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Karel De Gucht

European Commissioner for Trade

EU-Columbia and Peru Trade Agreement

Public Hearing of the Committee on International Trade at the European Parliament

Brussels, 29 February 2012

Mr. Chairman, Madam and Mr Vice President, ministers, ambassadors, honourable Members,

I'm very grateful for the opportunity to discuss the trade agreement we have negotiated with Colombia and Peru.

I'm grateful because this is a crucial agreement for all three parties and because it will do more than simply deepen our bilateral trade and investment relationships.

For Colombia and Peru, this agreement will ease their progress to broad economic prosperity and provide a buttress to their political and social stability.

For Europe the agreement is another step we take forward in our wider efforts to deliver the benefits of liberalisation in challenging economic times. Trade is a tool we are using to help us out of economic difficulties in which we find ourselves and this agreement is no exception.

Finally, agreement represents a key plank of the EU's strategy to deepen its political, economic and cultural ties with Latin America. The EU's special trade relationship with the region now practically covers the entire pacific rim of Central and South America from Tijuana to Punta Arenas. Beyond fostering trade, the agreement provides a solid anchor to strengthen our wider relations with Colombia and Peru on the basis of promoting our fundamental principles, such as the respect for democracy, the rule of law and human rights.

I will talk first about the economic impact.

Once the agreement is fully in place, we can expect substantial benefits in terms of growth and jobs. And not only in Europe. We expect this agreement will boost the development of our partner countries by around one percentage point of their GDP through a similar rise in trade flows accordingly. Overall, half a billion Euros will be saved annually by all sides on tariffs alone. A remarkable prospect.

In a nutshell the agreement brings:

  • 100% elimination of customs duties for industrial products and fisheries on both sides. EU tariffs will be fully removed from the day the agreement enters into force. Peru and Colombia will eliminate all tariffs on EU exports of those goods at the end of a 10 year transition period.

  • This will save European exporters at least €250 million annually in tariffs.

  • To break that down: it means €60 million a year for our textiles industry, €30 million for our automotive industry, €10 million for our alcoholic beverages producers and €18 million for telecoms equipment companies.

  • In the other direction there are real development opportunities: Independent studies suggest it would boost Colombian GDP by 1.3% and Peruvian GDP by 0.7% over the long term. Tariff savings for farm exports will amount to more than €150 million a year when the agreement is fully up and running.

On top of this, the initiative will deliver a series of less tangible but equally significant broad economic benefits:

  • the emergence of renewed trade and investment opportunities

  • the possibility of enhanced transfers of technology and know-how

  • and reinvigorated prospects for inclusive economic development, poverty alleviation and improved social cohesion.

Free trade must also be fair. The agreement therefore also provides for a clear commitment that all parties will play by the same rules on public procurement, competition policy, regulatory transparency and intellectual property rights.

The agreement then brings a combination of these systemic effects, the new market access opportunities and a common rule book. Together these will result in a much reinforced economic partnership between our regions. A partnership that will be up to any challenge that we may face in the 21st century.

But this deal is not all about business. For business has an impact on society and we must take care of this also.

I know that part of the debate that concerns us today is about the role of EU trade policy and how it expresses the core principles of the EU's external action - including the promotion of respect for human rights, democracy and the rule of law.

Let me reiterate what I have consistently said to this assembly throughout the course of the negotiations with Colombia and Peru.

  • This agreement will support the socially cohesive economic development of Colombia and Peru, which is crucial to strengthening democratic institutions, individual freedoms and the rule of law.

  • In addition, the agreement commits all parties to democratic government and sustainable development.

I believe the EU would be overlooking its responsibilities if it were to walk away from such a deal.

We have an opportunity before us to support the transition of Colombia in particular from a history of conflict and violence to a future of peace, freedom and opportunity.

I am well aware of the concerns that have been expressed about the protection of trade union rights there. I also know that there are those that feel that they cannot support this Agreement for precisely that reason.

To them I say that I share your desire to promote and protect all human rights - including trade union rights. And I am convinced that the Government of President Santos is committed to doing so as well.

There is indeed not a single doubt in my mind that this trade agreement - through the incentives it creates - will have a positive impact on Colombia's civil society, its governance structures, and the human rights situation in general.

The improvement of the human rights situation not only in Colombia but in all countries that suffer such difficulties requires that we address the root causes of violence. Chief among these are poverty and social exclusion. The best instrument to tackle these problems is socially cohesive economic development. This trade agreement - coupled with our continuing efforts through development cooperation - will further economic development, create jobs and reduce poverty. It will thereby have a direct effect on these questions of peace and justice that concern us all.

On top of this, and as Vice President Cruz and Vice President Garzón would no doubt be able to confirm, this agreement is not only strong in its principles; it is also robust in terms of its legal obligations. We have made sure together that the values we agree to promote are enshrined in the provisions that we have negotiated.

Let me take you through those that are of particular interest:

First, the human rights provisions of the agreement fully address your concerns on human and labour rights. They will ensure that our trade relations with Colombia and Peru underpin the EU's overarching objective to protect democracy, the rule of law, human rights and the principles of international law.

Article 1 of the agreement asserts that the respect for democratic principles, the rule of law and fundamental human rights, as laid down in the Universal Declaration of Human Rights (UDHR), constitutes an "essential element" of the Agreement.

This means that in a situation where a government violates this essential element, the other Parties will be able immediately, unilaterally, and without prior consultation to suspend the benefits of the agreement to another Party. I do not see how this could be expressed more clearly or more strongly.

I realise that some of you have concerns with regard to the internal EU procedures that could lead to such a suspension. But of one thing you can be sure, I take my responsibility to enforce our trade agreements very seriously. That is as much the case for these provisions as it would be for any economic provision. The Commission will play its role to the fullest.

With such an instrument at our disposal I am confident that our fundamental objective to consolidate and support democracy, the rule of law, and human rights will be fully safeguarded and promoted.

Second, the agreement promotes the sustainable development of our economies by safeguarding labour and environmental rights. While retaining the sovereignty to regulate their economies, the parties commit:

  • to encourage high levels of labour and environmental protection

  • not to lower labour or environmental standards in order to attract trade or investment; and

  • to effectively implement the eight core conventions of the International Labour Organisation and the main multilateral environmental conventions;

Third, the sustainable development provisions are backed up by a dedicated binding dispute settlement mechanism.

The mechanism can be triggered by any Party even against the will of the others. The process will lead to findings of fact by independent and impartial experts. These will be made public and provide an impartial basis on which remedial action can be decided and implemented.

This will be further supported by a robust mechanism for oversight by civil society groups within each Party. As governments we will depend on their active support in bringing their concerns on labour or environmental matters to our attention. There will, for instance, be regular open meetings of the government representatives where civil society organisations and citizens can directly raise issues. All decisions or reports that governments may make on the basis of civil society recommendations must be public.

With all of these safeguards, I hope you will agree that the agreement is strong enough to ensure that the parties' commitments on labour, human rights and the environment are consistently upheld.

Mr. Chairman, Madam and Mr Vice President, ministers, ambassadors, honourable Members,

We have the capacity to move quickly on this deal, perhaps even adopting it in the summer. On the EU side, it still needs to be endorsed by the Council and the European Parliament - but that can be done soon if we want.

I personally hope that it enters into force as soon as possible. It is a key plank in our trade strategy for the Latin American region. It will support economic development in Colombia and Peru. And it meets our requirements in terms of human rights and sustainable development.

I look forward to working with you to deliver those results.

Thank you very much.

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