The effects of international trade on national sovereignty: the case of the Central American Common Market

The globalization of economic activity has caused some to declare that national borders no longer matter and, therefore, the nation-state has become irrelevant. Others argue that globalization has weakened the nation-state and has made it susceptible to the economic interests that control the global economy. Regardless, countries have become increasingly integrated into the global economy over the past two decades; they have also organized themselves into various regional trading blocs. This study contributes to the debate of how globalization and regionalization have affected the sovereignty of the world’s nation-states, by investigating the effects of the Central American Common Market (CACM) on the national sovereignty of its member countries. To accomplish this goal, the study employed a battery of empirical and qualitative analyses to address three primary questions. First, does the existence of the CACM conflict with the nation-state, resulting in the formation of a de facto, supra-national boundary? Second, does the CACM’s legal and institutional framework possess the strength to compete and challenge the authority of the nation-state? And, third, does regional identity or economic integration strengthen the CACM in its challenge of the nation state? To determine the existence of a de facto, supra-national CACM boundary, the study employed a gravity model to determine its existence and to measure its effect. To understand the ability of the CACM to successfully challenge the authority of its member states, the research included interviews of individuals working at Central America’s multinational institutions, national governments and organizations representing its private-sector. The findings of the empirical analyses did show, from several geographic perspectives, a supra-national CACM boundary between 1980 and 1997. However, despite these findings, there was significant evidence gathered during the interviewing process to question whether this border actually exists. The Central American countries have been unwilling to give up more than the minimal amount of national sovereignty necessary to make the CACM work. Therefore, the findings of this research suggest that participation in the Central American Common Market agreement has not threatened the national sovereignty of its member nation-states.