SEEN AGAINST the potential advantages of common market arrangements, the obstacles to the integration of particular industries are often underestimated. Arguments for integration frequently stress that an enlarged internal market will produce a further expansion of industrial investments. This was the basic intent of the Latin American Free Trade Association (LAFTA), but in the automotive industry, at least, industrialization programs, operating under systems of national protection, already have expanded the production facilities of the LAFTA region to more than tenfold what would be economically justifiable. And each year new countries enter the industry, adding to an already overdeveloped regional capability. The unhappy reality in the automotive field is that, far from creating market opportunities, the LAFTA Agreement confronts member countries with the problem of disposing of excess plant facilities. This fact alone provides a major reason why so little progress has been made thus far in reducing internal trade barriers in the LAFTA region.
National or domestic content refers to the percentage of vehicle components (by value or weight, depending upon the government regulation) manufactured and assembled locally, the remainder being imported content.