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EU and Central America Association Agreement

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“The European Union and Central America Association Agreement constitutes an important boost for the international trade among the countries members, both in the medium and long term, which is advisable to consider when a decision concerning the internationalization of our business has to be made”


The European Union (EU) and the Central America countries concluded an Association Agreement, signed in Tegucigalpa (Honduras) on 29th of June 2012. This Agreement relies on political dialogue, cooperation and trade in the same level of complementarity and importance.

The trade pillar of this Association Agreement has been provisionally applied since 1st August 2013 with Honduras, Nicaragua and Panama; since 1st October 2013 with Costa Rica and El Salvador, and since 1st December 2013 with Guatemala.

Although historically the bulk of most Central America countries trade have been with the USA and Latin America, recently the region has increased its trade with Europe and Asia in such a way that:

  • EU imports from Central America are dominated by office and machinery and transport equipment and agricultural products.
  • Central America imports from EU machinery, transport equipment and chemicals, mainly.

BENEFITS OF THE AGREEMENT

 1. Elimination of most import tariffs.

At the end of the tariff phase-out period, the Agreement will eliminate tariffs for manufactured goods and fisheries with complete liberalization, in such a way that, once the trade pillar of the Agreement is in force, EU exporters will save €87 million annually in customs duties.

In relation to agricultural products, although most of those tariffs will be eliminated, certain “sensitive areas” for local markets are being respected.

In the same way, tariffs on dairy products will be entirely eliminated, with the exception of milk-powder and cheese, for which the EU has obtained duty-free quotas that cover the currently traded quantities and which will be increased on an annual basis.

But tariff elimination is only of real benefit if technical or procedural obstacles to trade are also being tackled, so the Agreement will ensure more transparency and better cooperation in the areas of “standards” and market surveillance, simplifying the requirements for marking and permanent labelling. For that purpose, the parties will promote the development of harmonized regulations and standards within each region with a view to facilitate the free movement of goods, and so, the operations for traders and business both within and outside the region.

As regards sanitary and phytosanitary (SPS) barriers, the Agreement also includes useful trade facilitation tools such as the listing of establishments, exports can come from, and the transparency of SPS import requirements and procedures.


“The Association Agreement establishes a gradual implementation of a free trade zone between the European Union and Central America countries, and the constitution of a Central America Common Market, that will simplify and provide legal certainty to the international transactions amongst the Estate members operators.”


2. Improved access to government procurement, services and investment markets.

The Agreement includes benefits for both Parties in the fields of telecommunication, environmental affairs, financial and maritime services, and it also liberalizes current payments and capital movements between the Parties.

The opening of Central America´s public procurement market varies in terms of levels of liberalization, with Costa Rica and Panama opening their markets more significantly than the other countries covered by the Agreement.

3. Better conditions for trade through new disciplines on non-tariff barriers to market access, competition, and intellectual property rights.

 

Intellectual property rights and Protected Geographical Indications

 

The Agreement includes a chapter on the effective protection of intellectual, industrial and commercial property rights: EU rights holders will profit from improved procedures to defend their rights more effectively in case of infringements.

Besides, the Central America countries have incorporated to their legislation regional specialities, so-called “Geographical Indications” (GI) in a manner similar to the EU. Additionally, over 200 geographical indications are also specifically protected on the Central American markets to the benefit of producers of GI products in the EU.

More competition and enhanced transparency on subsidies

 

In order to guarantee a fair and reliable competition environment for European companies, the Agreement calls upon national governments to ban all types of anticompetitive practices including restrictive agreements, cartels and abuse of dominance.

For increasing transparency particularly on subsidies, the Parties will regularly report on the subsidies given to companies that trade in goods and render services.

4. A more predictable environment for trade with a mediation mechanism for non-tariff barriers and a bilateral dispute settlement mechanism: a transparent way to settle trade disputes.

The Agreement includes a mediation mechanism for non-tariff barriers, and an efficient and streamlined dispute settlement system in accordance with the principles of transparency (open hearings and amicus curiae briefs) and sequencing (no right to impose retaliation until such time as non-compliance is verified).

5. Strengthening regional integration between the region´s countries

 

In practical terms this means the creation of a customs union and economic integration in Central America, setting up a single import duty for the whole region and using a single administrative document for customs declarations.

6. Support for sustainable development, including the consultation of civil society stakeholders.

Further economic development through trade

This closer economic integration between the countries of the Central American region is important for attracting investment to the region and helping local businesses develop the strength to compete internationally, expecting that the Agreement have an overall poverty-reducing effect across the Central American region.

Thanks to this Agreement, Central American countries will benefit from liberalised access to the European markets in numerous sectors, mainly in industrial goods and fisheries. Thus, it is expected to contribute to large sectorial gains in the fruits, vegetables, and nuts (FVN) sector, especially for Panama and Costa Rica. Guatemala and Nicaragua are expected to become more competitive in the textiles and clothing sector, and El Salvador and Honduras will increase their exports of transport equipment.

Sustainable development

One of the guiding principles of the Agreement, which is embedded in all its sections, is the commitment of both Parties to the promotion of sustainable development, and which finds a specific expression in the trade part through a chapter addressing the interrelation between trade and social and environmental policies, encouraging and promoting trade and marketing schemes based on sustainability criteria.

An important element in the overall structure of the Association Agreement is the role of civil society in the follow-up, and consultation of civil society stakeholders is foreseen in the trade area.

On the other hand, the Agreement enhances the cooperation in the production of organic products, which can be seen as another opportunity for the companies located in the signatory States Members.


Idoia Campoy – International Business Lawyer provides with the professional and specialized advice you need for doing business in Central America and European Union countries,  assisting you during all the process in the country of destination of your international transactions, in case it is required.

For more information:

Text of the Association Agreement: http://trade.ec.europa.eu/doclib/press/index.cfm?id=689

More details on the benefits of the Association Agreement: http://trade.ec.europa.eu/doclib/press/index.cfm?id=687

On EU-Central America trade relations: http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/regions/central-america/

How to claim commercial debts in the international area

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Yes, I know that trading in the international markets is ok, but what should I do in case my customers do not pay for the goods supplied or the services rendered?  Which means do I have to claim the payment in a foreign country where I do not know what law to apply?


Although it is common knowledge that the ideal thing in order to avoid surprises is making a previous research of the background and references of the company with which we are going to start doing business, assuring the means of payment and including all the details of the business transaction in a written contract, containing at least

  • Incoterm;
  • Date and means of payment and delivery;
  • Penalties in case of breach;
  • Governing law, jurisdiction and arbitration clauses, among other things,

in most occasions we have to face the harsh reality of negotiating conditions which are not always the most favorable for assuring and giving effect to our international operations, finally finding out that our customer has not been done the payment and we do not know neither how nor who to lodge against in order to enforce for its compliance.

Indeed, depending on the country we are exporting our products to or we have rendered the service, we would find with a legal regulation and a language that we are not always control, so the desirable would be counting from the starting point with good legal advice that allows us feeling calm and sure while we are doing international business, independently the country of destination of our goods or services.

From this Idoia Campoy – International Business Lawyer´s blog, we are trying to summarize the existing proceedings, apart from the others settled by the national laws in each country, in order to claim for the payment when our debtors are located in a country different from ours. For that purpose, we have to start distinguishing two geographical areas:

I. Debt claims in the European Union scope.Procedimientos sumarios europeos

Although between companies the main criteria in order to know who are the competent legal authority to judge these matters is the one where the debtor is located, there are several exceptions to that general rule that is necessary be known, depending on which is the exported good and depending on other requirements, and that will be addressed in other posts.

Once we have clear that the applicable law is the European Union one, because our registered office or the company´s registered office who has not paid us is settle inside the European Union, we have to know that inside the European Union there are several summary payment procedures we can action, which are alternatives to those set out under the laws of the Member States.

 

A) The European Small Claims procedure (ESCP).

It is available to claim for the payment of civil and commercial debts under a maximum value of €2000.

The procedure is established in the Regulation (EC) No. 861/2007 of the European Parliament and of the Council of 11 July 2007, which applies, since 1st January 2009, in all the Member States of the EU except Denmark s, and which settles period limitations both to the parties and to the Court, in order to speed up the process.

To start the procedure is enough with filling in a standard form drawing up for this special proceeding. Any relevant supporting documents, such as receipts, invoices, etc. should be attached to the form, previously it is sent to the court that has the jurisdiction. The defendant has 30 days to reply, from the day the court has served him a copy of the form. Within 30 days of receiving the defendant´s answer (if any) the court must either give a judgment, request further details in writing from either party, or summon the parties to an oral hearing, where it is not necessary to be represented by a lawyer.


“There is a special summary process inside the European Union to claim for the payment of civil and commercial debts under a maximum value of €2000, with short maximum periods for the resolution.”


With that form (which might need to be translated into the language of the other Member State), and a copy of the judgment, the judgment is enforceable in all the other Member States of the EU. Enforcement takes place in accordance with the national rules and procedures of the Member State where the judgment is being enforced.

Unlike the procedure for the European Order for Payment, which is limited to pecuniary claims, the subject of a claim under the ESCP can be-monetary and non-monetary claims (seeking to secure the performance of a contractual obligation, for example) non exceeding €2000 on the principal claim itself, excluding all interest and other expenses and disbursements which might be added to the claim.


Under the European Small Claims Procedure is possible to  claim for monetary and non – monetary debts”.


B) The European Order of Payment Procedure (EOP)

It is a similar ESCP simplified procedure for cross – border monetary claims, but with no limitations in the value of the debt, that can be action to recover uncontested civil and commercial claims according to a uniform procedure that operates on the basis of standard forms.


“The European Order of Payment Procedure allows to claim commercial and civil cross-border monetary debts without any limitations in their value.”


It is created by the Council Regulation (EC) 1896/2006, of 12 December 2006, and it is applied between all Member States of the European Union with the exception of Denmark.

The EOP dos not provide for a court hearing: the procedure is purely written, except if the EOP is contested or opposed. In that case, there may be a court hearing in accordance with the national procedures, ending, in that case, with the summary character of the initial EOP.


“Its summary character ends in case the defendant contests or opposes to the EOP.”


 

II. Debt claims outside the European Union area.mapa mundi

There are several Treaties, Regulations and other international rules which it is essential know in order to determine how to proceed to claim pecuniary debts arisen as a consequence of international trade operations and international investments, depending on the country of the debtor.

Even though most of the nations provide with a summary process similar to the ESCP and EOP, it is important to face this proceedings counting with a professional advice, in order to assure the payment before other expenses emerge.

Idoia Campoy – International Business Lawyer provide you the professional and specialized advice you need for recovering the total debt amount at the lowest cost, assisting you during all the process in the country of destination of your international transactions, in case is necessary.

 

Data sources: http://eur-lex.europa.eu/http://ec.europa.eu/justice_home/judicialatlascivil/

The European Free Trade Association Court (EFTA Court)

EFTA Court

It was created in 1994, its seat is in Luxembourg, and its Member States are Iceland, Liechtenstein and Norway. It is composed of 3 judges, one per Member State.

Its main task is to ensure the observance of the correct interpretation and application of the Law of the European Economic Area (EEA), taking into account that the EEA Law which has been adopted in the EFTA States is directly applicable in those States, and that it prevails over national law.

A reference for an advisory opinion gives the citizens the possibility of access to the EFTA Court through questions put by national courts in the context of a case pending before a national court. And, also, a natural or legal person addressee of a decision of directly concerned by a decision may bring an action directly before the EFTA Court.

Unlike advisory opinions, judgments in direct actions are binding.

Although English is the language mainly used in the proceedings, in the request for advisory opinions is possible to use the language of the national court.

http://www.eftacourt.int

Court of Justice of the European Union (CJEU)

 European Union law takes precedence over national law and is to be applied in a uniform manner in all the Member States. In case of doubt about its interpretation, it is possible to bring an action before the CJEU, whose judgments are binding in all the Member States.

1952 is the year when the Court of Justice of the European Union has its origin, when the ECSC Court (European Coal and Steel Community) was established. Its seat is located in Luxembourg and its main task is focused on ensuring the observance of the European Law, in its interpretation and application, in all the Member States.

It is composed of:

  • The Court of Justice, formed by one Judge per Member State and 8 Advocates General, has jurisdiction in cases of:
  1. Preliminary rulings from national courts on the interpretation of the Treaties and Acts of the European Union.
  2. Direct actions for failure of a Member State to fulfil its obligations.
  3. Direct actions for annulment or for failure to act brought by a Union institution against another institution, or by a Member State against the European Parliament, the Council or the Commission, in stated subjects.
  4. Appeals against decisions of the General Court.
  5. The review of decisions of the General Court ruling on appeals brought against decisions of the Civil Service Tribunal
  • The General Court, composed of one Judge per Member State, has jurisdiction for all direct actions, except those for which the Court of Justice has exclusive jurisdiction.
  • The Civil Service Tribunal, formed by 7 Judges, with jurisdiction for hearing and solving disputes between the European Union and its servants, and, also between the staff of Eurojust, Europol and OHIM.

Any natural or legal person may bring an action before the General Court against an act or a regulatory act which is addressed to him/her or which concerns with him/her directly, complying with the legal requirements.

Concerning the language of the proceedings, any of the official languages of the European Union may be used, although, in principle, the language of the case is the one of the “applicant” and, for preliminary rulings, it is the language of the national court that has referred the question to the Court of Justice.

 

http://www.curia.europa.eu