Based on the willingness of Costa Rican authorities to raise the tariff on imported sugar from 45% to 73%, Brazil decided to raise the entry taxes on four animal products from Costa Rica.
Months ago, the private sector has been warning of the possibility that the country's trading partners would apply reciprocal measures because of Costa Rica's unilateral decision to raise entry taxes on imported sugar.
Following in Brazil's footsteps, Canada warned the WTO about the possibility of imposing compensation against the Costa Rican authorities' policy of raising the tariff on imported sugar from 45% to 73%.
Salvadoran businessmen assure that for now the sector has not been impacted by the propagation of covid-19, since for the next few weeks they are preparing shipments for 70 thousand tons of sugar.
In a turbulent context, caused by the global spread of covid-19, Salvadoran sugar producers are in the middle of the harvest period and are preparing significant shipments of their product, they remain on alert.
The outlook for sugar producers in Nicaragua is complex, since they must face a fall in international prices, coupled with rising operating costs at the local level.
According to international reports, from January 2018 to September 2019, the average price of a quintal of sugar has remained below $14, even dropping to $10.46 in August 2018.
If the international prices of bananas, coffee, sugar and palm oil do not improve, and if combined with a global economic recession, Guatemala, Honduras and El Salvador could stop exporting as much as $2.268 million altogether in 2021.
According to the report "Proceso de integración Centroamericana del Triángulo Norte: Escenarios de riesgo en la matriz de exportación" (Central American Integration Process of the Northern Triangle: Risk Scenarios in the Export Matrix), prepared by the Asociación de Investigación de Estudios Sociales (Asíes), garment making is another activity that could be affected in the coming years.
Last year, the main regional crop sold abroad was coffee, with $2.671 million, followed by banana, with $2.594 million, pineapple, with $1.097 million and sugar, with $722 million.
Data from the Trade Intelligence Unit at CentralamericaData:
The main coffee export destinations were the U.S., Germany, Belgium, Italy, Japan and Canada, which together represent 70% of the volume exported by the region, equivalent to approximately $2,050 million. [GRAFICA caption="Click to interact with the graphic"]
The Constitutional Chamber of El Salvador declared the demand of the sugar manufacturers inadmissible, arguing that there is no link between the cancellation of the FTA with Taiwan and the application of constitutional norms.
After the Salvadoran government decided to finalize the trade agreement with the Asian country in December last year, an act that was not consulted with the country's productive sector, the guild presented in February this year an appeal of unconstitutionality.
Although exports have tripled in the last three years, mainly because of increased sales of medical equipment, sugar, ethyl alcohol and meat, the business sector's expectations are not as optimistic.
Data from the Foreign Trade Promoter (Procomer) specify that in 2016 Costa Rican exports to China totaled $46 million, in 2017 registered $111 million, and in 2018 rose to $200 million.
During the first nine months of 2018, the main regional crop exported was coffee, with $2,493 million, followed by banana, with $1,939 million, pineapple, with $825 million and sugar, with $645 million.
Figures from the Trade Intelligence Unit at CentralAmericaData: [GRAFICA caption="Click to interact with graphic"]
In Guatemala, the business sector has already begun to analyze the market opportunities that will arise after the Salvadoran government decided to cancel the FTA with Taiwan.
The decision taken by the Sánchez Cerén administration in December last year will be implemented as of March 15, when the Free Trade Agreement between Taiwan and El Salvador will expire.
As of March 15, the FTA between Taiwan and El Salvador will be null and void, a situation that will prevent the Central American country from selling 80,000 tons of sugar at favorable prices.
The Salvadoran government concluded the trade agreement with the Asian country in December last year, a decision that was not consulted with the country's productive sector and will affect sugar exports, as it will no longer have preferential treatment.
From January to September of this year, foreign sales totaled $531 million, resulting in a 5% increase over the same period in 2017, mainly explained by banana and sugar sales.
The most recent figures of the General Comptroller of the Republic detail that between the first nine months of 2017 and the same period of 2018 exports rose from $506 million to $531 million, an increase partly explained by the behavior of banana and sugar sales.
According to Guatemalan sugar producers, Africa and New Zealand are two of the markets that in recent years have generated growth opportunities for exports of the sector.
According to figures from the Bank of Guatemala, sugar exports to New Zealand increased from $11 million from January to August 2017 to $33 million for the same period this year.
In this regard, the manager of the Association of Sugar Producers of Guatemala (Asazgua), Luis Miguel Paiz, explained to Elperiodico.com.gt that "... In recent years the emerging markets that have meant an opportunity are Africa and currently New Zealand. The main ones are North and South America, the Far East and the Caribbean."
Between January 2012 and March 2018, the average price of Guatemalan raw sugar exports has been falling, going from $0.58 to $0.34 per kilo.
Figures from the Information System on the Sugar Market in Guatemala, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with graph"]
Entrepreneurs in the sector reported that for the 2017-2018 harvest the volume produced amounted to 11.6 million hundredweight, 2% more than what was registered in the previous harvest.
Representatives from the Association of Sugar Producers of Honduras (Apah) announced that between the harvests of 2016-2017 and 2017-2018, the country reported an increase of 200,000 hundredweight in the volume of production, going from 11.4 million to 11.6 million.