democratisation and integration, implement all the reforms that were decided, and advance towards real integration, making it possible to enjoy all possible political, economic and social advantages of the new association agreement. This should make a decisive contribution to achieving balanced and coherent relations between the EU and Central America, based on all the legitimate interests of both parties.

6. The future association agreement cannot overlook the serious economic, political and social deficit in most Central American countries, nor ignore the differences in development between the two regions, or the nature of their economic relations: regional trade concentrated on a small number of countries, high dependency on exports of traditional products and low levels of EU DFI in the region (hardly a tenth of the amount of North American investment).

7. In view of the existing imbalances between both partners, there is a fear that the future association agreement could be limited to a simple free trade agreement, which would further exacerbate the asymmetries and imbalances between the Central American countries. This is certainly not what the parties want, since in Paragraph 31 of the Vienna Declaration they expressly stated the common objective of concluding a comprehensive association agreement and hoped that negotiations would make rapid progress so that the future association agreement could take effect as soon as possible.

8. To reaffirm the conviction that the European Union is not proposing only to negotiate a treaty similar to the CAFTA, it is essential to base the future association agreement on the common interest resulting from a political and economic association with the region and its separate countries, taking account of the existing asymmetry and inequalities between the two regions and amongst and within the various Central American countries, and it should also include key provisions on development cooperation.

9. Conclusion of an association agreement between such disparate partners could not be based from the outset on absolute reciprocity of access to markets, since it is obvious that the production network of the SICA countries would not withstand the formidable free competition which would result from absolute reciprocity. Instead, setting sufficiently long transitional periods, establishing exceptions for certain sensitive products and strong EU support for changing the region’s production sector would undoubtedly produce beneficial results for both sides. Such a solution would contribute to the Central American economy and help it to develop, diversify and gradually and truly integrate itself into the international economy as a whole.

The main challenges for the future association agreement

10. The first challenge concerns the weak economic growth of the Central American economies. In recent years these countries’ per capita growth has hardly reached an average of 0.6% (according to ECLAC data in 2005), which is totally insufficient to reach the Millennium Development Goals.

11. In fact, poverty levels in Central America continue as high as in the 1990s, and inequalities have increased. Thus, poverty and inequality constitute a clear threat to the consolidation of democracy. Although during the last 15 years democratic regimes have been built up through free electoral processes, the low turnout of voters, discredited public institutions and political parties, the prevailing corruption and impunity and the low incidence of citizenship and civil society in the political and social life of most of the countries do not make it possible to come to an optimistic conclusion.

12. Because of their limited size, small Central American economies face serious challenges when it comes to integration into international trade. Most of the countries in the region are not in a position to enjoy the opportunities offered by open markets and attracting investments and at the same time to withstand the possible risks. This is due to their limited internal market and the weak development of their economies, which affects the competitiveness of the region’s countries; it is difficult for their enterprises to make economies of scale, which makes them more vulnerable to market fluctuations and foreign investment, and in addition makes internal change expensive.

13. To achieve gradual access to European markets under competitive conditions, without the future agreement exacerbating existing imbalances, is a real challenge to the trade part of the association agreement. On the European side, it requires special, variable and flexible treatment as regards the time limit to be established, depending on the commitments and improvements in the competitiveness achieved by the Central American countries, as a result of EU support measures such as technology transfer, the inclusion of home-country content requirements in rules of origin and the creation of cooperation and technical assistance programmes.

14. It is important to ensure that there is a positive link between the free trade envisaged in the association agreement and the objectives of sustainable development and social cohesion that underlie the EU’s action in the region. Recognition of imbalances through special and variable treatment, transitional periods, exceptions and other trade instruments as well as support for changes in the production sector and competitiveness can make a contribution. But it is also necessary to guarantee minimum employment and environmental standards, as envisaged in the current GSP+. It is important to ensure that this system of incentives that has proved useful is permanently enshrined in the association agreement and that effective mechanisms are set up to ensure that it is applied.

Achievements and challenges of the regional integration process in Central America

15. The current state of the process of regional integration is characterised by weak regional institutions, with economic integration focused more on the economic consequences of globalisation and the expansion of regional markets than on strong institutions and the development of common policies. The evidence usually cited is the region’s dependence on the United States, exacerbated in the light of the CAFTA, which facilitates trade and US investment in Central America without necessarily strengthening regional integration; worse still, regional integration will have to adapt to the new legislation and provisions of the CAFTA, with the risk that integration will become irrelevant. It is more vital than ever to ensure that integration plays a relevant role through common policies which make it possible to improve competitiveness, production and employment and in this way to promote sustainable development in the region.

16. The process of integration in Central America has made substantial progress with the creation of the Central American Integration System (SICA) by the Tegucigalpa Protocol in December 1991, which came into force on 26 March 1996, emphasised the political dimension of the process (since SICA establishes an explicit link between peace, democracy, the rule of law, economic and social development and regional integration) and went further than the strictly economic considerations of previous decades. The establishment of Central American integration bodies and institutions such as the SICA Secretariat, PARLACEN and the Central American Court of Justice were steps in the right direction, but what is certain is that Central American integration still tends to be an intergovernmental cooperation scheme that does not generate binding community laws but political agreements, and their final effectiveness depends on the decision of the relevant governments whether to apply them or not.

17. Although recently major advances have been made with regard to the Customs Union, what is certain is that this progress is threatened by the lack of a common trade policy, as has been shown by the signature of trade agreements with third countries – free trade agreements – in which each Central American country has set separate tariffs.

18. Central America needs a new focus on regional integration that would be truly supranational, more effective, representative and legitimate, more in line with social and geographical reality, focused on improving regional economic conditions and increasing social cohesion, and with greater capacities to allow the region to tackle the challenge presented by both the CAF and the association agreement with the EU.

EU development cooperation with Central America

19. The Commission is the main donor of non-reimbursable subsidies in Central America: the budget for the 2002-2006 period was €563.2 million, to which should be added €74.5 million from the memorandum of understanding between the Commission and the SICA Secretariat, and another €250 million mobilised after hurricane Mitch in the Central American reconstruction programme. Another €47 million was mobilised for the earthquake which later devastated El Salvador, and some further tens of millions of euro have been channelled through various different programmes and horizontal budget lines.

20. The least that can be said is that the new EU cooperation strategy for Central America in the period 2007 - 2013 represents a clear contradiction between the challenges identified in the region (poor quality of democracy, weak social cohesion, environmental vulnerability, weakness of the SICA), the main objective of the strategy (support for regional integration to prepare for the future association agreement) and the resources made available (new model of cooperation proposed through budget support in countries with weak democratic institutions and poor transparency, with a consequent risk that funds will be misappropriated).

21. It is therefore to be hoped that EU cooperation with Central America will come to constitute one of the fundamental pillars for the future association agreement, thus contributing to the genuine development of the Central American isthmus. The region needs the EU to play a more leading role in the political stability of Central American countries, democratic institutions and the protection of fundamental rights, as ways of ensuring that the new Commission budgetary support policy contributes directly towards harmonising aid to the various countries with the Millennium Development Goals and does not just serve the countries as an instrument of political legitimacy. Specifically, combating impunity and corruption and the programmes and measures intended to strengthen democratic institutions must in this respect play a key role in development cooperation by the EU.

4.7.2006

PROPOSAL FOR A RECOMMENDATION TO THE COUNCIL (B6-0417/2006)

pursuant to Rule 114(1) of the Rules of Procedure

by Willy Meyer Pleite

on behalf of the GUE/NGL Group

on the guidelines for the negotiation of an Association Agreement between the European Union and Central America

The European Parliament,

–    having regard to paragraph 31 of the Vienna Declaration, which contains the decision taken by the European Union and Central America at the Fourth EU-LAC Summit to open negotiations on an Association Agreement, including the establishment of a free-trade area,

–    having regard to Title V of the Treaty on European Union.

–    having regard to Rule 114(1), in conjunction with Rule 85, of its Rules of Procedure,

A.   whereas the establishment of democracy and constitutional government, the full enjoyment of human rights by all individuals (including the rights and the fundamental freedoms of indigenous peoples), the protection of those who uphold human rights and the elimination of impunity must constitute basic conditions for the development of the Association between the parties, as was decided in Vienna;

B.   whereas the guidelines for the negotiation of the future Agreement must accord with the parties’ wish (as expressed in paragraph 31 of the Vienna Declaration) to conclude a comprehensive Association Agreement - in other words, one which restates the firm belief that Central America is much more than free trade and that the European Union is proposing not to negotiate a purely commercial agreement similar to the CAFTA but, rather, to establish a political and economic partnership with the region and its constituent countries which takes into account the asymmetry and the inequalities between the two regions and amongst the various Central American countries, and which therefore includes key provisions on cooperation and development;

C.   whereas the guidelines for the negotiation of the future Agreement must ignore neither the serious social, economic and political deficit which exists in most Central American countries, nor the differences in development between the two regions, nor the nature of economic relations in Central America: regional trade concentrated on a small number of countries, a high level of dependence on exports of traditional products and low levels of EU FDI in the region, and so on;

1.   Addresses the following recommendations to the Council:

(a)  that the negotiating mandate should expressly include the legal base upon which the new Association Agreement is to be negotiated; that base should be Article 310 of the Treaty establishing the European Community, in conjunction with the first sentence of the first paragraph of Article 300(2) and the second paragraph of Article 300(3);

(b) that the negotiating guidelines should contain provision for the mechanisms required to ensure that the terms of the future Agreement are in perfect accordance with the EU Treaty mandate, pursuant to which the promotion of international cooperation, the development and consolidation of democracy and constitutional government and the upholding of human rights are basic CFSP objectives;

(c) that the negotiating guidelines should include guidance concerning the best way of cooperating closely and jointly in order to promote effective multilateralism and increase the UN’s ability to maintain and consolidate peace, and of jointly addressing the threats to peace and security (including the proliferation of weapons of mass destruction and terrorism) within a multilateral framework, as was decided in Vienna;

(d) that the negotiating guidelines should provide for progressive access to European markets for Central American products under competitive terms and conditions, so as to prevent the Agreement from aggravating existing asymmetries; that the guidelines should therefore provide for special, variable and flexible treatment as regards the timetable to be established, on the basis of the commitments and the improvements in the competitiveness achieved by the Central American countries as a result of EU support measures such as technology transfer, the inclusion of requirements for home-country content in rules on origin, and the drawing up of cooperation and technical-assistance programmes;

(e) that in order to ensure that the inclusion in the Association Agreement of the democracy clause or other social or environmental clauses is more than just an expression of good intentions, the new negotiating directives should refer specifically to the practical means which will enable such clauses to be invoked and should provide in particular for an annual report to be submitted to the European Parliament on the Commission’s monitoring activities in this area;

(f)  that specific references should be included to the structured involvement of civil society in the new political dialogue through the holding of periodic conferences with representatives of civil society in both the EU and Central America, the granting to those representatives of observer status at interministerial meetings and the taking of action to facilitate the representatives’ active involvement in appropriate sectoral forums, committees and subcommittees at all stages in the discussion, negotiation and monitoring of the process;

(g) that the Commission should provide Parliament with exhaustive (and if necessary confidential) information concerning its recommendations as regards the negotiating mandate;

2.  Instructs its President to forward this recommendation to the Council and, for information, to the Commission, and also to the governments of the EU Member States.

The Committee on International Trade calls on the Committee on Foreign Affairs, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

A  whereas, against the backdrop of the competitive pressures of globalisation, regional integration and bi-regional trade and investment can stimulate economic growth, development and employment, effectively contributing to the integration of the developing countries into the world economy,

B.  whereas, unlike the CAFTA negotiated bilaterally between the US and the Central America countries, the EU and Central America (CA) are proposing to form a global strategic association that goes beyond strictly commercial aspects to include wide-ranging cooperation and political dialogue,

C. whereas the conclusion and the successful implementation of the association agreements between the EU and Mexico and the EU and Chile highlight the strategic importance of, and the economic, political, and social interests involved in, bi-regional relations between the EU and Latin America under association agreements providing for free trade areas,

D. whereas the advent of an EU-CA Association Agreement is a key element of progress in bi-regional integration, and whereas the foundations of such an agreement are the special cultural and historical ties and the mutual commitment to promoting and strengthening shared values such as respect for human rights, democracy, economic and social cohesion, peace, and stability,

E.  whereas the future Association Agreement between the EU and the Central American countries must help to boost economic growth and reduce poverty, and seek to attain the Millennium Development Goals, especially those linked to poverty reduction, fair and equitable redistribution of wealth, the creation of stable jobs based on high-quality employment, and the social inclusion of marginalised groups,

F.  whereas the EU and CA should, in the framework of the Association Agreement and the wider framework of world governance, agree to promote international and multilateral standards on commercial, social and environmental issues,

G. whereas the Central American economies depend greatly on the agricultural sector and whereas the Association Agreement should therefore take into consideration the considerable socio-economic impact of its agricultural provisions both in terms of support for CA’s economic development and as regards EU products,

H. whereas a Free Trade Area (FTA) with the EU would be important for the consolidation of CA as a common market, a customs union, and an area undergoing a comprehensive integration process,

I.   whereas an EU-CA Free Trade Area on its own will not serve to generate economic growth if it is not complemented with the necessary support for development, especially of small and medium-sized enterprises, enabling every opportunity to be seized,

J.   whereas it is to be welcomed that the EU and CA decided at the fourth EU-Latin American Countries Vienna Summit of 12 May 2006 to launch negotiations for an Association Agreement, including the establishment of a Free Trade Area, on the basis of the common strategic objectives of the Guadalajara Declaration and taking into account the positive outcome of the joint assessment exercise on regional economic integration carried out with CA;

K. whereas the EU is the largest donor of development aid to CA and the only one to have laid down a cooperation strategy aimed at strengthening regional integration,

Addresses to the Council the following recommendations concerning the directives for the negotiation, within the framework of the prospective Association Agreement, of a Free Trade Area between the European Community and the countries of Central America:

As regards the negotiation of a FTA with Central America

1.  to regard an EU-CA FTA as a priority strategic objective for the EU’s external relations in an international context characterised by increased interdependence, economic growth, the emergence of new economic powers, the expansion of US bilateral trade agreements, including CAFTA, and a series of global challenges which transcend national borders;

2.  to take into account the fact that GSP, including GSP Plus, is an autonomous EU regime benefiting the CA countries on the basis of their levels of development;

3.  to conclude a comprehensive and balanced Association Agreement with CA based on three pillars: a political and institutional chapter reinforcing democratic dialogue and political cooperation, a cooperation chapter promoting sustainable economic and social development, and a trade chapter establishing an advanced FTA with a broad agenda including, in addition to the gradual and reciprocal liberalisation of trade in goods and services, investment, public procurement, the protection of intellectual property rights, cooperation regarding competition and trade defence instruments, trade facilitation and an effective dispute settlement mechanism;

4.  to join Parliament in asking the Commission to launch, as a matter of urgency, a trade SIA (Sustainability Impact Assessment), which should be a preliminary step in the negotiation of a trade agreement, and to request that the Commission informs Parliament about initiatives taken in this regard;

Principles, scope and relationship to the WTO

5.  to request that both the Council and the Commission ensure a negotiation process that is inclusive, effective and transparent and can count from the beginning on the broadest participation of stakeholders, in particular the social partners and civil society in all countries concerned;

6.  to commit to the establishment of an FTA in full compliance with the new WTO Transparency Mechanism and the rights and obligations arising out of the WTO, particularly Article XXIV of GATT and Article V of GATS, thus contributing to the strengthening of the multilateral trading system;

7.  to negotiate a single and indivisible trade agreement which goes beyond the negotiating parties’ present and future WTO obligations and establishes over a transition period compatible with WTO requirements a FTA and which, without excluding any sector, takes account, in the least restrictive fashion possible, of the development dimension and the specific sensitivity of certain products;

Special and differential treatment

8.  to effectively recognise the principles of "asymmetry in the levels of development", "special and differential treatment" and "less than full reciprocity" and, therefore, to ensure that the FTA balances the concessions in accordance with the levels of development and sectoral competitiveness of the two regions;

Human Rights and Democracy Clause

9.  to include the standard clause on the respect for the general objective of developing and consolidating democracy and the rule of law and on respect for human rights and fundamental freedoms; to provide, in this regard, for specific measures in the area of social and civil rights and for specific implementation arrangements for the democratic clause along the lines of the GSP Plus ‘special incentive arrangement’ as laid down in Council Regulation (EC) No 980/2005 of 27 June 2005 applying a scheme of generalised tariff preferences(1);

GSP

10. to take into account the fact that the Generalised System of Preferences (GSP), including GSP Plus, is an autonomous EU regime benefiting the CA countries on the basis of their levels of development and that the EU-CA FTA therefore must provide for such preferences to be maintained outside of any requirement for CA countries to grant reciprocity in tariff reductions;

11. to include a clause in the Association Agreement requiring compliance with the labour law and environmental conventions covered by GSP Plus, so as to provide continuing incentives for their observance and actual enforcement in CA countries; to that end, to lay down effective oversight arrangements and a requirement for the Commission to report annually to Parliament on its enforcement monitoring;

CA economic regional integration

12. to take into account, as a very important step for the successful development of the negotiations, that CA has endeavoured to fulfil its commitment, confirmed at the above mentioned Vienna Summit, to implement as planned the decisions taken by CA Heads of State on 9 March 2006 in Panama which aim at achieving an effective customs union, as well as to seek ratification of the CA Treaty on investment and services and to develop a jurisdictional mechanism that could secure enforcement of regional economic legislation throughout the region;

13. to take carefully into account that the joint EU-Central American assessment of Central America’s economic integration highlights a number of important specific conclusions to be drawn at the operational level (as regards the institutional framework for economic integration, the customs union, technical barriers to trade, the rules on sanitary and phytosanitary (SPS) measures, regional liberalisation of services and investment, public procurement, intellectual property rights and the geographic information system (GIS), competition, and the trade defence instrument) so as to strengthen, develop, and complete the Central American customs union and the common internal market, which are essential in order to negotiate and implement a genuine FTA encompassing the two regions;

14. to take into account that consolidating and strengthening the Central American common market, first and foremost by completing the customs union and developing the common market, among other things by establishing an external trade policy and genuinely free movement of imported goods, will serve to lower the barriers for economic operators and boost trade and investment flows between the two regions;

Agriculture

15. to offer meaningful new opportunities for market access in agriculture, which is a crucial sector for CA’s development independently from progress made in other areas, such as access to the market in non-agricultural products (NAMA) and in services, as well as on agricultural issues other than market access;

NAMA

16. to ensure a far-reaching and balanced outcome to the NAMA negotiations so as to allow for new and real opportunities for market access across the whole trade spectrum, subject to the appropriate degree of flexibility regarding the timetable for the elimination of tariffs by CA and also to enable fisheries-related activities to continue and expand;

17. to take carefully into account that fishing activity is an important and sensitive matter both for the EU and for CA, given its contribution to economic development and job creation in that region, and to maintain fish stocks at sustainable levels through responsible fishing;

Services

18. to take into account the importance of guaranteeing universal access to essential services and of national rights to regulate, and therefore to proceed cautiously in negotiations on the liberalisation of trade in services, in conformity with Article V of GATS in order to ensure real improvements regarding the liberalisation commitments thus far agreed and applied and the need for a clear and predictable regulatory framework; to abstain from making offers or accepting requests in the areas of public health and education;

19. to take into account the ever increasing potential of the tourism sector for investment and economic development in the Central American countries, and the importance of promoting tourism between the two regions;

Investment

20. to make sure that new FTAs to be negotiated by the EU with other countries and regions, including CA, include, in conformity with the EC Treaty and the declaration of the European Council on guiding principles for sustainable development, a "non-lowering of standards clause" that discourages and prevents foreign direct investment leading to a lowering of domestic environmental, labour or health and safety legislation, norms and standards;

21. to lay down arrangements requiring companies based in CA to show social responsibility within the wider framework of good governance;

Rules of origin

22. to make sure that the rules of origin to be negotiated with CA are transparent, simple to understand and apply, adapted to the level of development and degree of industrialisation of the countries concerned and based on criteria which are tailored to the features of each product;

Trade facilitation and standards

23. to include a chapter in the Agreement aimed at facilitating trade by simplifying and rationalising import procedures and removing the differences in terms of standardisation and conformity assessment, and as regards sanitary and phytosanitary measures, since these aspects would all make for better access for both regions to the markets concerned;

24. to carefully consider the need to press determinedly ahead with the harmonisation of accounting and auditing standards with a view to boosting trade and investment;

Intellectual property

25. to provide in the FTA between the EU and CA for measures guaranteeing the necessary effective protection of intellectual and commercial property rights, including protection against counterfeiting and piracy, in accordance with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); in this connection, to take account of the fact that no TRIPS+ agreement should serve to rule out the public health guarantees accorded to WTO members under the TRIPS Agreement, as this would limit access to affordable medicines in developing countries;

Public procurement

26. to take into account that, since no Central American country is party to a multilateral public procurement agreement, concluded within the WTO, provisions on public procurement need to be included in the EU-CA FTA in order to enable both regions to gradually gain genuine access to the respective procurement markets in a much more predictable, secure, transparent, and non-discriminatory environment for economic operators;

27. to take into account that trade in the area of public procurement should conform to the general principles of transparency and openness, objectivity in selection, and oversight by the proper authorities of both regions;

Overall convergence

28. to include as a general provision the need for both the EU and Latin America to seek, as a matter of principle, the eventual convergence of the various agreements in force or under negotiation between the two regions;

Dispute settlement

29. to take into account that the dispute settlement procedures provided for in comparable existing agreements concluded by the Community and non-member countries are not effectively utilised ; therefore, to request the Commission to put forward new proposals with a view to devising a more effective dispute settlement instrument to issue rulings on conflicts arising in any of the individual sectors to be covered by the FTA;

Other issues

30. to call for closer cooperation in the area of competition policy with a view to encouraging investment and achieving compatibility in terms of the relevant regulatory frameworks;

31. to take into account and study the beneficial effects that the forthcoming construction of a third set of Panama Canal locks might have on CA’s economy in terms of strengthening integration and promoting investment;

As regards economic cooperation and accompanying measures

32. to ensure, as a condition for the success of the liberalization process, that the Association Agreement complement the FTA with the financial resources and technical cooperation required to support from the beginning the process of economic adjustment and its social consequences;

33. to call on the Commission to provide appropriate funding for the new regional cooperation strategy for CA in the period from 2007 to 2013 so as to afford a secure basis for tackling the challenges of institutionalisations, strengthening the regional process, and giving rapid and full implementation to the future Association Agreement, especially as regards completion of the common market and the customs union and greater participation by civil society;

34. to provide under the Association Agreement for joint cooperation plans to be drawn up to enable economies to be diversified more widely and brought into closer complementary relationships, so as to reduce the excessive dependence on exports of agricultural commodities; to that end, to broaden cooperation to encompass civil society, involving it actively in the integration process and intensifying relations between the social partners, economic operators, and social stakeholders in the two regions;

35. to take into account that the debt and loans question remains one of the most severe obstacles for the improvement of the public administration and to economic progress in the Central American countries and that possible debt cancellation should be a key chapter for the cooperation between the two regions;

36. to provide under the Association Agreement for cooperation arrangements to be laid down in order to guarantee the security of trade with a view to combating drug trafficking, the illicit trade in arms, and trafficking in human beings;

37. to call for regulatory coordination and cooperation arrangements to be agreed for the purpose of managing migration between the two regions;

As regards the conduct of the negotiations and role of Parliament

38. to provide the process of negotiations for the FTA with CA with greater legitimacy, increased transparency and the necessary participation of all EU stakeholders, including the relevant actors of civil society, social partners and economic operators of the two regions;

39. to provide strong support to the operational development of the newly established Euro-Latin American Parliamentary Assembly, thus taking effective steps to enhance the parliamentary dimension of the association and integration process involving the two regions; to take into account in this connection that by participating in EUROLAT, members of PARLACEN and MEPs can contribute to achieve the above mentioned aim by increasing the scrutiny of government action, fostering the integration process, conferring legitimacy, and helping to shape the political cooperation between the two regions;

40. to take into account that the Commission must provide early and clear information to Parliament both during the phase of preparation of the agreements and during the conduct and conclusion of international trade negotiations, and that this information should be provided to Parliament in sufficient time for it to be able to express its point of view if appropriate and for the Commission and Council to be able to take its views into account as far as possible.

41. to bolster the negotiating process currently under way by adding a parliamentary dimension; and to call on the Commission to involve Parliament regularly and intensively in the negotiation of the Association Agreement between the EU and its Member States on the one part and the Central American countries on the other part;

42. to take into account that the Association Agreement must not be concluded until Parliament has given its assent; to bear in mind in this connection that the Commission must consult and inform Parliament in proper and timely fashion on the EU’s strategy along the course of the negotiations; asks the Commission, in particular, at the end of each round or significant negotiating meeting, to forward a document to Parliament describing its content and conclusions, subject to the confidentiality rules in force;

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(1) OJ L 169, 30.6.2005, p. 1.

SUGGESTIONS

The Committee on Development calls on the Committee on Foreign Affairs, as the committee responsible, to incorporate the following suggestions in its motion for a resolution:

1.  Points out that an association agreement between the EU and Central America must aim, among other things, to promote the sustainable - and ultimately complete - development of the countries of Central America, social cohesion and the consolidation of democracy and the rule of law and foster full respect for human, economic, social, cultural and environmental rights;

2.  Reaffirms that the European Union should, in all its dealings with the countries of Central America, be guided by the global priorities which the Union has set for its cooperation policy, which is to say the fight to eradicate poverty, efforts to continue reducing what are currently gaping inequalities in all respects and, more immediately, to meet the Millennium Development Goals within the set deadline;

3.  Emphasises the need to ensure that the agreement includes, in binding form, the clause on human rights and democracy as well as the social and environmental clauses, and that these benefit from mechanisms and instruments that will guarantee their positive implementation, with provision being made for an annual report to the European Parliament on the monitoring by the Commission of their implementation;

4.  Requests that in the negotiations on the trade-related aspects of the association agreement the parties recognise the asymmetries which exist, as well as the existence of disparities not only between Central America and Europe but also within those regions; calls, therefore, for them to provide for a specific and differentiated approach which is flexible in the deadlines to be agreed, and for access to European markets for Central American products in competitive conditions;

5.  Calls for concrete and binding arrangements to be established for the structured participation of national parliaments, the European Parliament and civil society at all stages of the discussion, negotiation and monitoring process in the three dimensions of the association agreement - political dialogue, cooperation and trade;

6.  Emphasises the importance of integrating measures that help to foster a culture of peace and social justice, in stepping up EU support for development and social progress in Central American countries; this entails granting fundamental priority to actions in the field of education and health, in which the EU should, moreover, strive to coordinate its initiatives with those of other countries - and in particular Latin American partners - who already actively pursue solidarity policies of this type;

7.  Point out that, at all stages of the negotiations, the economic and social rights of all citizens should be enhanced and respected, with particular attention being paid to social inclusion, particularly of citizens of indigenous origin;

8.  Takes the view that EU cooperation should support small-scale producers and small- and medium-sized enterprises in general, and urges that investment be made in small businesses since the opening-up of the European markets will essentially benefit larger-scale producers who are able to satisfy European sanitary and phytosanitary standards (SPS);

9.  Emphasises the need for investment to be flanked with infrastructure, as one of the drivers of economic development, with due recognition for the priorities set out in paragraphs 2 and 6;

10. Advocates strongly that cooperation and the economic instruments should also be used to ensure conservation of the environment in the countries of Central America; emphasises that the development of sustainable agriculture should also be a focus of European cooperation and that fair trade and environmentally-friendly production should be promoted, for example, through the negotiation of a special Community customs tariff for fair trade and/or environmentally-friendly products;

11. Emphasises with reference to product access in the respective markets, that improving the traceability of such products would result not only in a raising of health and environmental quality standards, but also in a significant increase in fair trade;

12. Emphasises that tourism is the world’s leading activity and is a lever for economic growth; calls on the Commission to pay special attention to projects for the development of sustainable tourism in the countries of Central America which, owing to their diffuseness, benefit as many of the population as possible;

13. Draws attention, nonetheless, to the fact that tourism is dependent on a wide range of external factors, such as terrorism or natural disasters, and is therefore not a reliable and stable growth factor;

14. Takes the view that the EU should work with the countries of Central America to support their efforts to counter the illegal production and trade in drugs; part of those activities should involve extending aid programmes to farmers for introducing alternative crops, the marketing of which the EU could help effectively to ensure;

15. Believes that part of these cooperation agreements should guarantee certain quotas for the channelling of legal and controlled immigration from Central America to the EU; also takes the view, in relation to illegal immigration that not only should repatriation agreements which obviate the ‘pull effect’ be established, but also full account should be taken of the discussions in which the international community is currently engaged, with a view to reducing and progressively putting a stop to illegal immigration;

16. Takes the view that once the association agreement has entered into force, three-way and bi-regional cooperation should also be promoted – especially with the Caribbean – and the policy of South-South cooperation encouraged.

PROCEDURE