Added: 05/22/2006 |
CACM - the Regional Economic Organization of Latin AmericaThe Central American Common Market, regarded as one of the four regional economic organizations formed during Latin American export boom, was incorporated by signing the General Treaty of Central American Economic Integration in a conference in Managua in 1960. In its initial endorsement of integration as a way to continue industrialization, CACM was similar to such Latin American trading blocks as the Andean Group, the Caribbean Free Trade Association and the Latin American Free Trade Area.
However, the basic strategy for Latin America's economic development was adopted in the 1950s by the Economic Commission for Latin America and the Caribbean. The organization emphasized increasing both public and private investment to overcome dependence on the exports of primary commodities. In order to eliminate restrictions of single country import substitution industrialization, the Economic Commission for Latin America and the Caribbean envisioned the expansion of local market by creating common markets among groups of countries. This approach was accepted and advanced through the Western Hemisphere. However, in practice this model existed uneasily in the majority of Latin American economies until 1980.
Though a number of Latin American trading blocks adhered to the model of intraregional free trade designed by ECLAC, they still differed from each other in economic structure of member states, institutions, intermediate goals and relationships to the global economy.
During the period of 1950-1956, a number of bilateral free trade treaties were signed among Costa Rica, Nicaragua, El Salvador, Honduras and Guatemala. By the end of bilateral negotiations each of these countries became part of at least one treaty that involved free trade in a limited range of products. In February 1960 these countries signed the Tripartite Treaty, accepting thus the US-sponsored integration scheme.
The Treaty was strongly opposed by ECLAT, whose guiding role in Latin American integration was undermined the involvement of the United States in the process. In response to numerous protests from the organization, the United States agreed to negotiate a compromise integration treaty. Thus, the General Treaty of Central American Economic Integration establishing CACM was signed in December 1960 by four republics, with Costa Rica joining the organization in 1963. The treaty established the Secretariat of the General Treaty on Central American Economic Integration and the Central American Bank for Economic Integration.
In 1963 the Central American Clearing House was established to promote use of local currencies in settlement of trade deficits among CACM member states. The following year the Central American Monetary Council was created to promote monetary union.
During the 1970s, CACM had a tremendous impact on trade flows in Central America.
Significant improvements were brought about on Nicaragua market, with interregional exports growing dramatically from nearly 7% of total exports in the 1960s to 26% in the 1970s. The total value of trade grew from $33 million in 1960 to $1.1 billion in 1980.
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