Sunday, November 20, 2011

Central America comes to an agreement with the EU to create a Central American competition organization and accompanying legislation

By Gabriel Guardado

Central America is currently in the final stages of agreeing to an Association Agreement with the European Union, which includes free trade, cooperation and channels for political dialog. The language has been agreed upon, including its charter, which refers to trade and competition.

Through the trade and competition charter, Central America commits to establish within the next 7 years, after the entry into force of the agreement, regional competition legislation and a regional competition authority, in accordance to Article 25 of the Protocolo al Tratado General de Integración Económica Centroamericana (Protocolo de Guatemala) and Article 21 of the Convenio Marco para el Establecimiento de la Unión Aduanera Centroamericana (Guatemala, 2007). 

Although the plans for the establishment of this organization and legislation were already on the Central American agenda as a part of its integration efforts, the region has now acquired an international commitment from the European Union, adding motivation and momentum to the cause and giving added support to other aspects of the "Association Agreement". The effort to integrate Central America has been ongoing since 1951 when the original agreement was signed. 

The text of the Agreement can be found on the web page of the Ministry of the Economy of El Salvador over here.


  1. Dear Gabriel, do you know if the model and competition policy that will be implemented in Central America will follow the US principles or the EU practice? Many differences can follow from that choice.

  2. Dear Juan:

    Thank you so much for reading our blog.

    In relation to your question, my understanding is that to date, the negotiators have not fully defined that.

    One of the major issues is that Guatemala does not have a domestic legislation in competition, and probably is why the text of the title with the EU is quite limited in scope. As you can see, it enunciates general principles and just some obligations in relation with public enterprises and enterprises with especial or exclusive rights. The rest of the title refer to exchange of information, cooperation on enforcement and technical assistance. This is a reflection of how difficult it is, to reach an agreement on competition on a regional basis.

    Since the term agreed to comply with the obligation of a regional entity and legislation is 7 years, Central America has still time to decide which way they would go. Any news in relation to this or further research I conduct, will be posted for your knowledge.