Bureaucracy and its Impact on Foreign Trade

The costs incurred by businessmen in Nicaragua, because of excessive procedures and low efficiency of foreign trade systems is 25% additional to the value of the goods, while in El Salvador and Costa Rica, amounts to 18% and 16%, respectively.

Monday, April 22, 2019

A study by the Economic Commission for Latin America and the Caribbean (ECLAC) specifies that the costs paid by businessmen in Nicaragua, because of excessive procedures and low efficiency of foreign trade systems is 25.3% additional to the value of the goods, followed by El Salvador with 18.3%, Costa Rica with 16.3%, Honduras with 15.8%, Guatemala with 14% and Panama with 9%.

José Durán, official of the International Trade and Integration Unit of ECLAC, explained to Elmundo.sv that "... non-tariff factors affecting trade in goods are of greater importance than tariffs, especially in Central America, where the average applied tariff is only 2% and virtually zero in most products."

Durán added that "... Businessmen in the region, and in particular in El Salvador, still perceive important barriers that counteract this trade opening and progress in trade facilitation, a scenario that aims to improve with efforts such as the customs union."

According to the estimates of the international organization the sectors most affected by non-tariff barriers are textiles, clothing and footwear, as well as agro-industrial products, which have higher costs in all countries.

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