Central America has made progress in trade facilitation, but needs more effective participation in global value chains, as well as a shift towards exports of sophisticated goods and services, according to officials from international organizations and representatives of the private sector who met last Thursday (10.11.2022) in the Guatemalan city of Antigua, within the framework of the event “Trade facilitation: the path to recovery.”
The event, organized jointly by the World Bank, the Secretariat for Central American Economic Integration (SIECA) and the pro tempore presidency of the Council of Ministers for Economic Integration (COMIECO), aimed to deepen the integration of goods and services markets in the region.
“The event allows us to assess achievements in regional economic facilitation, announce priority initiatives in areas such as reducing air transport costs, express shipments and advance declarations, and begin preparing a new roadmap for regional market integration.”Said Francisco Lima, Secretary General of SIECA.
Meanwhile, Carlos Felipe Jaramillo, Vice President of the World Bank for Latin America and the Caribbean added: “The economies of Central America have made substantial progress in trade facilitation and have signed an average of 9,5 trade agreements, almost twice as many as the Latin American and Caribbean region. However, they have great opportunities to further reduce costs and times for intraregional and extraregional trade.”
Advances
The region shows progress in areas such as customs union, for which the World Bank has provided technical assistance through the Support Program for the Implementation of the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO), together with other cooperating partners, but still faces challenges in terms of infrastructure and efficiency at border crossings. On average, a truck transporting cargo from the Mexico-Guatemala border through Central America to Panama moves at a speed of 18.5 km/h. According to the study,“Dispatch Times”, carried out by SIECA and Central American customs authorities, with the support of the World Customs Organization and the European Union, the average border crossing time, not including waiting lines, is 9 hours.
Challenges
However, the World Bank believes that there are areas where improvements can be made, such as the slowness of border formalities, Low connectivity and adoption of technology, infrastructure problems, and non-standard schedules at border posts, among others.
A recent World Bank study estimates that full implementation by Central American countries of their commitments in the WTO Trade Facilitation Agreement could reduce trade costs by 15,5% in the region, increasing intraregional trade by 61%. In addition, expanding the implementation of this Agreement to Mexico would increase trade between Central America and Mexico by 130% and Central American GDP by 6,7% by 2030.
According to the same study, a 10% decrease in intraregional transport costs could increase intraregional trade by 5% and the region's GDP by 0,3% by 2030. Extending the reduction in transport costs between Central America and Mexico would further increase Central American GDP by 0,4% by 2030.
Event
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