I thank the Vice Chairman and the members of the select committee for the opportunity to discuss the motion proposed by the Minister for Foreign Affairs and Trade, Deputy Charles Flanagan, which has been referred to it for consideration. I am joined today by Caoimhe Ní Chonchuir, Paul O'Hara, Elisa Cavacece and Karl Finnegan from the Department.
The motion seeks Dáil approval of the terms of the agreement establishing an association between the European Union and its member states, on the one hand, and Central America, on the other. The six countries which form Central America are Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. Diplomatic relations between the European Union and Central America were formally established with the San José dialogue in 1984 and were driven partly by the desire of Europe to help bring to an end the political violence and instability that afflicted the region at that time. Europe and Central America concluded a framework co-operation agreement in 1993 and a political dialogue and co-operation agreement in 2003. In 2007, the European Council authorised the Commission to begin negotiations on an association agreement. Talks on the agreement concluded in 2010 following the EU-CELAC summit in Madrid. The association agreement was signed by all parties in Honduras in June 2012 and received the approval of the European Parliament in December of that year.
Each member state of the European Union, together with the EU and the republics of Central America, will become a party to this mixed competence agreement. It is called a mixed competence agreement because some of the areas covered by the agreement are matters of EU competence while others remain within the competence of member states. The agreement contains three pillars: political dialogue, co-operation and trade. It was agreed that the trade pillar of the agreement, which involves European Union rather than member state competence, would be provisionally applied pending the ratification by all EU member states of the agreement. The trade elements of this agreement therefore came into effect during 2013.
To date, all six Central American republics have ratified the agreement, while on the EU side, 12 member states, including Ireland, have yet to notify the European Commission that they have completed all internal procedures necessary for the ratification of the agreement. For Ireland, receiving the approval of the Dáil is the last step of our domestic procedures necessary for its entry into force.
I will turn now to the substance of the agreement. This agreement has real value for the European Union and its people and for the people of Central America. There are significant economic advantages for both sides. The trade pillar of the agreement will eliminate high tariffs, tackle technical barriers to trade, open up services markets and public procurement markets and protect EU geographical indications. For Europe, this means new business opportunities for European exporters and investors. For Central America, it means access to the European market of 500 million consumers and a chance to move up the industrial value chain and create better quality jobs for workers.
Over time, under the agreement import duties on industrial goods and fish will be eliminated. It is estimated that the overall value of tariff elimination on European exports will be in the region of €90 million.
Agricultural trade will also open up, while protecting sensitive products in both regions. Central American exporters of fruit and vegetables stand to gain significantly from the agreement. Conversely, key European exports such as whiskey and wine will enjoy zero tariffs. This is good news for the producers of Irish whiskey which we already export in significant quantities to Panama.
The agreement also simplifies customs procedures. All Central American countries will, within three years, use a single customs document, thereby reducing the administrative burden for European exporters and traders within the region. In addition, our partners in Central America have committed to removing barriers to services, trade and investment, which will make the region more attractive for European investors. When fully enacted, the reduced costs of trade should have a beneficial impact on growth and job creation in all Central American countries and it is expected that the agreement will have a poverty-reducing effect overall in the region. EU data suggest Central America’s GDP could grow by over €2.5 billion as a result of the agreement. Economic resilience will also be improved by reducing reliance on the United States as a destination for Central American exports.
In 2014, the first full year in which the trade pillar of the association agreement was in effect, goods trade between the European Union and Central America was worth €10.5 billion, an increase of 1.2% on the figure for the previous year. The European Union is Central America’s second largest trading partner after the United States, excluding intra-regional trade. In 2014 there was a trade surplus of €1.7 billion in favour of Central America. The chief imports to the European Union from Central America are data processing machines, coffee, bananas and pineapples. The main EU exports to Central America are machinery, electrical appliances, pharmaceuticals, motor vehicles and steel products.
I reassure the committee that the agreement contains very strong safeguards for human rights, the rule of law, democratic principles, respect for the environment and workers’ rights. The very first article states human rights, the rule of law and democratic principles constitute an “essential element” of the agreement. This means that, in a situation where a government violates this essential element, any of the parties would be able to react unilaterally by taking proportional measures that could go as far as the suspension of the whole agreement. This provision is a powerful statement of our commitment to uphold our values. The co-operation pillar of the agreement commits the two sides to co-operate to achieve full compliance with all human rights and fundamental freedoms, as well as the building and strengthening of democracy. It commits the parties to work together in promoting good governance, fighting against corruption and supporting the participation of civil society in decision-making.
The agreement has sustainable development at its heart and commits both sides to respect, implement and enforce a series of universal standards for labour rights and the environment, including the eight core conventions of the International Labour Organization. The agreement contains a binding arbitration mechanism to ensure these commitments are respected, which can be triggered unilaterally by the European Union or any of the Central American countries, even against the will of the country concerned.
In regard to oversight, the agreement foresees the creation of a committee of parliamentarians, composed of MEPs and Deputies from the Central American parliaments. The committee will have the right to demand information and make recommendations to the European Commission and Central American governments. The agreement will also establish a civil society dialogue forum and a consultative committee, designed to allow civil society to hold government parties accountable.
I now turn to what the agreement means for Ireland.
Many Irish people feel an affinity with Central America. From the late 1970s up to the 1990s, a solidarity movement grew up in Ireland in reaction to the political upheaval and civil wars affecting El Salvador, Nicaragua, Guatemala and Honduras and many Irish people travelled to the region in that period as volunteers. There is also a tradition of Irish missionaries in Central America, particularly from the 1970s onwards. Our relations with Central America received a significant boost with the visit of President Higgins to El Salvador and Costa Rica in 2013, where he received a very warm reception. We do not have an embassy in Central America and most Central American republics are accredited to Ireland from their embassies in London. There is, therefore, significant potential to develop our relations, which can only be assisted by an agreement such as this.
Ireland’s trade with the region is small but growing. Ireland’s chief exports to the region include medicines, infant food, medical equipment, industrial machinery, computers and alcoholic beverages. Our chief imports from Central America include vegetables and fruit, coffee, sugar and honey.
In 2013, total trade in goods between Ireland and the region was worth €106 million. In 2014, the first full year of operation of the free trade agreement, total trade grew to €126 million, representing growth of almost 20% in our trade. Figures from January to November 2015 show continued strong growth in Irish exports, particularly in trade with Panama, Guatemala and Costa Rica. While it is not possible to prove causation, trade data seem to indicate that there is at least a correlation between the entry into force of the trade elements of the association agreement in 2013 and recent growth in Ireland’s trade with the region.
This agreement will provide a framework for strengthening the relationship between the European Union and Central America in trade, policy dialogue and co-operation. It provides a platform for bi-regional engagement on issues concerning health, the environment, climate change, energy, education, employment and science and technology and will allow us to work together to tackle global challenges, such as migration, terrorism, money laundering, organised crime and corruption. It contains important safeguards for human rights, workers’ rights and the environment. The ratification of the EU-Central America Association Agreement not only strengthens the foundation of the relationship between the EU, its member states and Central America but also charts a course for political and economic reforms. Through Ireland’s ratification of this agreement, we will show our support for the people of Central America.
I thank the committee again. I hope this motion will meet with the committee’s approval and that Dáil Éireann will approve the terms of the agreement so that Ireland can proceed to ratify in the near future. I am happy to take questions at this point.