Central American Common Market (MCCA)

Commerce

The Central American Common Market, known by its acronym MCAA, is a process of integration between Central American countries.

The Central American Common Market (CACM) was created with the signing of the General Treaty of Central American Economic Integration of 1960. Said treaty is made up of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. After the decision-making that regulated the integration process, in 1991 Panama was added, with the signing of a new treaty. This is known as the Tagucigalpa Protocol.

Organizational structure

The creation of the MCCA required the establishment of certain Bodies to ensure the proper functioning of the integration process.

These are:

  • Central American Economic Council: It is the highest entity in charge of controlling the activities of the other entities. In addition, it is the last instance for the resolution of conflicts that are the responsibility of the MCCA. This is made up of the finance ministers of the member states.
  • Executive Council: It is in charge of carrying out the activities necessary to fulfill the objectives of the MCCA. In other words, it is responsible for making decisions in legal matters to guarantee the integration process. On the other hand, it is made up of a proprietary official and a substitute for each member. Decisions that cannot be resolved in said Council will be in charge of the Central American Economic Council.
  • Permanent Secretariat: This figure is in charge of keeping the organization operational. In other words, it is in charge of carrying out the daily administrative processes.
  • Central American Bank: This institution was created with the objective of providing financing to the Contracting States. In addition, it has the objective of promoting economic growth in the region.

Policies governing the MCCA

The member states established a series of economic and trade policies to regulate the multilateral relationship.

Some of the policies they established are:

  • Elimination of tariffs for products from other member states.
  • Freedom of transit for merchandise from the Contracting States. That is, the elimination of restrictions on the transport and distribution of merchandise.
  • Prohibition of elimination of tariffs on products by States outside Central America. Mainly, this measure applies to those products that are manufactured by a Contracting State.
  • Cooperation between Central Banks to avoid exchange rate distortions. This, in order to avoid competitive devaluations that harm the neighbor.
  • Prohibition of dumping or other policy of subsidizing exported goods.

Objectives of the MCCA

The CACM, and its base treaty, has as its main objective to accelerate the regional integration process. This, considering that integration contributes to improving the quality of life of its inhabitants. Likewise, it is also among its objectives to promote Central American development. With this, they recognize the need to cooperate with each other to boost domestic industries in a more competitive environment.

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