ABSTRACT
This chapter begins by stating the case for the revival of the Central American Common Market (CACM), albeit in amended form. It describes suggestions for European Community policy on aid, debt renegotiation and trading arrangements with Central America. Although the CACM agreements included provisions for a Common External Tariff and a Convention on Fiscal Incentives, in practice, the granting of tariff and fiscal exemptions on an ad hoc basis by each country became the rule. Bulmer-Thomas argues that the revival of the CACM will depend on the recovery of foreign exchange earnings from traditional exports, the removal of restrictions on intra-regional trade, and the implementation of a complementary package of measures aimed at settling intra-regional debts and financing trade flows under agreed exchange rate arrangements. A new Common External Tariff has been adopted; membership of the Central American Bank for Economic Integration has been broadened and a new intraregional payments scheme launched.
