NCPA - National Center for Policy Analysis

Central America Reforming And Trading

June 21, 1997

Central American countries from Guatemala to Panama are trying to cooperate on breaking down trade barriers among themselves.

Shipping goods across borders there has long been a nightmare, according to trade experts. There was the corruption and paperwork, of course. But often neighboring countries didn't even bother to keep adjacent customs houses open at the same time.

  • Observers report that the countries are concentrating not only on free-trade policies -- but on deregulation and harmonizing taxes with one another.
  • While the region's economies are growing at an average annual rate of 3 percent, growth this decade in El Salvador -- the area's most avid reformer -- has been nearly 6 percent.
  • Exports within the region doubled between 1991 and 1995 -- to more than $2.8 billion.
  • Both internal trade and exports are increasing at rates of nearly 25 percent a year.

Economic leaders are devising common strategies to deregulate, attract investment, reform their pension systems, join electricity grids and telecom networks, and build roads.

Aggrieved at having been excluded from the North American Free Trade Agreement, they are petitioning President Clinton to join them in a pact even less restrictive than NAFTA.

Source: "Central America Opens for Business,"Economist, June 21, 1997.


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