Curious Common Marketing

Two years ago, in open imitation of Europe's Six, five nations of Central America--Honduras, Guatemala, El Salvador, Nicaragua and, later, Costa Rica--set up their own common market. But, unlike its European model, the Central American Common Market has poor economic soil to grow in: per capita income in its five member nations averages $200 a year, and heavy industry is almost nonexistent. Last week, at a meeting in El Salvador, the executive council of the Central American Common Market put into effect a curious plan to foster industrial growth. Henceforth, the five nations will select one company in each of a number of essential industries and give it exclusive tariff protection until it reaches large-scale production so efficient that it is able to take on foreign competitors on equal terms.

Named last week were the first two companies chosen for protection: GINSA, the General Tire Corp. subsidiary in Guatemala, and Nicaragua's Hercules Powder Co. insecticide plant. Both will be able to ship their products throughout the Central American market free of tariff and will enjoy the shelter of a high common tariff against competitive imports. Theoretically, there is nothing to prevent their foreign competitors from setting up plants in Central America, too, but such plants would not get the same tariff breaks. All this may well lead to rapid growth for GINSA and Hercules. But it may produce some spectacular hanky-panky on the part of Central American companies vying for "protected" status.

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