The plan to impose a 5% tariff on Mexican products entering the U.S. would open up opportunities for Central American countries to increase their sales to the U.S., but there are fears that similar measures could be taken against the region.
On May 30, President Trump announced on his Twitter account that he plans to impose a 5% tariff on Mexican products entering the U.S.
The complex economic and political situation that has affected Nicaragua since April continues to affect Central America, where exporters report losses of $45 million.
In the past months, cargo transport faced difficulties in moving goods along Nicaragua's highways due to demonstrators' blockades and insecurity, seriously affecting Central American companies.
Key information regarding the seasonality in the value of Central American trade in both the intra-regional and extra-regional markets.
Extracted from a report entitled "Seasonal patterns of trade in Central America: initial notes" issued by the Secretariat of Central American Economic Integration (SIECA):
Merchandise exports from Central America enjoy marked seasonal patterns, with March and May being the months where total exports had a seasonal variation of 8.6% and 3.5% respectively. In a distinct rhythm, during the months of February and April Central American exports observed a variation of -3.0% and -5.4% due to seasonal factors.
Starting July 17th the categorization of products according to their health risk will be applied and a 15 day shipping notice will be required to import those labelled as "high risk."
A new "Directive on sanitation and phytosanitation for the facilitation of trade in goods and shipments in Central America", adopted by the Council of Ministers for Economic Integration (Comieco), approved in January and which will come into effect from Thursday, July 17, could detract agility from intraregional trade, warns the Exporters Corporation of El Salvador (Coexport).
The competitiveness of the economies of the isthmus is being impaired by the inefficiency of the bureaucracy in the management of customs offices in the region.
The bureaucracy at customs offices has become a serious problem for the Central American region. Among other things it generates increases in the costs of exporting because of the procedures that must be paid for, loss of perishable goods and delays in production in processes that have to wait for raw materials.
Regional unions are threatening a general strike in the Salvadoran border to protest at the rate of $18 per inspection at customs offices in that country.
S21.com.gt reports: "The new provision of the General Customs of El Salvador will take effect on 6 January, in light of this, carriers of the remaining five countries in the region have announced a general strike on the Salvadoran border if this legislation goes ahead. "
FECAEXCA has submitted a regional strategy for the Association Agreement to be an effective tool of investment, business and employment generation.
From a press release issued by the Guatemalan Association of Exporters (Agexport):
Central American exporters meeting in the Federation of Chambers and Associations of exporters from Central America and the Dominican Republic, FECAEXCA, has delivered to its governmental and private initiative authorities a regional strategy for the Association Agreement to be an effective tool for investment, business and generating employment for regional countries.
Lack of regional standardized sanitary requirements, registration, labeling and certification, is making food more expensive and reducing competitiveness.
From a statement by the World Bank:
BM / Central America: NTMs increase product prices by 30 percent
The application of non-tariff measures, such as the requirements for the import and export of food and beverages, have a significant impact on trade in Central America and raise the price of commodities by up to 30 percent according to a new World Bank study.
Preparations are being made for a single form that will streamline customs trade ahead of the entry into force of the Association Agreement between Central America and the European Union.
According to the president of the Superior Council of Private Enterprise (Cosep), Joseph Adam Aguerri, already working on this issue are the Central American Integration System (SICA), and the Secretariat of Central American Economic Integration (SIEC).
Last Friday in San Jose the first round of negotiations of the Customs Union ended, having made major advances in the fields of food, medicine, manufacturing and agriculture.
A press release from the Ministry of Foreign Trade of Costa Rica reads:
On Friday in San Jose the first round of negotiations of the Customs Union ended, having made major advances in the fields of food, medicine, manufacturing and agriculture.
The Central American Federation for the Beef Industry is promoting the creation of traceability protocols that would allow them to export meat to the EU.
Regional leaders in the cattle industry and beef marketers "came together to promote the creation of a traceability protocol that would allow them to export meat to the EU."
Christopher Navas, president of the Federation, said: "We met to discuss the problem of the meat sector in Central America, seeing as the agreement for a free association with the European community has been signed, and that gives countries in the region the right to export a quota of meat. However, to do this we have to meet certain requirements. "
There is a requirement to avoid duplicate collection of customs duties levied on imports in order to meet the provisions of the trade pact with the European Union.
The commissioner of Customs at the Superintendency of Tax Administration (SAT) in Guatemala, Oscar Funes, referred to the commitments made by the region in the signing of the Association Agreement between Central America and the European Union, signed on 29 June.
The FOB value of Central American exports totaled $7,919 million in the first quarter of 2012 seeing a growth rate of 8.5%.
AMERICAN FOREIGN TRADE
Bulletin: January-March 2012
Executive Summary
Exports
Exports in Central America reached a FOB value of U.S. $7.91 billion during the first quarter of 2012, an year on year increase of 8.5%, less than that from January-March 2011, which was of 22.0%.
Industrials in Costa Rica are celebrating the incorporation of Panama into SIECA, seeing the country as a first–rate ally for industry in Costa Rica.
A statement from the Chamber of Industries in Costa Rica reads:
The Chamber of Industries in Costa Rica, CIRC, would like to express its satisfaction at the incorporation of Panama into the Sub System for Economic Integration (SIECA), with which compliance is reached for one of the most important requirements proposed by the European Union to enable signing of the Association Agreement.
After negotiations to overcome some last minute objections from Nicaragua, Panama has been formally included in the Central American Integration System.
Citing "lack of clarity in the protocol document regarding the exact date, requirements and deadlines to which Panama commits to in order to be integrated into SICA", Nicaragua had objected to Panama’s full integration into the Central American Integration System (SICA).