Course Doing business in Mexico, Central America and the Caribbean

Course summary  Doing business in Mexico, Central America and the Caribbean:

In January 1994, Mexico joined Canada and the United States in the North American Free Trade Agreement (NAFTA), which will phase out all tariffs over a 15-year period. Under NAFTA, merchandise trade between the U.S., Canada and Mexico has tripled, reaching US$946.1 billion in 2008. Today NAFTA covers a North American economy with a combined output of US$17.0 trillion; the NAFTA partners exchange about US$2.6 billion in goods each day—that’s about US$108 million per hour.

The NAFTA region is home to 444.1 million people, 33.3 million of whom live in Canada, 304.1 million in the United States, and 106.7 million in Mexico.

With 105 million people, Mexico is the world's 10th biggest economy and the 7th most important commercial trader. Mexico has signed more free trade agreements (FTAs) than any other country in the world. To date, Mexico has signed FTAs with 32 countries and is in preliminary negotiations with 6 more. Foreign direct investment had a very favorable performance for Mexico prompted by the negotiation of Free trade agreements, the tax discord with the in bond assembling industry, new changes in the PITEX and Maquila programs.

The objectives of the Caribbean Community and Common market (CARICOM) are the Economic integration of the member states by the establishment of a Common market regime and the coordination of the foreign policies of member states.

The objectives of the Association of Caribbean States ACS are the following:
- The strengthening of the regional co-operation and integration process, with a view to creating an enhanced economic space in the region;
- Preserving the environmental integrity of the Caribbean Sea which is regarded as the common patrimony of the peoples of the region; and
- Promoting the sustainable development of the Greater Caribbean

The Central American Integration System (SICA) is the institutional framework of regional integration in Central America, created by the states of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. The System was designed taking into account past attempts for regional unification as well as lessons learned from a history of political crisis, belligerent conflict and dictatorial rule in Central America.

The Central American economy (the sum of the economies of all countries in the region), represents the sixth largest economy in Latin America (after Brazil, Mexico, Argentina, Colombia and Peru). The value of trade in goods between Central America and the world has been developed very favorably in recent years. In the period 2003-2008 grew at an average annual rate of 14.7 percent. United States is the main trading partner in Central America (31.6% of total exports of the region and the 33.4% of total imports).

El Salvador is located in a strategic position in Central America, between the north and south zones of the continent, which gives it privileged access to the most important Latin American and United States markets. The United States dollar is the country’s official currency. El Salvador is the second country with most free trade throughout Latin America, after Chile.

One of the pillars of the Costa Rican economic development has been trade liberalization, which has allowed exports to surpass its 30% ratio of GDP in 1980 to a current 50% rate (includes exports of goods and services). Over 200 global companies have chosen Costa Rica as an establishment location. Costa Rica is the 4th high-tech exporter in the world

Guatemala has the largest economic market in Central America (35% of the region’s total GDP), with a US$38,139.00 millions GDP for 2009, representing 33% of the region’s total GDP. Guatemala offers an excellent option as a FDI destination, besides belonging to Latin America -the region with the second highest growth of FDI inflows- Guatemala is becoming one of the main emerging markets within the region.

Honduras serves as a distribution platform of Central America, among the lowest logistical costs in the region. Laws that protect and promote foreign investment provide export-oriented companies fiscal and legal incentives highly favorable to investment. During just the past few years more than 300 companies have established operations in Honduras.

Nicaragua is one of the top two countries with the most favourable conditions to conduct business in the Central American region. Nicaragua is strategically located in the heart of the Americas, this privileged location, only two hours and thirty minutes by air and three days by sea from the United States, facilitates access to the world’s largest market.

Panama City is the country's capital and the principal commercial center. Colon, the country's second largest city, is located on the Caribbean Coast. Its economy is dependent on traffic through the Panama Canal (80 kilometers long between the Atlantic and Pacific Oceans) and on business activity in the Colon Free trade Zone, the largest duty-free zone in the Americas.

The Dominican Republic is primarily a service economy (55% of domestic supply) and is the largest employment generator in the country. Free trade zones, tourism, telecommunications and construction are key economic sectors. Tourism contributes more than U.S. $ 1,000 million a year.

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