As negotiations for the Europoean Union (EU) - Central American (CA) Association Agreement move forward, not all are optimistic about the opportunities such a referendum may create. Numerous civil society organizations, under the umbrella organization ‘Coalicion Hondurena de Accion Ciudadana’ (CHAAC), have expressed deep concerns regarding the effects of such an initiative.

The liberalization of trade and opening up markets between the Union may well create greater commercial and investment opportunities for the business class but it is certainly worth questioning whether Honduran society as a whole would benefit from such an agreement.

Meetings to develop closer trading ties between Central America and the Europe are now well under way. Since 2007 the EU has been in the process of negotiating a free trade agreement with Central America. It is intended that such an agreement would facilitate trade between the two regions as well as promote regional integration of markets in Central America.

The first round of negotiations took place in Costa Rica in October 2007, and was shortly followed by a second round of talks on the 29th February 2008 in Brussels, Belgium. The third round took place in San Salvador, El Salvador (April 14, 2008). A further three rounds are expected to take place this year with hopes to reach a complete agreement by 2009.

After the U.S and other Central American countries, the EU is the most important trading partner for Honduras. This relationship developed from the 1984 San Jose Dialogue, which arose out of the need to develop ways to deal with Central America’s internal conflicts.

The Dialogue has provided the basis for the EU´s promotion of social and economic development, political stability and human rights within the region. According to the EU, bilateral trade between the two regions is worth about 160 billion (euros) annually.

In addition, the EU is a major contributor of development aid to Honduras and Latin America in general. Since the 1960s Latin America has benefited from both financial and technical assistance from the Union. European policy aims in this context have been centered upon tackling poverty and social inequality as well as the integration of developing countries into the global economy.

However, some in Latin America still hold reservations about entering into free trade initiatives with the EU. Such concerns often focus on the nature of the policies being promoted, specifically neoliberal economic policies, which arose out of the Washington Consensus and have been pushed by international economic organizations such as the International Monetary Fund and World Bank. Skeptics of neoliberalism
generally argue that this kind of philosophy favors economic elites and does not represent the needs of wider society, especially the most economically disadvantaged groups.

As Latin American leaders met last month in Lima, Peu (May 16 & 17) to discuss free trade between the two regions’ divisions in opinion became visible. Chilean and Peruvian presidents Michelle Bachelet and Alan Garcia represented a few of those who were in favor of quicker mechanisms to bring about a free trade arena between the Andean region and the EU.

However this view was not shared by Bolivian president Evo Morales, who argued with the support of Ecuador, that it is just too soon for a free trade agreement with Europe.

For CHAAC, the agreement in its current form fails to address socio-economic factors such as inequal i ty and poverty. The Coalition argues that the opening up of markets and FDI would benefit the higher echelons of society but could potentially expose the vulnerable to increased risk. In particular, with regards to agricultural products the coalition believes that Central American producers should be able to compete with subsidized European farmers on a more equal level.

CHACC argues that there would be negative impacts for small farmers that come from increasing difficulties in access to land because the agreement will increase the regions demand for tourism rather than traditional production like flowers, agriculture and access to irrigation water for farming.

CHAAC are also opposed to the neoliberal economic philosophy of such an agreement not because they view the neoliberal position as dogmatic but more so for the possible effects on a poor region such as Central America. Additionally, they believe there could be negative effects on migration and labor rights. CHAAC are promoting a transparent agreement process whereby the sovereignty of Central American countries as well as human and labor rights are respected.

Therefore it would be wise to consider all the implications an Agreement Associat ion with Europe may have. Although sectors of the Honduran economy may benefit through liberalized trade and greater FDI, this may only lead to greater prosperity for a section of society and the benefits are not guaranteed to trickle down to Honduran society as a whole, thus the agreement may not help tackle socio-economic problems of poverty and inequality.