Weekly Report - 06 September 2012 (WR-12-35)

CENTRAL AMERICA | Free trade agreement with Mexico takes effect. On 1 September the free trade agreement between Nicaragua, El Salvador, Honduras, Guatemala, Costa Rica and Mexico went into effect. It is expected that the agreement, which was signed in 2011, will allow Central America to better integrate its production chains with Mexico in order to generate economies of scale that will lead to increased efficiency and productivity in the new free trade area by reducing administrative and business costs. Previously Mexico had trade agreements in place with the five different countries separately and the new agreement will consolidate 98% of the rules governing trade between Mexico and its Central American trade partners, according to Mexico’s economy ministry. The new consolidated rules will go into immediate effect in Mexico, Nicaragua and El Salvador. It is expected that the same will happen in Honduras, Costa Rica and Guatemala once these three countries conclude the legal proceedings necessary for the agreement to take full effect.

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