Economic integration between El Salvador and Guatemala:

The impact of the establishment of a Customs Union on the Salvadoran economy.

Abstract

ANALYZES THE EXPECTED IMPACT OF THE ESTABLISHMENT OF A CUSTOMS UNION BETWEEN EL SALVADOR AND GUATEMALA ON THE SALVADORAN ECONOMY. THE IMPLICATIONS OF MOVING FROM A FREE TRADE SCHEME TO A CUSTOMS UNION ARE EVALUATED: THE ESTABLISHMENT OF A COMMON EXTERNAL TARIFF, THE ANNULMENT OF RULES OF ORIGIN, AND THE ELIMINATION OF BORDER CONTROLS FOR TRADE OPERATIONS BETWEEN BOTH COUNTRIES. THE STUDY PREDICTS THAT THE BENEFITS ASSOCIATED WITH THIS POLICY OUTWEIGH THE NEGATIVE EFFECT ON THE SALVADORAN SECTORS THAT WOULD BE AFFECTED BY A TARIFF REDUCTION.