The free trade agreement between Mexico and the republics of Costa Rica, El Salvador, Guatemala and Nicaragua entered into force with Honduras

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The free trade agreement between Mexico  and the republics of Costa Rica, El Salvador, Guatemala  and Nicaragua entered into force with Honduras.

On January first, the Free Trade Agreement between Mexico and the Republics of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua entered into force for The Republic of Honduras.

This Agreement was signed on November 22nd, 2011, approved by the Senate of the Mexican Republic on December 15th, 2011 and published in the Federal Official Gazette on August 31, 2012. On September 1st, 2012 it came into force for trade between Mexico, El Salvador and Nicaragua.

Among the objectives of the Agreement are: increase and facilitate trade by harmonizing rules; homologate 98 percent of specific rules of existing agreements. It has a single regulation, just one certificate of origin and only one instance of interlocution.

Additionally, companies in Mexico and Central America will strength their productive chains and will generate economies of scale; the investment in the region will be increased and transaction costs will be reduced updating commitments and disciplines of the trade agreements between Mexico and Central America.

Therefore, Honduras is the third Central American country that enforces the Agreement, leaving Costa Rica and Guatemala pending, because both countries have not yet concluded its internal approval procedures, and so it is expected to do so during the first half of 2013.

Finally, since the said Agreement has entered into force for El Salvador, Honduras and Nicaragua, the FreeTrade Agreement between the United Mexican States and the Republics of El Salvador, Guatemala and Honduras and the Free Trade Agreement between the United Mexican States and the Republic of Nicaragua, respectively, are not effective in these three countries.

In the last ten years, bilateral trade between Mexico and five Central American countries has increased by 3.6 times, to reach six thousand 554 million dollars in 2010. It is expected that this trend will be increased with this Agreement.

Central America is the fourth Mexican investment destination in Latin America, with five thousand 200 million dollars in sectors such as telecommunications, food, manufacturing, entertainment and energy, among others.

By its geographical proximity, particularly for the South-East of Mexico, Central America represents, as a region, an important market with imports amount to 48 billion dollars. The participation of Mexico in these imports amounts to approximately eight percent.

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