Describes trade agreements this country is a party to. Includes resources where U.S. companies can get information on how to take advantage of these agreements.
The United States, the Dominican Republic, and five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), signed the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) in August 2004. The Agreement entered into force in Guatemala on July 1, 2006, after the country completed all the commitments necessary for implementation.
CAFTA-DR liberalizes bilateral trade between the United States and the region and promotes regional integration. It also requires the Central American countries to undertake needed reforms to alleviate systemic problems in such areas as customs administration, protection of intellectual property rights, services, investment, financial services, market access, and government procurement, as well as sanitary and phytosanitary and other non-tariff barriers.
Under CAFTA-DR, all U.S. consumer and industrial goods enter Guatemala duty free (for goods that meet the country of origin requirements) as of January 1, 2015. In addition, nearly all textile and apparel goods that meet the Agreement’s rules of origin enter Guatemala duty free and quota free.
Under CAFTA-DR, nearly all U.S. agricultural exports enter Guatemala duty free. Guatemala will eliminate its remaining tariffs on rice by 2023 and on dairy products by 2025. In 2017, Guatemala eliminated its out-of-quota tariff for chicken leg quarters, five years early. For certain agricultural products, tariff-rate quotas (TRQs) permit some duty-free access for specified quantities during the tariff phase-out period, with the duty-free amount expanding during that period.
Central America established a common external tariff schedule in 1998. Six Central American countries signed a revised protocol for economic integration and macroeconomic coordination in October 1993. The integration protocol allows Central American countries to advance at varying rates toward more open trade.
Guatemala, El Salvador and Honduras have moved the most rapidly towards eliminating trade barriers among themselves. In February 2015, the presidents of Guatemala and Honduras signed a general framework agreement to establish a customs union between the two countries.
In January 2016, the Guatemalan Congress approved the protocol to enable a customs union with Honduras, which has allowed for the free movement of people and goods between the two countries. Guatemala’s protocol to enable the customs union with Honduras went into force in May 2016. After completing regulatory, technical, and administrative procedures, the two countries implemented the first stage of the customs union process in June 2017.
El Salvador began negotiations to join the customs union between Guatemala and Honduras in October 2017 and deposited its instrument of adhesion to the customs union between Honduras and Guatemala with the General Secretariat of the Central American Integration System (SICA) in August 2018. El Salvador signed a resolution to join the customs union process on legal and administrative aspects with Guatemala and Honduras in November 2018.