Central America Plans Customs Union

by Mike Godfrey, Tax-News.com, Washington

29 July 2010

Presidents and high level officials from Belize, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Panama have met to adopt a “comprehensive agenda” on regional integration.

The meetings were hosted by the government of El Salvador and sponsored by the World Bank Group (WBG). Specific measures included:

• Continued progress on removing customs duties, building on the measures agreed between El Salvador, Guatemala and Honduras;
• An agreement to include Panama in the Secretariat of Economic Integration for Central America (SIECA); and
• The strengthening of the institutions responsible for regional integration with the assistance of WBG training, technical and advisory services financed through a two year USD1.3m “trade facilitation window”.

World Bank economist Hugo Lopez noted at the meeting that the first article of the Central American Integration Free Trade Agreement was signed in Managua on December 13, 1960, when the Central American Bank for Economic Integration, and the Secretariat for Central American Economic Integration (SIECA) were established. Progress on a common market was halted in 1969, but the Tegucigalpa and Guatemala protocols in the 1990s helped to revive moves towards integration. Lopez confirmed that this helped to build trade within the region from 7% in 1960 to 20% of the total today.

It is said that the cost of customs procedures add up to 40% to the price of products traded between countries in the region.

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