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Economic integration

Tuesday, December 13, 2011

Depending on how you look at it, economic integration among Central American countries is barely making progress, or else the process is moving slowly but steadily forward. Three developments last week - two forums, both held in Merida, Mexico, and an agreement on new Mexico-Central America trade rules - can support either perception.

The latest summit of the Tuxtla Mechanism creates a management unit, which promotes the development of a regional road infrastructure, and electric and telecom interconnection.

The Tuxtla Mechanism includes the Central American countries, Mexico, Colombia and the Dominican Republic. Members also announced the Mesoamerican Procedure for International Goods Transport, involving the installation of computer systems and standardized procedures, in order to speed up customs, migratory and health procedures.

In fact, the Tuxtla plan for a road-rail-telecom-energy corridor, first made at the organization’s inaugural session 20 years ago, has made significant progress.

With a few small gaps, regional-wide electric-power interconnection is almost in place, while a trans-Central America fiber-optic link is likewise nearing completion.

In another development, Mexico and the region (except for Panama) signed a Unified Free Trade Agreement, which would reduce obstacles to commerce, by establishing a single set of rules.

The pact is intended to replace existing Mexican accords, with Costa Rica, Nicaragua and the Northern Triangle (Guatemala, Honduras and El Salvador).

It remains to be seen if the five Central American countries can adopt common border measures, something they failed to do, as part of negotiations on a pact with the European Union.

Finally, the summit of the Alliance of the Pacific announced the start of an ambitious program, involving Mexico, Chile, Peru and Colombia.

The goals of the Alliance include the elimination by 2020 of all barriers to the movement of goods, services, people and capital among member states.

Mexico’s stock market would merge with the combined exchange, which Chile, Peru and Colombia have already created.
In addition, member countries would jointly promote their goods and services in key markets, including China, the United States and Canada.

The Alliance has little involvement with Central America, even though each country in the region has a Pacific port.

On the other hand, Panama participates as an observer, and may become a full member.