The integration process in Central America, a model from the early 60s through which countries managed to mutually benefit from the progressive elimination of trade barriers, continues to show great dynamism in adapting to new times, according to the study published by SIECA.
In the document entitled “Current status of Central American Economic Integration, 2021"The report reviews the progress of this regional model, especially in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, through trade indicators and initiatives aimed at overcoming barriers to integration, both institutional and logistical and infrastructure-related.
El business performance, in particular, has been favorable. According to SIECA, regional data indicate that in 2019, the export of goods and services was USD 76,842.4 million, foreign direct investment was USD 9,580.2 million, and the direct contribution of tourism was USD 12,713 million. In addition, Central America remains the largest exporter of pineapples and cardamom worldwide, ranks second as an exporter of bananas, third in coffee exports, and is among the 30 largest global exporters of textiles, clothing, and medical instruments. The boost in demand from the United States and from the subregion itself contributed markedly to this result. The markets of the European Union and China, although with less relative weight, made important dynamic contributions.
Regarding the functioning of the free trade AreaIn 2020, tariff barriers between the five founding countries, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, were very low. The study highlights that the achievements of Central American economic integration include the improvement of this free trade zone for 99% of goods originating in Central American countries, progress in the work leading to the elimination of non-tariff barriers or obstacles to intraregional trade, and the process of updating the Central American Uniform Customs Code (CAUCA V) and its Regulations (RECAUCA V).
The region also made progress in the Implementation of the Central American Trade Facilitation and Competitiveness Strategy, implemented in 2015 on the basis of a Coordinated Border Management Model that allows for increased transit speed of goods and strengthens competitiveness. In this regard, the document highlights the short-term measures adopted in the region: registration by means of Radio Frequency devices, streamlining and coordination of immigration controls, advance declaration of goods, electronic phytosanitary and zoosanitary certificates and the use of camera systems at border crossings.
In this direction, Central America has built a network of Free Trade Agreements where the agreements reached with its main partners, the United States and the European Union, stand out. SIECA highlights that with regard to the agreements, cooperation projects, between 2019 and 2020, eleven projects were executed, with the cooperation of the European Union, the Central American Development Bank, the Central American Bank for Economic Integration (CABEI), the Spanish Development Cooperation Agency/Spain-SICA Fund, the Japan International Cooperation Agency (JICA), the United States Agency for International Development (USAID), the Food and Agriculture Organization of the United Nations (FAO) and the World Customs Organization (WCO).
The document points out the Advance declaration of goods as one of the most notable advances for regional economic integration that took place on March 1, 2021, when the pilot phase of the advance electronic transmission of the cargo manifest was launched before reaching the integrated border crossing of Corinto, between Guatemala and Honduras.
Finally, SIECA reports that in the context of the health crisis derived from the COVID-19 pandemic, the region needed to strengthen the infrastructure In order to continue with regional and extra-regional trade, improvements were implemented in the following computer platforms: the DUCA-T/Territorial Transit capture portal, the DUCA-F/Merchandise originating for export capture portal, the SIMMAGRO virtual platform (Regional System for Intelligence and Monitoring of Agricultural Markets), the RFID (Radio Frequency Identification) data board, the Guatemala – Honduras Customs Union Trade Data Board, and the Central American Trade Network (REDCA) commercial information and intelligence App.
Countries are thus moving forward with joint actions to develop a model of Coordinated Border Management in Central America, a key element of a strategy to consolidate the Central American integration process.
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