Negotiating Trade Preferences in Central America

Central America’s experience with preferences demonstrates that it is analytically useful to distinguish between reciprocal and unilateral preferences rather than between North-South and South-South arrangements. Whereas reciprocal tariff preferences have had important beneficial effects, as the CACM (including Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua) demonstrates, the same cannot be said to be the case, on the whole, of tariff preferences unilaterally granted to Central America, such as those of the US CBI (CBERA), the EEC’s GSP and Latin America’s partial scope agreements. This leads to a focus on reciprocity as a potential means of obtaining effective preferences, either by making explicit the political and economic reciprocity that often exists implicitly as part of unilaterally granted preferences, and/or by increasing the potential for reciprocity through joint actions of a group of countries benefiting from preferences.