After several rounds of negotiations, El Salvador formally joined the Customs Union process with Guatemala and Honduras, so it will have to adjust its systems to the community information platform.
Authorities from the countries of the Northern Triangle reported that since November 20th, El Salvador has been fully incorporated legally and administratively into the process of Deep Integration of the Customs Union between Guatemala and Honduras.
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.
It has been estimated that since the crisis began in Nicaragua, losses in trade between Nicaraguan and Salvadoran companies amount to $12 million.
The cheese and milk trade is the area that has been most affected by the socio-political crisis occurring in Nicaragua.According to representatives from the Ministry of Economy of El Salvador, losses in bilateral trade not only of cheese and milk, but also of other goods, amount to $12 million.
Due to the crisis affecting Nicaragua and paralysis of construction in Panama between April and May, the IMF has reduced the expectation of economic growth for the Central American region from 4% to 3.3%.
The International Monetary Fund (IMF) cut growth forecasts for the Central American economy, due to the uncertainty caused by the situation in Nicaragua and its effect on the region's economic activity, and the impact of the construction strike in Panama, which has halted works on 260 projects nationwide for the last 30 days.
Reduced times to move goods through customs posts and an increase in bilateral trade are some of the results of the first year of the Customs Union between Guatemala and Honduras.
Twelve months after the entry into force of the treaty between the two countries, trade figures have favored the two Central American countries. In 2017, exports from Honduras to Guatemala totaled $384 million, 16% more than in 2016, and sales made from Guatemala to Honduras amounted to $967 million, which is equivalent to a 6% increase.
To be able to ship cargo throughout the region, Central American business leaders are exploring options for moving goods using alternative methods, such as shipping.
Representatives from the Costa Rican government and the union of exporters met to address the issue of blockades in Nicaragua and the logistical drawbacks that they have caused, since Costa Rica transports by land about five thousand containers to the other Central American countries every month. As a result of this meeting, both parties concluded that the most viable option is to use maritime transport.
With the paralyzation of the cargo transport and the retention of about 6 thousand units in Nicaragua, the region is starting to feel the effects of a crisis with no potential solution in the short term.
The crisis in Nicaragua has created high costs in all countries in the region, as according to the latest report it is estimated that at least some 6,000 heavy cargo vehicles are trapped due to the violence and blockades that have intensified in the last weeks.
In 2017, trade in milk and dairy products among countries in the region amounted to $306 million, 2% more than what was sold in 2016, and the highest value in the last six years.
Figures from the Information System on the Milk and Milk Products Market in Central America, compiled by the Business Intelligence Unit at CentralAmericaData: [GRAFICA caption = "Click to interact with graph"]
Entrepreneurs from Costa Rica are paying attention to what is happening in its neighboring country, where 90% of Costa Rican exports to Central America are transported by land.
In a statement, the union of exporters noted that "... As representatives of the export sector, we are concerned about the transit of goods to the rest of the Central American region, which receives more than $2.3 billion in Costa Rican products.This considering that more than 90% of exports to Central America are made by land and that Nicaragua, as well as being a destination for our exports, is also our gateway to Guatemala, Honduras and El Salvador".
The Ministry of Agriculture and Livestock may decide to impose tariffs on dairy products from El Salvador in the coming days.
For months, Honduran dairy producers have been complaining to the government about the difficulties they face in selling their products in El Salvador, which could impose additional tariffs on the entry of these products.
In Costa Rica, an action of unconstitutionality filed almost three years ago is preventing the construction of a customs post on the border with Nicaragua, which would allow cargo transportation to be spared a distance of 160 kilometers.
Although the government has the $12 million needed for the final construction of the border post, where a temporary container has operated since 2013, the unconstitutionality action filed by the environmentalist Alvaro Sagot, is preventing the project from progressing.
With the aim of increasing trade relations between both countries, efforts will be made to facilitate customs and consular procedures, in order to expedite border procedures and others.
The president of the Nicaraguan - Costa Rican Chamber of Industry and Commerce, Mario Solano Salazar, recently called on the various companies that maintain commercial relations with Costa Rica, and the main companies founded with Costa Rican capital, to reactivate, on Tuesday, March 6, 2018, in the the Embassy of Costa Rica in Nicaragua, the Nicaraguan - Costa Rican Chamber of Industry and Commerce (CADICONIC), in order to strengthen the expansion of trade relations between both countries and to facilitate customs and consular procedures so as to expedite the procedures related to border and procedural matters.
Despite the new import requirements imposed by the Salvadoran government, in 2017 the Nicaraguan dairy industry managed to maintain the level of its exports to its neighboring country.
Data from a report by Cetrex shows that 2017 will have closed with growth of just 3% in exports of dairy products to El Salvador, which is positive for entrepreneurs in the sector, who in the middle of the year anticipated less favorable figures, due to the entry into force of themore restrictive import controls.
The use of the Central American single invoice and declaration form will be mandatory from March 1, 2018 and not from January 1, as originally planned.
Authorities in Guatemala and Honduras have decided to postpone the mandatory use of the Central American single invoice and declaration (Fyduca) form, due to, among other things, ignorance about the use of the system on the part of some companies.
Although Juan Orlando Hernández has now been declared as the winner of the elections and blockades and demonstrations have decreased, difficulties in transporting merchandise to and from Puerto Cortés, as well as land borders, remain.
As a result of the difficulties faced by entrepreneurs when transporting goods to and from Honduras, companies in neighboring countries are looking for alternatives to expedite shipments, especially those of perishable products.