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Trade Facilitation in Central America

Progress on Binational Coordination

Central America — In recent weeks, several Central American countries have held binational meetings to make headway on the upgrading of border crossings in the region. Among the activities planned as part of the Trade Facilitation and Competitiveness Strategy with an emphasis on Coordinated Border Management, which was approved by the Central American Council of Ministers of Integration, the Economy, and Trade (COMIECO) [1] in October 2015, high-level coordination meetings took place between Costa Rica and Panama in September; between Nicaragua and Honduras in November, and between Guatemala and El Salvador, also in November. These meetings were held to move toward defining the operational models that will be implemented at different border crossings between these countries.

The meeting between Costa Rica and Panama, for example, saw the completion of the bilateral agreement that will enable the construction of border passes at Paso Canoas, Sixaola-Guabito, and Sabalito-Río Sereno. This legal agreement will soon be signed by the presidents of the two countries and then sent to their respective legislative assemblies to be passed. The agreement will lead to the construction of a one-stop border crossing at Paso Canoas that will allow transportation companies to move easily between the two countries via a single physical facility that will handle both entry and exit paperwork for freight and passengers. The entry country will be responsible for the monitoring process in each case. To this end, the agreement needs to bestow extraterritorial border monitoring powers on the parties. At the crossings at Sixaola-Guabito and Sabalito-Río Sereno, the project is much more ambitious: it entails a single physical customs facility where entry and exit checks for both countries will be carried out. At Sixaola-Guabito, the checkpoint will be on the Panamanian side. At Sabalito-Río Sereno, it will be on the Costa Rican side.

The meetings between Nicaragua and Honduras marked the start of the technical coordination process, and the two countries agreed upon the operational models to be implemented at El Guasaule, El Espino-La Fraternidad, and Las Manos. Work at these border crossings will begin with the modernization of the facilities under the current scheme of two physically separate but virtually integrated checkpoints. However, these projects will be designed in such a way as to be able to join them into a single checkpoint in the future. El Salvador and Guatemala have also agreed on a similar model for the border crossings at Pedro de Alvarado and La Hachadura.

Nicaragua’s Minister of the Treasury and Public Credit, Iván Acosta; Honduras’s Minister-Director of the Secretariat of Revenue and Customs, Miryam Guzman; and Carlos Melo, the IDB’s representative in Nicaragua, on November 9, 2016.

The Inter-American Development Bank (IDB) has played various parts in these processes. First, it has coordinated and facilitated this binational dialogue. Specialists from the Trade and Integration Division (TIN) brought the parties together and acted as technical consultants to bring each country’s project on par with that of the other and unite them under a common vision. Second, the IDB is financing the upgrading works at the two countries’ border facilities, although El Salvador, it is only providing technical assistance for the present. The IDB is seeking to help the countries of Central America define the technical aspects of the various operations, including the drafting of these international agreements or memoranda of understanding and the presentation of proposals on operational models The main difficulties lie in the challenge of bringing each country’s fiscal and parafiscal monitoring authorities in line with one another and with their counterparts in the other country, using a shared model inspired by the Coordinated Border Management (CBM) system. CBM is a concept that originated in the World Customs Organization (WCO) and that seeks to distill the best border management practices so as to facilitate the transit of goods and passengers without compromising the process of monitoring these. By so doing, it is hoped that the time it takes for goods to cross any of these borders will be reduced by up to 80%, leading to a corresponding reduction in the logistics costs associated with the import and export processes.


 

[1] COMIECO is made up of Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and Panama.

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