With the entry into force of the AA in August, 90% of Salvadoran products will be able to be sent to European Union countries duty free.
"What will happen is that Central America, instead of exporting to the international market, will export to Europe. It will change the export destination," said Julio Arroyo, CEO of the Asociación Azucarera.
The project aims to facilitate the arrival of foreign investment in the country, but it remains trapped in Congress.
"The law presented by the government is positive. Hopefully this is a good law, but in itself it is not enough. If conditions (such as uncertainty, bureaucracy, etc..) carry on being reinforced, then the law will not help "said Roberto Rubio, from Funde.
A draft bill submitted for consultation to employers by the government of El Salvador, proposes a charge of 0.5% on the assets of foreign investors.
An article in Elsalvador.com reports that "The Government plans to charge a "premium" of 0.5% on total investment assets to entrepreneurs who arrive in the country attracted by the newly proposed law on legal stability, according to a draft by the Secretariat sent to the Chairman of the National Association of Private Enterprise (ANEP) a few months ago.
Canada is putting pressure on El Salvador to adopt better labor and environmental standards as a condition for signing a free trade agreement.
Rigoberto Monge, from the Office of Private Sector Support for Trade Negotiations (ODASP), explained that as negotiations advance, Canada has made new demands relating to "key labor and environmental aspects", reports Siglo21.com.gt.
Among incentives applied in short term is the implementation of improved energy rates and changes in collection of VAT.
“Fearing a drop of up to 15% in exports caused by the elimination of the 6% subsidy, Rigoberto Monge, advisor to the Salvadoran Association of Industrialists (ASI), said the proposal of the Ministry of Economy (MINEC) should be supplemented with the creation of very specific tools supporting the industrial sector and exporters," reports the article in Laprensagrafica.com.
The World Trade Organization demands explanation as to why the country is maintaining a 6% subsidy for exporters and various fiscal benefits for free zones.
El Salvador should have terminated the 6% exports subsidy four years ago, according to the agreement it reached with the World Trade Organization. The country was not able to do it, because “businessmen opposed it and made the government promise it would sustain it until a proper policy for fostering exports is in place”.
With an increase of 16% annually over the past five years, trade between the countries of Central America is the real force behind regional integration.
Despite the comings and goings with which governments have handled the process of integration, intra-regional trade continually progresses. In recent years, the numbers in the exchange of goods and services between the countries of the region have doubled, surpassing $6.3 billion per year.
The European Union again noted its interest in an integrated Central America where there is a free flow of investments, goods and services.
The seventh round of negotiations of the Association Agreement between the European Union and Central America opened in Honduras with the explicit indication by Petros Mavromichalis, political negotiator of the EU that "regional integration remains a subject of great importance for us. We're not talking about philosophical considerations, but rather a practical analysis of the tangible effects on our agreement to the free movement of goods, services and investment in Central America and Europe; this for us is of paramount importance." This is how German Rivas explained the process in an article in Laprensagrafica.com.