El Salvador’s open economy, combined with its bilateral, regional and multilateral trade agreements, has led to a steady increase in foreign trade and improvement in the country’s international competitiveness.

These commercial agreements constitute the fundamental pillars for the promotion of investments and exports. They serve as an instrument for the development of the Salvadoran economy; likewise, it gives more opportunities for locals to buy products at competitive prices. It also offers wider access for our products in international markets.

These agreements consist of a legal framework that grants certainty to the signatory countries; it also guarantees a secure investment climate for productive sectors that seek better opportunities.

Below are the trade agreements El Salvador has subscribed up to June 2005:

Commercial Agreements

Caribbean Basin Trade Partnership Act (CBTPA)

  • Amplification of the Caribbean Basin Initiative (CBI): In 2000, the Caribbean Basin Trade Partnership Act 2000(CBTPA), was implemented; this Act provides for 24 Central American and Caribbean nations to be “beneficiary countries” for purposes of the enhanced trade preferences and modifies the Harmonized Tariff Schedule (HTS) to reflect the new trade preferences.

  • The CBTPA significantly expands preferential treatment for apparel made in the Caribbean Basin region. Duty and quota-free treatment is provided for apparel made in the CBI from U.S. fabrics. Duty/quota-free treatment is also available for certain knit apparel made in CBTPA beneficiary countries from Caribbean Basin region fabrics, provided that U.S. yarns are used in making the fabric.

Generalized System of Preferences

  • The purpose of this program is to encourage the economic growth of beneficiary developing independent countries and dependent countries and territories.

  • The U.S. General System of Preferences (GSP) provides preferential duty-free entry for more than 4,650 products from approximately 140 designated beneficiary countries and territories.

  • Products that are grown, produced or manufactured in a beneficiary country and which meet Rules of Origin criteria are eligible for duty-free entry to the United States under the GSP.

Free Trade Agreements

General Agreement of Central America

  • El Salvador has been part of the Central American Common Market since 1960 and an economic integration process has been achieved with the member countries with which it shares a model of common market, a free trade zone with a common external tariff and common tariff schedules.

Free Trade Agreement El Salvador – Mexico

  • This FTA was signed on June 29, 2000 and became effective on March 15, 2001. It allows the exports and imports of goods and services in El Salvador, and access to the Mexican market without restrictions to trade.

Free Trade Agreement El Salvador - Dominican Republic

  • This was the second FTA signed by El Salvador and it has been effective since October 04, 2001. Both nations have agreed to guarantee access to their respective markets through the total elimination of the custom duties on commerce of “origin goods”. This agreement allows Salvadoran merchandise to receive the same treatment as any other product coming from Dominican soil, and vice versa.

Free Trade Agreement El Salvador – Chile

  • This was the third FTA signed by El Salvador, and it has been effective since June 03, 2002. It established a free trade zone, which encourages growth and trade diversification of goods and services between the signing parties.

  • Regarding the National Treatment and Market Access of Goods, the Agreement establishes that each party shall progressively eliminate their custom duties over all originating goods.

Free Trade Agreement El Salvador – Panama

  • This was the fourth FTA signed by El Salvador, and it has been effective since October 03, 2002. This was the first agreement between two economies that have the dollar as legal tender. Likewise, it creates more opportunities so the consumer can acquire products at competitive prices in their local markets.

Free Trade Agreement El Salvador – United States

  • The U.S. Congress approved this agreement in July 2005 and El Salvador was the first country of Central America signing it on march 2006. Once CAFTA-DR is implemented, more than 80 percent of consumer and industrial exports of the signatory countries will be immediately benefited from a duty free status. The remaining 20% of the products will gain access during a term of 10 years for the industrial sector and 20 years for the agricultural sector. In the particular case of El Salvador, 100% of its industrial goods will enjoy immediate free access to the USA market.

Free Trade Agreements under negotiation

A Free Trade Agreement with Canada is still being negotiated; it is expected that by the end of 2005 talks will be concluded.