Global Tax Alert (News from Americas Tax Center) | 31 October 2013

Association Agreement with European Union enters into force for Costa Rica and El Salvador

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The trade pillar of the Association Agreement between the European Union and Central America (i.e., Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) signed in June 2012 (the Agreement) is now in force for Costa Rica and El Salvador.

The Agreement is comprised of three interdependent and fundamental pillars: political dialogue, cooperation and trade.

The Agreement's trade pillar establishes a free trade area among both regions. The key benefits of the Agreement include:

  • Reduction or elimination of customs tariffs and non-tariff barriers to trade
  • Facilitation of trade in goods
  • Liberalization of trade in services
  • Promotion of economic regional integration regarding customs procedures
  • Effective, reciprocal and gradual opening of government procurement markets
  • Adequate and effective protection of intellectual property rights
  • Promotion of free and undistorted competition
  • Establishment of an effective, fair and predictable dispute settlement mechanism
  • Promotion of international trade and investment between the parties

While the Agreement was ratified by the Costa Rican and Salvadoran Congresses in July 2013, the entry into force of the trade pillar for these two countries was delayed due to a dispute with Italy, which has been resolved.

As a result, the trade pillar of the Agreement is now in fokorce for Costa Rica and El Salvador as of 1 October 2013. It has been in force for Honduras, Nicaragua and Panama since 1 August 2013. It is not in force for Guatemala.

The political dialogue and cooperation pillars will enter into force when national parliaments of all 28 member States of the European Union ratify the Agreement.

For additional information with respect to this Alert, please contact the following:

Ernst & Young, S.A., San José, Costa Rica
  • Rafael Sayagués
    +506 2208 9880
  • Alexandre Barbellion
    +506 2208 9800
Ernst & Young, S.A., San Salvador
  • Héctor Mancia
    +503 22 48 7000
Ernst & Young LLP, Latin American Business Center, Houston
  • Priscila Maya
    +1 713 750 8698

EYG no. CM3922