Tratado De Integración Económica Centroamericana

Signed in 1959 by all members of ODECA except Costa Rica who joined in 1962. In July 1962 the members signed agreements establishing uniform tariffs on more than 95 per cent of all products entering the area.

Tratado De Asociación Económica

Signed in February 1960 by El Salvador, Guatemala and Honduras, and came into force in April 1960. Tariffs were then removed on 95 per cent of all goods traded between the members, and most remaining tariffs had been removed by June 1966. At a later stage restrictions on the movement of capital and labour will be removed.

Tratado De Intercambio Preferencial Y De Libre Comercio

Signed by Costa Rica, Nicaragua and Panama in 1961 and ratified in 1962, to spend economic integration through tariff reductions between members.

OTHER AGREEMENTS

Convention on Integrated Industries: signed June 1958; provides that special monopoly status be given to an individual enterprise in each industry, to be established in one member country with a view to exporting to the rest. The operation of this convention has been limited and, to date, only two integration industries have been set up—a tire factory in Guatemala and an insecticides plant in Nicaragua.

Special System of Promotion of Production Industries: signed January 1963, this system uses tariff regulations to encourage projects requiring heavy investment, with the limitation that such project must produce at least half the total of the regional demand.

Convention of Uniform Fiscal Incentives for Industrial Development: signed in July 1962, the Convention provides for a wide range of benefits to be applied to various categories of industries in Central America.

Agreement to establish the Central American Monetary Union: signed by the Governors of the Central Banks in 1964. The Monetary Union is not yet effective; it involves the alignment of foreign exchange and monetary policies, and the operation of a common currency (Central American peso at par with the U.S. dollar).

Treaty on Telecommunications: signed in April 1966 by Nicaragua, El Salvador, Guatemala and Honduras, and by Costa Rica in January 1967.

FUNDS

Guarantee Fund: set up 1969 by the Governors of the Central American Bank for Economic Integration. Capital of $40 million subscribed entirely by members of the Bank.

FONDO CENTROAMERICANO DE ESTABLIZACIÓN MONETARIA

(Central American Fund for Monetary Stabilization)

Agreement signed on October 1st, 1969, by Presidents of the five Central American Central Banks to provide short-term financial assistance to members facing temporary balance-of-payments difficulties. Capital to be subscribed equally by the five members: U.S. $20 million. Initial shares of $1 million each subscribed January 2nd, 1970. Additional funds will be sought from international sources. Mems. : Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica.

b. General Treaty for Central American Economic Integration (Managua Treaty), 1960

CHAPTER 1. CENTRAL AMERICAN COMMON MARKET

ARTICLE I

The Contracting States agree to set up among themselves a common market which should be fully established in not more than five years from the date of the entry into force of this Treaty. They also undertake to set up a customs union among their territories.

ARTICLE II

For the purposes of the previous Article, the Contracting Parties shall undertake to complete the establishment of a Central American free trade area within a period of five years and to adopt a uniform Central American tariff in accordance with the terms of the Central American Agreement on the Equalization of Import Duties and Charges.

CHAPTER 2. TRADE REGIME

ARTICLE III

The signatory States shall grant free trade rights for all products originating in their respective territories, with the sole limitations included in the special regimes referred to in Annex A of this Treaty.

Accordingly, the natural products of the Contracting Countries and products manufactured in them shall be exempt from import and export duties, including consular fees, and all other taxes, surcharges and imposts levied on such imports and exports or on the occasion of their importation and exportation, whether such duties, fees, taxes, surcharges and imposts are national, municipal or of any other nature. The exemptions provided for in this Article shall not include taxes or charges for lighterage, docking, warehousing and handling of goods or any other charges which may be legitimately levied by port, warehouse and transport services; nor shall they include exchange differentials resulting from the existence of two or more rates of exchange or from any other exchange measures adopted in any of the Contracting Countries.

Goods originating in the territory of the Contracting States shall be accorded national treatment in all of them and shall be exempt from any restrictions or measures of a quantitative nature, apart from control measures which are legally applicable in the territories of the Contracting State for reasons of a public health, security or police character.

ARTICLE IV

The Contracting Parties shall establish for given products special transitional arrangements excluding them from the direct free trade rights mentioned in Article III of this Treaty. Such products shall be automatically incorporated in the free trade regime not later than the end of the fifth year after the entry into force of this Treaty, except where specifically provided to the contrary in Annex A.

Annex A shall include products to special arangements, trade in which shall comply with the conditions and requirements laid down therein. The said conditions and requirements may only be amended following multilateral negotiations in the Executive Council. Annex A shall form an integral part of this Treaty.

The signatory States shall agree that the Protocol to the Central American Agreement on the Equalization of Import Duties and charges, concerning a Central American Preferential Tariff, shall not be applicable to trade in products subject to the special arrangements mentioned in this Article.

ARTICLE V

Goods which are accorded the advantages laid down in this Treaty must be covered by a customs form signed by the exporter which shall include a declaration of origin and shall be submitted for the visa of the customs officers of the countries of shipment and of destination, in accordance with the provisions laid down in Annex B of this Treaty.

When there is doubt regarding the origin of a product and the problem has not been settled by bilateral negotiations, either of the parties affected may ask the Executive Council to intervene in order to verify the origin of the said product. The Council shall not consider as originating in one of the Contracting Countries, those products which have come from or have been manufactured in a third country and have been merely assembled, packaged, bottled, cut up or diluted in the exporting country.

In the cases referred to in the previous paragraph, import of the goods concerned shall not be prevented, always provided that a guarantee is given to the importing country for the payment of the tariffs or other charges associated with the import. This guarantee shall become effective or shall be cancelled, as the case may be, when the problem has finally been settled.

The Executive Council shall establish, by means of regulations, the procedure to be followed in order to determine the origin of the goods.

ARTICLE VI

When the products in which trade is carried on are subject to charges, excise taxes or other internal duties of any kind, levied on production, sale, distribution or consumption in one of the Signatory Countries, the latter may impose an equal duty on goods of the same nature which it imports from another Contracting State, in which case it shall impose a duty of at least the same amount and under the same conditions, on imports coming from third countries.

83-877 0-72-18

The Contracting Parties agree that internal duties on consumption shall be established in accordance with the following conditions:

(a) Such duties may be established for the amount deemed necessary when the article in question is produced nationally or when the said article is not produced in any of the Signatory States:

(b) When an article is not produced in one of the Contracting Countries but is produced in another, the former may not levy duties on the consumption of the said article, except following a favorable decision by the Executive Council;

(c) When one of the Parties has established an internal tax on consumption and production of the article thus taxed subsequently commences in one of the other Contracting Countries, although such production does not exist in the country imposing the tax, the Executive Council shall, if requested by the Party concerned, consider the case and report whether the existence of the tax is compatible with free trade. The States shall undertake to abolish, in conformity with their legal procedures, such taxes on consumption on receiving a notification calling for this from the Executive Council.

ARTICLE VII

None of the Signatory States shall establish or maintain regulations on the distribution or sale of goods originating in another Signatory State when such regulations tend to place or do in fact place the said goods in an unfavorable position vis-à-vis similar goods either of domestic origin or imported from any other country.

ARTICLE VIII

Articles which because of the internal arrangements of the Contracting Parties constitute state or other monopolies on the date of entry into force of this Treaty, shall remain subject to the relevant legal provisions in each country and, where applicable, to the conditions laid down in Annex A of this Treaty.

In the event of new monopolies being created or the regime governing existing ones being modified, consultations shall take place among the Parties with the aim of providing special rules for Central American trade in the corresponding articles.

CHAPTER 3. EXPORT SUBSIDIES AND UNFAIR BUSINESS PRACTICES

ARTICLE IX

The governments of the Signatory States shall not grant exemptions or reductions in customs tariffs to imports coming from outside Central America when the articles concerned are produced in the Contracting States under satisfactory conditions.

When a Signatory State considers it is affected by the granting of customs exemption for imports, or by government imports which are not intended for the use of the government itself or of its institutions, it may submit the problem to the Executive Council, which shall consider it and come to a decision in the matter.