What Trade Lessons Can We Learn from Honduran Coup?
I have not seen any discussion on what the Honduran coup means in terms of the United States FTA with the Central America 4. I also have not seen any discussion on what the Honduran coup means in terms a Canada's free trade agreement negotiations with the Central America 4 (Honduras, Guatemala, El Salvador and Nicaragua). Presumably the political instability in Honduras will put a damper on the negotiations, especially if the Canadian Government considers the Honduran government to be illegitimate.
There is a report that the "coup throws a curve ball at EU plans to wrap up an Association Agreement with the six-country Central American bloc this year, whose members included Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama." The negotiations have been suspended for now. See - http://euobserver.com/9/28386
I wonder whether Canada should enter into into individual FTAs with Guatemala, El Salvador, Nicaragua and Honduras (when it is more stable). Should Canada see the writing on the wall that there is political instability in the region and the potential for a military government as opposed to a democratically elected government? Should Canada enter into a free trade agreement with a country that may not be governed according to democratic principles? If Canada enters into bilateral FTAs (as opposed to an Association FTA or regional FTA), then it would have greater flexibility to withdraw from the agreement (terminate the agreement) should the military overrule/replace democracy. A withdrawal could affect one country, but not the other three. Focused attention is needed to ensure severability in the negotiated agreement.
Honduras has also entered into FTAs with Mexico and Panama and is a member of the Central America Common Market.
