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The Salvadoran Economy
Free Trade Agreement El Salvador – the United
States of America
Effective since March 1, 2006. In 2007 97.9% of
national products entered the United States customs
free and 77.8% of US products to the country. To
emphasize the importance of this treaty, here are
some figures:
Annual Exports to United States: USD$2,400 million
United States Annual Direct Investment in El
Salvador: USD$885 million Dollars
Free Trade Agreement El Salvador – Republic of
China (Taiwan)
Effective since March 1, 2007. It is the first treaty
signed by El Salvador with an Asian country and
for Taiwan it is the fourth with a Central American
country. The negotiations lasted only 6 months.
Some of the benefits of the TLC are:
Immediate access to 64.4% of Salvadoran products
to the Taiwanese market with 0% customs.
The free trade commerce includes Cooperation and
Investment chapters.
With average customs of 7.5%, resulting from
the reduction of customs on all products, which
imposes very little limitations on imports of goods
and services (fuel, asphalt, textiles, sugar); El
Salvador maintains a mainly liberal access regimen
to markets for merchandize. The type of NMF means
applied to non agricultural products is 6.7%, while
on agricultural products it is 12%. The customs
structure is significantly progressive. All customs
are consolidated, the majority with a 40% maximum
rate, so there is a disparity between applied and
consolidated rates that may impair the predictability
of conditions of access to the markets.
The influence of imports and exports in relation to the
GDP shows a high degree of economic openness.
MAIN BUSINESS PARTNERS
According to the information from the Spanish
Commercial Office in El Salvador exports distributed
by country are distributed accordingly: (2008)
• 48% the United States
• 13.6% Guatemala
• 12.9% Honduras
• 5.5% Nicaragua
• 3.6% Costa Rica
• 2.7% Germany
• 2.3% Spain
The principal products exported are: (2008 – M$)
• Coffee, tea, grass, mate 261.8
• Beverages, vinegar and alcoholic liquids 247.7
• Paper and cardboard 199
• Plastic and manufacturing 195
• Iron and steel foundry 174
• Fuel, minerals, oil 170
• Cereal based preparations 113
• Sugar and confectionery articles 111
Imports by origin (2008)
• The United States 34%
• Mexico 9%
• Guatemala 8.4%
• Honduras 3.8%
• Brazil 3.3%
• Costa Rica 2.6%
• Japan 2%
• Nicaragua 2%
• Panama 2%
The principal products imported: (2008 – M$)
• Fuel, minerals and oil: 1908
• Machinery and electronic equipment: 618
• Nuclear reactors, boilers and other machinery 612
• iron and steel foundry: 379
• Vehicles: 350
• Cereals: 328
• Pharmaceutical products: 290
• Paper and cardboard: 280
Definitely, NAFTA and CAFTA countries are the
main commercial partners. Other Iberia-American
countries such as Brazil, Panama, Argentina, Chile,
and Venezuela are situated as supply countries
after them, but not as export markets. The European
Union has substantially reduced its partcipation,
while Asia’s has considerably increased. Above all,
China, followed by Japan,Taiwan and South Korea.
PRODUCTIVE SECTORS
El Salvador has consolidated itself as a service
economy with 60% of the Economically Active
Population dedicated to this area, while 15 years ago
it was only 44%. Employees in agriculture reduced
from 36% in 1992 to 17% in 2007; in other words
farmers migrated to other more productive activities.
We may say that the sectors that have lost relative
importance between 2000 and 2008 are industry,
construction and public administration and the ones
that have increased their importance are services
and commerce. Within services, it is important to