• Costa Rica Real Estate

Guatemala to eliminate customs duties with Honduras

February 20, 2015

By the end of 2015, foreign goods could flow freely between Guatemala and Honduras, without costly customs barriers between the Central American nations. Guatemalan President Otto Pérez Molina has set a deadline of mid-December for eliminating customs duties between the two countries.

Economists and development experts have long said that eliminating customs between Central American countries would help free up commerce, reducing costs and helping to alleviate poverty.

Plans to form a customs union among Central American countries have been in the works since the 1960s, and gained momentum with the passage of the Central American Free Trade Agreement in 2005.

Last year, the leaders of the so-called Northern Triangle countries of Central America — El Salvador, Guatemala, Honduras — produced a joint development plan that included eliminating customs among the countries as a major goal.

“Along with Honduras, we’re proposing to eliminate the three land border crossings we share in six to eight months,” Guatemalan Foreign Affairs Minister Carlos Raúl Morales told reporters earlier this month on a visit to Mexico.

He said El Salvador might also join the initiative.

Morales said Mexico’s border with Guatemala would no longer be a border between the two countries, but rather a border with the Northern Triangle region.

He said the customs union initiative was part of implementing the Alliance for Prosperity in the Northern Triangle plan, a poverty-reduction and development initiative presented last year by El Salvador, Guatemala and Honduras. The plan has received backing from the administration of U.S. President Barack Obama.

All four countries are under pressure to reduce the poverty and violence that have sparked an exodus of Central American children and families to the U.S. in the last two years. In a Jan. 2015 op-ed in The New York Times, Vice-President Joe Biden promoted the regional Alliance for Prosperity plan and said President Barack Obama would request $1 billion from Congress to help with its execution.

Besides improving infrastructure, strengthening institutions and improving public safety, the plan calls for “a framework guaranteeing the efficiency of border controls, including customs, immigration, sanitation and security aspects.”

According to the UN’s Economic Commission for Latin America and the Caribbean, the Northern Triangle has some of the most critical poverty levels in the region. Honduras tops the list, with nearly 70 percent of its population living in poverty, followed by Guatemala, with 55 percent, and El Salvador, with 40 percent, according to ECLAC.

The Northern Triangle’s combined population is 29 million.

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