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Central American Common Market

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Central American Common Market

Economic alliance and trade organization established in 1960 by El Salvador, Guatemala, Honduras (which seceded for a period from 1969), and Nicaragua; Costa Rica joined in 1962. Panama has observer status in some areas. Although formed to encourage economic development and cooperation between the smaller Central American nations and to attract industrial capital, the CACM has failed to live up to expectations as political and social conflicts have undermined efforts at greater integration and the establishment of a common market. Its offices are in Guatemala City, Guatemala.



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Adoption of a treaty of friendship and non-aggression by the democracies of Central America would formalize a regional security relationship that reinforces the economic framework being pursued through the Central American common market and CAFTA.
To help reactivate the Central American Common Market and reduce temporary imbalances in the countries' balance of payments, the European Economic Community has allocated ECUs (European Currency Unit) 120 million (about $163 million) to establish a subregional payment system, with adequate funding and a credit system to facilitate payments.
The programme of immediate action includes two high-priority areas: external debt servicing, and financing the reactivation of the Central American Common Market and the temporary disequilibrium of the balance of payments of individual countries.
 
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