Joint Business Ventures in the Central American Common Market

The European Economic Community\u27s Treaty of Rome was referred to by Paul Monet as the first great anti-trust law in Europe. This view is undoubtedly predicated on the belief that the Treaty of Rome would break up the large cartels existing in the individual European nations by providing relatively uninhibited competition from other nations. However, this has not proved true since many of the old cartels remain strong. Conversely, other individuals expressed concern about the proposed EEC and feared that giant European cartels might develop. These concerns equally proved to be erroneous. With respect to the CACM, at least one of the developments has been labeled as monopolistic, that being the agreement which arose from the Integrated Industries Convention of June 1958 providing that industries requiring access to the entire CACM in order to have reasonably profitable expectations should be divided among the CACM countries. Two examples would be the Ginsa Tire plant in Guatemala and the Caustic Soda and Chlorated Insecticide plant in Nicaragua. This arrangement has been attacked as being monopolistic with the argument that free enterprise should determine what industries will enter the region and where they may locate. Notwithstanding the above developments the Central American Common Market offers a unique and challenging area for investment in developing economies. No other underdeveloped area of the world has shown such forthright action in terms of self-help. The United States should encourage private investment in the CACM even more than it has done to date. Investment in the form of joint ventures could be encouraged through tax credits for investment using this form. It is hoped that such organizations as the Agency for International Development will continue to encourage the use of the joint venture, and that United States investors will become more aware of the potential benefits to be gained from investment in the developing economies