Guatemala-Honduras customs union furthers integration

Subject Customs union. Significance On June 26, Presidents Jimmy Morales of Guatemala and Juan Orlando Hernandez of Honduras formally launched a customs union between their countries, in an effort to boost trade by reducing or eliminating tariffs. The arrangement is the first of its type in Central America and may prove a step towards greater regional economic integration. Impacts The union may attract greater foreign investment, by allowing potential investors to spread operations across two countries. Bilateral moves may allow integration to advance in easily negotiable areas, while problematic issues such as border disputes are deferred. Washington’s recently stated intention to maintain tariff-free trade within NAFTA should ease concerns regarding the future of DR-CAFTA. Increased US deportations will further discourage moves towards more open borders, particularly between the north and south of the Isthmus.