Economic integration of Central America



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The Central American Common Market represents a pioneering effort for economic integration among the underdeveloped nations of the world. The program for a Common Market of Central America is the result of several meetings initiated among the member countries since 1951. Before the program was established, several bilateral agreements had been signed during the decade of the fifties. The culmination of all these efforts was achieved in December, 1960, when the General Treaty for Economic Integration of Central America was signed at Managua, Nicaragua, by all the Central American countries except Costa Rica. This last country finally signed in November, 1963. The General Treaty superseded all the treaties that were signed before but did not abrogate non-conflicting clauses of the previous treaties. The General Treaty provided that in a five-year term all goods produced in the area would enjoy free trade. The term expires in June, 1966. At present, approximately 95 per cent of all goods produced in the region are duty free. In an effort to establish a Customs Union and present a common tariff to the rest of the world, a treaty was signed in San Jose, Costa Rica, in September, 1959. It is 'The Central American Agreement on Equalization of Import Duties and Charges,' which became effective in 1960. The agreement contained 1,512 items; of these, only 35 items have not been equalized as yet. These 35 items involve the most difficulties because they alone supply more than 30 per cent of the customs duties revenue. Since independence of Central America was gained from Spain in 1821, several attempts to achieve political union failed. Now the phenomenon of economic unity may result eventually in such a political union. The struggle for betterment of living conditions has proved to be stronger than local strife and political dissension. The program for economic integration has advanced, notwithstanding political or local problems. A mature generation of political and business leaders is directing the economic policies for Central America. The success of the Central American Common Market can be summarized as follows: First, the success is a result of the cooperation among government, private, and international institutions. Second, the integration program has been followed up without hesitation, all troubles arising having been resolved. Third, the economic figures show the results. A total area exchange of approximately $8 million in 1951 had grown to more than $66 million in 1963. We can add to all these that the main objectives of a Common Market are about to be fulfilled, namely, a bigger market, giving rise to economies of scale; free movements of goods, elimination of restrictions to the movement of labor and capital, common tariffs, common agricultural policies, common banking practices, and the harmonization of national economic policies and institutions. The prospects for the Central American Common Market, if current trends continue, are for a general betterment of living conditions and economic and political stability. The success will also prove that free enterprise is still the best system to achieve accelerated economic development, with the safeguard of individual freedom which is completely lost in communistic societies.



Central America, Economic integration