From: rich@pencil.cs.missouri.edu (Rich Winkel)
Subject: El Salvador: Proceso 527: Free Trade
Followup-To: alt.activism.d
Originator: rich@pencil.cs.missouri.edu
Organization: PACH
Date: Tue, 1 Sep 1992 23:34:09 GMT

/** reg.elsalvador: 164.0 **/
** Topic: Proceso 527: Region **
** Written  9:42 pm  Aug 31, 1992 by cidai@huracan.cr in cdp:reg.elsalvador **
From: cidai@huracan.cr (Centro de Informacion Documentacion y Apoyo a la Invest. - UCAJSC)
Subject: Proceso 527: Region

Center for Information, Documentation and Research Support (CIDAI)
Central American University (UCA)
San Salvador, El Salvador
 
PROCESO 527
August 26, 1992
 
REGION:
A new free trade zone in Mexico and Central America
 
     Only a week after the announcement of the North American Free
Trade Zone, the countries of Mexico, Costa Rica, Honduras,
Nicaragua, Guatemala and El Salvador signed an agreement which
provides a framework for a free trade zone. The new agreement will
allow increased and more diversified reciprocal trade at higher
levels, and will permit activities aimed at the sustained growth of
Central American exports and will improve their access to the world
market.
     The treaty is an attempt to stimulate investments oriented
toward intensive use of markets and the competitive capacity of the
signatories, while it also favors the creation of bilateral and
multilateral regional businesses. 
     The new free trade zone is the result of one of the accords
hammered out during the presidential summit between Central
American nations and Mexico, which was held in Tuxtla Gutierrez in
January 1991.
     This transcendental historical step toward regional
integration and socio-economic development took place in Managua,
Nicaragua, in the framework of a new economic and political context
with a tendency toward regionalization, for lack of another
alternative. It is one of many small steps toward a hemispheric
free trade zone such as the one President Bush has proposed in his
"Initiative for the Americas."
     For some, Mexico has become the principal bridge uniting North
America with the rest of the continent. Not only will it bring
Central America closer to the north, but will also help establish
new trade relations in the future with South America. It is hoped
that Mexico will soon establish a definitive and formal system of
economic relations with Venezuela and Colombia, in the so-called
"Group of Three." The latter two belong to the Andean Group, the
Rio Group and the Latin American Integration Association (ALADI),
which together involve almost all the southern nations, thus
facilitating North-South relations. Mexico also belongs to the Rio
Group and ALADI. For the time being, we must wait to see if events
confirm or disprove the "bridge theory."
     The framework agreement for free trade between Central America
and Mexico covers such issues as dumping and all practices of
unfair competition, a commitment to eliminate all export subsidies,
safeguard clauses, general criteria for establishing technical
norms, and issues of domestic taxes. The agreement also specifies
that controversies will be solved through direct consultations,
mediation and arbitration; an administrative commission will also
be created to oversee compliance with the provisions of the accord
and recommend any necessary modifications.
     Furthermore, the document stresses that freeing up regional
trade requires continuing the execution of other commitments
acquired in the Tuxtla meeting, such as financial aid, promotion of
investments, aid to primary sectors, energy supply and technical
assistance. The treaty also specifies that Central American
products may enter the 80-million person Mexican market duty-free
starting in 1993, while Mexican products can enter Central America
duty-free starting three years after the treaty was signed; this is
an extra benefit for Central America, which historically has
maintained a trade deficit with Mexico.
     Another important point established by the treaty is a
framework governing bilateral trade negotiations between individual
Central American countries and Mexico for the purpose of mutually
establishing duty-free products. This provision would permit free
entry of products into each respective market with the
understanding that the free trade zone will be fully established by
December 31, 1996. Nations may also bilaterally establish
requisites governing the national composition of each product with
regard to its eligibility for preferential status.
     Salvadoran Economic Minister Arturo Zablah declared on August
25 that El Salvador and Guatemala would negotiate with Mexico as a
bloc regarding issues such as eliminating tariffs and trade
barriers, and establishing rules governing the national composition
of each product. He also expressed the hope that Honduras would
join up with the initiative, thus forming the so-called "Northern
Triangle."
     According to statements made several days before the signing
of the accord by Amilcar Ibarra, Nicaragua's Foreign Trade
Director, there is a chance that in December a bilateral free trade
treaty will be signed between Mexico and Nicaragua. Costa Rican
president Rafael Calderon announced one week before the Managua
accord that his country and Mexico would sign a bilateral trade
agreement in November.
     As we can see, nothing has been said yet about Panama, which
is not part of the treaty because it did not participate in the
Tuxtla negotiations in 1991 where the treaty originated. However,
on August 20, the deputy director of the Panamanian Foreign Trade
Institute, Juvenal Monteza, announced that his country would soon
request to join the free trade agreement once it had evaluated its
content and analyzed the mechanisms necessary to become a part of
it. Yet shortly after his announcement, Panamanian president
Guillermo Endara denied that plans currently existed to request the
inclusion of Panama in the accord. Thus the chances of Panama's
participation in the Mexico-Central America free trade agreement
are still uncertain.
     In general, opinions expressed by the different governments
involved have been positive; all feel that this is the best way to
improve regional standards of living by strengthening regional
development. Others feel that the Mexico-Central America agreement
is mostly protocol, and sets forth more intentions than concrete
acts; business sectors throughout Central America have expressed
the fear that they will be undersold by a flood of Mexican goods.
Much of the success of the agreement will depend on measures taken
to improve business competitiveness as well as government support
toward this end.
 

** End of text from cdp:reg.elsalvador **

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