Central American Common Market

Central American Common Market (CACM), trade organization envisioned by a 1960 treaty between Guatemala, Honduras, Nicaragua, and El Salvador. The treaty established (1961) a secretariat for Central American economic integration, which Costa Rica joined in 1963; Panama now has observer status in some areas. By 1970 trade between member nations had risen more than tenfold over 1960 levels, and imports doubled and a common tariff was established for 98% of the trade with nonmember countries. However, the 1969 war between El Salvador and Honduras led to the latter's effective withdrawal, and the political turmoil in Central America during the 1970s and 80s left the organization moribund. The 1990s saw a revival of the organization, but its ultimate place with respect to the Central American Free Trade Agreement (signed 2004, and including the Dominican Republic and the United States) and the proposed (2001) Free Trade Area of the Americas is unclear.

Central American Common Market (CACM or ODECA) An economic organization comprising Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica. Beginning with a treaty signed by all five countries in 1960 the CACM sought to reduce trade barriers, stimulate exports, and encourage industrialization by means of regional cooperation. With a permanent secretariat at Guatemala City, its aim was cooperation with the member countries of the Latin American Free Trade Association (now called the Latin American Integration Association). During the 1970s, it somewhat lost impetus, owing to war, upheaval, international recession, and ideological differences among member states. A new tariff and customs agreement came into effect in 1986, when regional trade improved. In 1993 Panama agreed to implement full economic integration with the CACM nations.

Central American Common Market (CACM) An agreement from 1960 between Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica (which joined in 1962) to create a common market, promote industrialization, and establish a customs union. It resulted in a growth in trade among its members and a considerable increase in foreign capital investment during the first part of the 1960s. However, slower economic growth, increasing debts, and growing economic heterogeneity as a result of partial industrialization led to tensions culminating in the Football War of 1969. Subsequent efforts at a reformulation of priorities towards economic development during the 1970s were hampered by domestic unrest in Nicaragua and El Salvador, whose civil wars in the 1980s brought the development of the CACM to a complete standstill. Only once these conflicts had been resolved, at the end of the 1980s, were efforts at closer economic and political integration resumed. This was spearheaded by an agreement between Guatemala, Honduras, and El Salvador and to create a Free Trade Area from 1 January 1993. The three states subsequently signed a Free Trade Agreement with Mexico. This did facilitate trade between these states, but made the CACM more heterogeneous.