Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
U.S. companies exporting to El Salvador benefit from the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) with zero percent duties on U.S. consumer and industrial goods. CAFTA-DR entered into force on March 1, 2006 and has contributed to dramatic increases in the United States’ bilateral trade with El Salvador and broader trade throughout the region. Also, El Salvador’s dollarized economy eliminates foreign exchange risk and lowers transaction and financial costs. On June 5, 2021 President Bukele announced that bitcoin would become a legal tender in El Salvador alongside the dollar. The Bitcoin Law was passed on June 8, to take effect on September 7, 2021. This included a requirement for businesses in El Salvador to accept bitcoin for payments.
President Nayib Bukele was elected in 2019, and his Nuevas Ideas political party gained a super majority in the Legislative Assembly in 2021. There have been a number of recent legislative changes in El Salvador that undermine judicial independence and remove a critical counterbalance on the executive branch, raising serious concerns over the separation of powers and the rule of law and thus creating a less stable environment in which to do business.