1 WORKING TOGETHER TO BUILD AGRICULTURAL EXPORTS TO EUROPE

ING. LUIS RAMÓN RODRÍGUEZ, MSC.Minister of AgricultureDominican Republic

UK-CENTRAL AMERICA NEW BUSINESS OPPORTUNITIES

The SICA Region: Profile

Economic Outlook for 2014

Trade Agreements

The Role of Agricultural Sector in

SICA Economies

Value Added Agricultural Production

Exports and Imports

Business Opportunities

The SICA region is comprised by theseven countries of Central America(Belize, El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica,Panamá) and Dominican Republic,that holds the Pro-Tempore Presidency for the first semester of2014.

The SICA Region: Profile

Population: 52 million GDP of US$417Bn in 2013 Average Gross National Income grewfrom US$4,360 in 2011 to US$4,721 in2012. Production of agricultural commoditiesAnd tropical produce, such as fruits,vegetables, coffee, cacao, bananas andothers.

The SICA Region: Profile

Gross National Product (GNP) of SICA Countries for 2013US$ Billions

5

Source: WEO/FMI, Octubre 2013

(*) Millardos = Billon USA

A bridge between South America andthe European Union; a door to the NorthAmerican market through the DR-CAFTA;rising intercontinental trading with theexpansion of the Panama canal; strategicLocation; trade logistics infrastructure:hubs and warehousing committed tomove forward regional integration forsound economic development and tradecompetitiveness.

The SICA Region: Profile

FMI estimates a global growth of 3.7% for 2014 FMI growth projections for SICA region is 3.9%. Trade exchange is projected to rise to 4.5% from a 2.7% in2013. Agricultural products are expected to be a key factor in theregion´s growth.

Economic Outlook for 2014

8

Expected Market Performance:

OECD estimates price increases over the next coming years due to slower production and stronger global demand and the growth in China´s market.  Consumption increase in developing countries, driven by growing populations, higher incomes, urbanization and changing in diets.  Per capita consumption is projected to expand most rapidly in Eastern Europe, and Central Asia followed by Latin America and Asia. Emerging economies will capture much of the trade growth, accounting for the majority of exports of coarse grains, rice, oilseeds, vegetable oil, sugar, beef, poultry and fish. 

Economic Outlook for 2014

Total Trade Exchange of the European Union with the World - 2000/13 (in Billions of Euros)

849.7

1,101.7

1,739.4

992.7

1,23

4.3

1,682.7

0200400600800

1,0001,2001,4001,6001,8002,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Export Import

9

Source: EuroStats

Variación 2013 con 2009UE27 to World…….. +57.8%World to UE27……… +36.3%

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DR-CAFTA Changed the pace of economic development of the region by:

Strengthened and diversified trade relations between SICA and the United States.

Boosting economic growth and political cooperation between Central American states and the US.

Leading reforms at the legal, infrastructure, logistics and business environment levels

Trade Agreements

11

Central America- Dominican Republic Agreement Signed in 1998 between Dominican Republic and Central American countries with the exception of Panama.

• Promoted regional exchange, eliminating trade barriers andpropelling regional investment.

• Products manufactured on Tax Free Zones are notincluded.

• Implemented as a bilateral agreement between DominicanRepublic and the signatory countries.

Trade Agreements

12

EPA-CARIFORUM (Dominican Republic and Belize) Opened a bridge for trade exchange consolidating freeaccess to the EU market.

• Fostered trade-related cooperation issues and investmentpromotion.

• Duty-free quota-free access for all products to the EUmarket.

• Technical cooperation for modernization of customsprocedures and trade facilitation.

• Capacity building on procedures and international tradestandards.

Trade Agreements

13

EU-CENTRAL AMERICARelies on three pillars: political dialogue, cooperation, andtrade.

• Foster business and investment opportunities.

• Reinforces economic integration among the CentralAmerican countries.

• SICA exporters have duty free access for 91% of theirproducts.

Trade Agreements

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Source: EuroStats

SICA Region Share of EU Global Trade Exchange ( 2010/13)

SICA0.40%

Rest99.60%

SICA0.54%

Rest99.46%

EU global exports EU global imports

15

Agricultural production is a major contributor in theeconomic development of SICA countries , ranging from4% of GDP in Panama to 20 % in Nicaragua for 2012,with an average of 11% for the region.

Common objective of the SICA Ministries of Agriculture:

• Improve productivity and promote competitiveness. • Production planning with market oriented approach. • Compliance with international food safety standards. • Promote business climate for public-private partnerships

and FDI.

The Role of Agricultural Sector in SICA Economies

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Source: EuroStats

Market Share of the European Union Agricultural Global Trade 2010/13 (average %)

Agri6.6%

Rest93.4%

Agri6.9%

Rest93.1%

Global Exports Gobal Imports

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Source: EuroStats

Market Share of the SICA Countries Agricultural Trade with EU27

SICA0.59%

Rest99.41%

SICA3.14%

Rest96.86%

Exports UE27 to WorldImport UE27 from World

Total Trade Between EU and SICA Region - 2000/13 (000.000 Euros)

5,058.7 5,263.4

7,453.84,960.8 5,

323.

9

8,425.3

0

2,000

4,000

6,000

8,000

10,000

12,00020

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Export Import

18

Source: EuroStats

Variation 2013 to 2009UE27 to SICA…….. +41.6%SICA to UE27……… +58.2%

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Source: Worldbank

The Role of Agricultural Sector in SICA Economies

Share of Agricultural Sector on GDP of SICA CountriesCountry  2011 2012Dominican Republic  6.10% 6%Panama  3.80% 4%Belize  9.70% 13%Costa Rica  6.20% 6%Nicaragua  17.50% 20%Honduras  12.80% 15%El Salvador  10.50% 12%Guatemala  13% 12%

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DOM CRI HON GUA ESA NIC BEL PAN0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

58.45%

25.58%

87.85%95.19%

70.01%

83.94%

96.43%

35.67%

Market Share of Agricultural Goods in the Imports of UE 27 from SICA Region 2013 (%)

Fuente: EuroStats

21

Areas for investment opportunities:

• Joint Ventures in greenhouses and fresh vegetables production.

• Renewable energy projects.

• New technologies such as greenhouse production, organic

farming.

• Improvement in trade facilitation: Logistics, food processing and packaging, warehousing, and market access.

The Role of Agricultural Sector in SICA Economies

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Regional agricultural development is lead by the CentralAmerica Agricultural Council (CAC), a body of theSICA that joins all the Agricultural Ministers under theProtocol of Guatemala.

Role: spearhead and promote integration of the region’sagricultural sector.

CAC scope of actions 1. Climate change and risk management2. Farm agriculture3. Rural Development 4. Sanitary and safety procedures5. Technology, information and innovation6. Competitiveness, trade and agribusiness 7. Food security and nutrition

The Role of Agricultural Sector in SICA Economies

Source: EuroStats

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• Competitive advantages in the agricultural value-chain.• Certified organic production.• Most organic farming produced under a fair trade model

for sustainable development of agribusiness

• Dominican Republic: largest global exporter of organic banana, organic cocoa, mango, coffee and vegetables

• Costa Rica: Banano, pineapple, coffee and cocoa.• Guatemala: Internationally known for organic coffee

exports• El Salvador: Fresh vegetables.

The Role of Agricultural Sector in SICA Economies

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• The bulk of most Central America countries trade has been with USA and Latin America.

• Trade exchange between SICA countries and EU has been relatively modest until now.

• The most important exports from the EU to Central America are machinery and transport equipment (47.2%) and chemicals (21.5% in 2012).

• Principal UK exports are beverages, medicinal and pharmaceutical products, road vehicles, specialized industrial machinery, electrical machinery and miscellaneous manufactured articles.

Exports and Imports

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Source: EuroStats

Total Trade Between EU and SICA Region - 2000/13 (000.000 Euros)

EU Exports EU Imports

EU Exports: Euros 7,453.8 mo.EU Imports: Euros 8,425.2 mo.

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Source: EuroStats

Trade of Agricultural Goods Between EU and SICA Region - 2000/13 (000.000 Euros)

Variation 2013 to 2009UE27 to SICA…….. +66.5%SICA to UE27……… +24.7%

(*) Agriculture= HS 01 to 24

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Source: EuroStats

Export and Import of Markets in the European Union with 27 Countries of SICA

Export UE27 Import UE27

Export UE27 = Euros 711.4 mm.Import UE27 = Euros 3,717.5 mm.

Trade of Agricultural Goods between EU and Individual SICA Countries in 2013 (000.000 Euros)

214.

0

73.8

51.0 78

.7

51.1

20.1

11.2

211.

4

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

DOM CRI HON GUA ESA NIC BEL PAN

Export Import

Export UE27 = Euros 711.4 mo.

28

Source: EuroStats

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Average % of EU Imports of Fruits, Coffee, Tea and Species - 2010/13

SICA10.50%

World 89.50%

SICA10.40%

World 89.60%

Fruits Imports :15.090 billion EUR Coffee, tea and species Imports: 9.033 billion EUR

Source: EuroStats

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Average % of EU Imports of Ornamental Plants, Flowers and Tobacco - 2010/13

SICA2.84

%

Rest97.16

%

SICA2.75

%

Rest97.25

%

Plants and flowers Import: 1.532 mm EUR Tobacco Imports: 2.591 mm EUR

Source: EuroStats

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The SICA region is determined to boost its competitiveadvantages of location, agricultural production and tourism.  • Integration policies are moving forward agricultural

modernization. • Tourism, manufacturing and service industries are

becoming increasingly important.• Mining is just in the first stages of development. • The expansion of the Panama canal is opening

exponential opportunities in transportation service and logistics.

Business Opportunities

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• Investment opportunities are supported by demands from the expansion and diversification of its economies such as:

• Farm inputs and related technologies for agribusiness• Animal breeding and capital intensive production processes.• Development of infrastructure in roads, urban transportation

systems, ports improvement, merchant marine and trade facilitation, in general.

• Logistics warehousing services for exports of perishable • Distribution services on European Union markets for export

products. • Renewable energy and wastewater treatment plants

Business Opportunities

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Ecological Profile

The clean energy sector in SICA region is expanding. The region’s natural resources offer potential for the development ofmarine, solar, geothermal, wind and bio power generation and severalprojects are already underway • Costa Rica has no registration requirements or project approvalprocesses for new investments. No specific limitations are applicable toforeign investments. • In general Costa Rica does not have any special laws governingforeign investments. • Its free zone industry is under the Free Zone Regime Law thatprovides benefits and incentives on raw materials, machinery andequipment for certain types of vehicles.

Business Opportunities

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Dominican Republic legal framework offers incentives and guarantees for investments inseveral sectors. • Foreign investment Law and Free Trade Zones for Exports carry important incentives for

investments in tourism and production/manufacturing.

• Housing Projects Law (189-11) is aimed at promoting real estate financing with direct incentives for low cost housing development .

• Renewable Energy Law (57-07) provides incentives in energy generation from renewable sources.

• Solar and wind farms projects are already in progress and two bio-fuel power plants will start within 2014.

• Film Industry Law (108 -10) sets up incentives for the filmmaking industry, local filmmaking production and on studio´s construction.

• One-stop Investment Counter is in the process of being implemented, to accelerate and streamline procedures related to national and foreign investment.

Business Opportunities

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• Nicaragua has various incentive laws for priority sectors, such as the Tourism Incentive Law, the Renewable Energy Incentive Law and the Free Trade Zones Law for export-oriented industries.

• Guatemala has a foreign investment law dating back to 1998 to promote foreign direct investment. There are no restrictions on foreign investment in the telecommunications, electrical power- generation, airline, or ground-transportation sectors.

• New legislation for Public Private Partnerships has been enacted to attract investments towards large-scale construction projects.

Business Opportunities

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Panama has a bilateral investment agreement with theUnited Kingdom and has been a member of theInternational Centre for the Settlement of InvestmentDisputes (ICSID) since 2001.

A particular area of opportunity for foreign investors is inthe former Canal Zone and associated military bases. Panama Pacific, one of its facilities, has been singled as aspecial economic incentives zone for investments on the “new town” infrastructure concept.

Business Opportunities

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