Central American Integration System

Central American Integration System
Sistema de Integración

Central American
Integration System
Motto: God, Union and Liberty
Anthem: La Granadera
Map of the Central American Integration System
Map of the Central American Integration System
Official language Spanish
Type Supranational union
 -  Court of Cartago 20 December 1907 
 -  ODECA 14 October 1951 
 -  CACM 13 December 1960 
 -  SICA 13 December 1991 
 -  Total 572,510 km2 
221,047 sq mi 
 -  2009 estimate 51,152,936 
 -  Density 89.34/km2 
231.4/sq mi
GDP (PPP) 2010 estimate
 -  Total 318.141 billion 
 -  Per capita $6219.40 
GDP (nominal) 2010 estimate
 -  Total 172.634 billion 
 -  Per capita $3374.86 

Central American Integration System (Spanish: Sistema de la Integración Centroamericana; SICA) is the economic, cultural and political organization of Central American states since February 1, 1993. It was on December 13, 1991, however, when all the countries of the ODECA (Spanish: Organización de Estados Centroamericanos; ODECA) signed the Protocol of Tegucigalpa which extended the earlier cooperation in search for regional peace, political freedom, democracy and economic development. The headquarters of the General Secretariat of SICA are located in the Republic of El Salvador.

In 1991, the institutional framework of SICA included the States of Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. Belize joined in 2000 as full member, while the Dominican Republic became an associated state in 2004. More recently, Mexico, Chile and Brazil became part of the organization as regional observers; while the Republic of China, Spain, Germany and Japan became extrarregional observers. The SICA has a standing invitation to participate as observers in the sessions of the United Nations General Assembly[1] and maintaining permanent offices at UN Headquarters.[2]

Four countries, Guatemala, El Salvador, Honduras, and Nicaragua, are going through a process of political, cultural, and migratory integration and have formed a group called The Central America Four or CA-4, which has introduced common internal borders. Belize, Costa Rica, Panama and Dominican Republic join the CA-4 only in matters of economic integration and regional friendship.



Central American Court of Justice

Between November 14, and December 20, 1907, following a proposal made by Mexico and the United States, five Central American nations – Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua – took part in the Central American Peace Conference in Washington, D.C, sponsored by United States President Theodore Roosevelt's Secretary of State, Nobel Prize winner Elihu Root. The five nations, which had all previously been Spanish colonies had sought on numerous prior occasions, with great difficulty, to form a political alliance. The earliest attempt was the Federal Republic of Central America, and the most recent such effort had taken place 11 years earlier, with the founding of the Republic of Central America.

Nations ended the Conference by signing a peace treaty, one aspect of which created the Central American Court of Justice (Corte de Justicia Centroamericana). The signatories agreed that the convention creating the Court would remain in effect for ten years, beginning at the time of the last ratification. All communications between the signatories were made through the government of Costa Rica. The Court was composed of five judges, one each from each member state. For the period of its functioning the Court heard ten cases, five of which were brought by private individuals and declared inadmissible, and three of which were started by the Court's own initiative. The court operated for 10 years, until April 1918, from its headquarters in Costa Rica, at which point it dissolved. Its members had sought without success from March 1917, when Nicaragua gave a notice of termination from the agreement, to continue the arrangement.

Several explanations for the treaty's failure exist:

  • The court lacked an effective system of judicial procedure.
  • The judges were not free to act independently of their respective governments.
  • The court had been given a jurisdiction too broad to satisfy its member states.[citation needed]

Organization of Central American States

BCIE logo.png

Following the end of World War II, a new interest in integrating the Central American governments began. On October 14, 1951, 33 years after the dissolution of the CACJ, the governments of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua signed a new treaty creating the Organization of Central American States (Organización de Estados Centroamericanos, or ODECA) to promote regional cooperation, integrity and unity in Central America. The following year, December 12, 1952, ODECA's charter was altered to create a new Central American Court of Justice (this time called the Corte Centroamericana de Justicia, or CCJ), without the time limitation of its previous incarnation.

The Charter of San Salvador was ratified by all the governments of Central America, and on August 18, 1955 the foreign ministers held their first meeting in Antigua Guatemala. There ensued the Declaration of Antigua Guatemala, which decreed that subordinate organizations should be formed under ODECA, to help establish systems of organization and procedure so there would be no restrictions to free intercourse, to economic cooperation, to better sanitary conditions for member nations, and to continued progress in the “integral union” of the Central American nations.[3]

The Central American Common Market, the Central American Bank for Economic Integration, and the Secretariat for Central American Economic Integration (SIECA) were established between five nations of Central America on December 13, 1960 in a conference in Managua.[4] These nations ratified the treaties of membership the following year. Costa Rica joined the CACM in 1963. Panama is conspicuous by absence. Then organization froze in 1969 with the war between Honduras and El Salvador. In 1973, ODECA was suspended and progress in regional integration came to a standstill.


It was not until 1991 that the integration agenda was completed with the creation of the SICA, which provided a clear legal base to avoid discrepancies between the member states. The SICA membership includes the 7 nations of Central America plus the Dominican Republic, a state that is part of the Caribbean. Central America already has several supranational institutions such as the Central American Parliament, the Central American Bank for Economic Integration and the Central American Common Market. The current Central America trade block is organized by the General Treaty for Economical Integration signed October 29, 1993 (Guatemala Protocol). The CACM has succeeded in removing duties on most products moving among the member countries, and has largely unified external tariffs and increased trade within the member nations. The bank has 5 non-regional members: Argentina, Colombia, Mexico, Taiwan and Spain.

Economic Integration

Prospects for a Central American Currency Union

Trade with the US—the region’s largest trading partner—is the most important source of income for Central America. More than half of Central American exports are destined for the US. Remittances annually add up to billions of dollars as well.[5] This concentration of trade with the US points to the potential benefits of reduced transaction costs and greater efficiency of a common currency. Yet, at the same time retaining their own currencies is a priority for individual countries. A weaker domestic currency means cheaper exports and a more dynamic and competitive export industry.

A new currency is unlikely and a dollarization of the region is perhaps the only possibility.The emergence of a new common currency would also be troubled by the available regional institutions’ lack of effectiveness, resources and relevance; thus, governments have rarely delegated responsibilities to them.[6] A regional central bank would also have to be established and it’s not clear how this would be done.The currency union undertaking—a process that would require frequent and consistent political commitment—has not found priority in the regional agenda. Regional efforts are focused on security problems and social issues such as combating drug trafficking and organized crime, improving education, meeting energy needs, crafting natural disaster prevention measures, etc.[7]

In terms of Robert Mundell’s Optimum Currency Area criteria, Central America does not fulfill important prerequisites for a union and is arguably not the site of an optimum currency area.[8] Though the region as a whole enjoys a high degree of factor mobility, diversified composition of output, price and wage flexibility, and important financial integration it also fails to meet important criteria. The lack of business cycle synchronization[9], high and dissimilar levels of public sector debt, diverging inflation rates, and the lack of high levels of intraregional trade are some deficiencies.[10]


Central American Parliament

The parliament was created with the vision to be a modern renewal of the historic Federal Republic of Central America which existed from 1823 to 1840. Costa Rica is the only one of the original five states not to join Parlacen, but in its place are two new contributors: Panama (which was once part of Colombia, or rather New Granada, and so was not one of the original Central American states) and the Dominican Republic. It has its more recent origins in the Contadora Group, a project launched in the 1980s to help deal with civil wars in El Salvador, Guatemala and Nicaragua. Although the Contadora was dissolved in 1986, the idea for Central American Integration remained, and its works were taken by the Esquipulas Peace Agreement, which, among other acts, agreed to the creation of the Central American Parliament. Members return 20-22 directly elected deputies to the Parliament. In spite of its efforts to promote the Esquipulas Agreement, Costa Rica has not yet ratified and is consequently not represented in the Parlacen. Parlacen has been seen by some, including former President of Honduras, Ricardo Maduro as a white elephant.[11]

Central American Court of Justice

The current mission of the CCJ is to promote peace in the region and unity between its member-states. Today's Court[12] has jurisdiction to hear cases:

  • between member States
  • between a member state and a non-member state which agrees to the Court's jurisdiction
  • between states and any natural or legal person who is a resident of any member state
  • regarding the integration process between Central American Integration System's (SICA) organs and member states or natural or legal persons

The Court may also offer consultation to the Supreme Courts of the region. In 2005, the Court ruled that Nicaraguan congressional reforms, which took control of water, energy and telecommunications services away from President Enrique Bolaños were "legally inapplicable", possibly further inciting the Nicaraguan political crisis. As of July 2005, the CCJ has made 70 resolutions since hearing its first case in 1994.

System bodies

  • Central American Bank for Economic Integration (Banco Centroamericano de Integración Económica, BCIE)[13]
  • Central American Common Market (CACM; Mercado Común Centroamericano, MCCA)
  • Central American Court of Justice (CCJ)[14][15][16]
  • Central American Parliament (Parlamento Centroamericano, PARLACEN)
    • Plenum
    • Board of Parliament
    • Secretariat
  • Presidents Summit
    • Comité Consultivo (CC-SICA)
    • Council of Ministers of Foreign Affairs
    • Executive Committee (CE-SICA)
    • Vice Presidents Summit
    • Secretariat General (SG-SICA)[17]

See also


  1. ^ United Nations list of observing international organizations
  2. ^ Central American Integration System: representation in New York
  3. ^ "Central American Defense Council - Some Problems and Achievements". Lieutenant Colonel Laun C. Smith, JR.. http://www.airpower.maxwell.af.mil/airchronicles/aureview/1969/mar-apr/smithl.html. Retrieved 2006-05-22.. 
  4. ^ General Treaty on Central American Economic Integration between Guatemala, El Salvador, Honduras and Nicaragua signed at Managua, on 13 December 1960
  5. ^ Allen, Albert, Osei-Agyeman Yeboah, Saleem Shaik, Victor Ofori-Boadu “Trade Effects of the Central American Free Trade Agreement” AAEA 2007
  6. ^ Granados, Jaime. Intraregional Commerce. Inter-American Development Bank. CABEI 50th Anniversary Series. September 2010.
  7. ^ Corbo, Vittorio. Is it Time for a Common Currency for the Americas? Journal of Policy Modeling 23. 2001
  8. ^ Mundell, Robert. The Theory of Optimum Currency Areas. American Economic Review 51(4). 1961
  9. ^ Edwards, Sebastian. “Monetary Unions, External Shocks, and Economic Performance: A Latin American Perspective”. International Economics and Economic Policy. June 2006
  10. ^ Bulmer-Thomas, Victor and A. Douglas Kincaid. Central America 2020: Towards a New Regional Development Model. USAID. EU Commission. 2000
  11. ^ América Central
  12. ^ Alexander Aizenstatd. Reflejos del Derecho Comunitario Europeo en las decisiones de la Corte Centroamericana de Justicia. Revista General de Derecho Europeo No. 25 (2011)
  13. ^ Central American Bank for Economic Integration
  14. ^ Official website of the CCJ (Spanish language)
  15. ^ History of the CACJ from WorldCourts
  16. ^ CACJ history page from PICT
  17. ^ "The EU's relations with Central America". The EU's Official Website. http://ec.europa.eu/comm/external_relations/ca/index.htm. Retrieved 2006-06-19. 

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