Relaunch of Central American Integration
Friday, July 19, 2002
By
Norman Girvan - ACS
Recent meetings of Central American Presidents
and Trade Ministers manifest a marked renewal of the integration process
in that sub-region since the beginning of this year. Central America now
aims to cement a Central American Customs Union by the January 1, 2004.
Integration efforts date back to 1958, when Central American Free Trade
Area was launched. Integration was set back in the 1970s and 1980s as a
result of political and civil conflict. The peace agreements of the early
1990s spilled over into a re-start of the integration process. The Treaty
of Tegucigalpa of December 1991 established the Central America
Integration System (SICA). But political support for integration faltered
in the second half of the 1990s.
The new integration thrust owes much to the taking of office of new
Presidents in three of the five Central American states since January
2002. Presidents Bolanos of Nicaragua, Maduro of Honduras and Pacheco of
Costa Rica all come from a business background and all three are committed
to the trade liberalization process.
Another factor has been signals from Central America’s principal external
trading partners. The United States and the European Union have both
indicated that they will negotiate free trade agreements with Central
America as a whole, rather than with individual countries. Discussions
with the U.S. have already started, while those with the EU are envisaged
for 2004.
Central America’s population and Gross Domestic Product are about the
twice that of CARICOM’s and its foreign trade is about one-third larger.
The projected Customs Union would create a significant new player in
sub-regional economic life.
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Central America |
CARICOM* |
|
Population M.
|
33.24 |
14.85 |
|
GDP US$ Billion |
56.096 |
31.202 |
|
Per capita GDP US$ |
1,687 |
2,101 |
|
Foreign trade US$
Billion |
30.582 |
22.246 |
|
*Includes Haiti |
The accelerated time-table for Central
American integration was formally launched with the San Salvador Plan of
Action of March 2002. It sets out the following objectives:
- Implement agreements on common rules for
dispute resolution, trade in services and investment, and the
establishment of the Central American Unified Customs Code (CAUCA); by
December 31, 2002.
- Establishment of common customs
administration and the free movement of goods including elimination of
border customs posts by December 31, 2003.
- Harmonization of customs duties by
December 31, 2002; except for Nicaragua, which is given until December
31, 2003.
- Extension of free trade in the majority
of products by December 31, 2002.
- Establishment of a common external trade
policy by December 31, 2003.
- Implementation of mechanisms for the
collection of taxes on foreign trade by December 31, 2003.
The revitalization of the Central American
integration process is good news for the region. Like CARICOM’s drive
towards the Single Market and Economy, it will constitute a building block
for the construction of an enhanced economic space in the Greater
Caribbean.
Professor Norman Girvan is Secretary General of the Association of
Caribbean States. The views expressed are not necessarily the official
views of the ACS. Feedback can be sent to
mail@acs-aec.org.
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