On June 29, 2012, the European Commission issued a press release announcing the signing of an Association Agreement between the European Union (EU) and Central America, which includes an ambitious trade component aimed at expanding and diversifying the trade of goods between the two parties. The Central American countries participating in this agreement are Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

According to the press release, European Commissioner for trade, Karel De Gucht, stated that "European exporters will save around €90 million on customs per year and European service providers, such as for telecoms and transport, will get greater market access. At the same time, this deal should have a positive spill-over effect on Central America's overall economic integration process and contribute to the stability of the region."

Some highlights of the agreement related to trade include:

• The elimination of tariffs for manufactured goods and fisheries, with complete liberalization at the end of the tariff phase-out period, and elimination of key agriculture tariffs
• The increase of transparency control and cooperation in market surveillance
• The creation of a single administrative document for customs declarations

The other two main pillars of the agreement are political dialogue and cooperation. The trade related provisions are expected to become effective at the end of this year, or the beginning of next year at the latest.

Read the full text of the Press Release and agreement.