Guatemala-Honduras customs union furthers integration

Thursday, July 20, 2017

Subject

Customs union.

Significance

On June 26, Presidents Jimmy Morales of Guatemala and Juan Orlando Hernandez of Honduras formally launched a customs union between their countries, in an effort to boost trade by reducing or eliminating tariffs. The arrangement is the first of its type in Central America and may prove a step towards greater regional economic integration.

Impacts

  • The union may attract greater foreign investment, by allowing potential investors to spread operations across two countries.
  • Bilateral moves may allow integration to advance in easily negotiable areas, while problematic issues such as border disputes are deferred.
  • Washington’s recently stated intention to maintain tariff-free trade within NAFTA should ease concerns regarding the future of DR-CAFTA.
  • Increased US deportations will further discourage moves towards more open borders, particularly between the north and south of the Isthmus.
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