In the NAFTA review carried out by the Central American and U.S. authorities, it is ruled out that the U.S. government will apply trade sanctions in retaliation for the deepening of the migration problem.
After the Trump administration pressured Mexico with the threat of increased tariffs on Mexican imports, the region has generated expectations for the planned review of the NAFTA with Central America.
In the view of Fitch Ratings, the likelihood of the trade agreement being renegotiated is low, but the region faces challenges "if US protectionism gains traction over the next few years."
From a statement issued by Fitch Ratings:
Fitch Ratings - New York - (May 16, 2017): While Central America and the Dominican Republic could benefit from the expected economic acceleration in the United States, these countries could also face challenges if US protectionism were to gain traction in the coming years, says Fitch Ratings.
There still remains tasks to be completed in the process of preparing to compete with milk and dairy products, which in 2025 will start to enter the country duty-free under the CAFTA.
In regards to how to prepare for the next market opening, José Antonio Madriz, President of the National Chamber of Milk Producers, told Nacion.com that there still remains work to be done, and that they"... have approached the Ministry of Agriculture and Livestock (MAG) several times, as lead agency, to establish joint plans between the private sector, government, universities and other research centers, but the result is insufficient."
Removing the tariff on chicken legs under the CAFTA-DR would resolve the problem arising from the use of different tariff headings, but can be done only if approval is granted by the other member countries.
In addition to relying on the approval of the member countries of CAFTA-DR, no one knows how long the process could take.
From this year these three products will be traded duty-free under the DR-CAFTA agreement.
The tariff reduction process that started with the entry into force of the free trade agreement with the United States and Central America has now reached completion for rum, flour and fats exported from Guatemala.
Entrepreneurs in the sector have asked for the opening up of a new export quota of 36 thousand tons per year, in addition to the quota of 15,500 tonnes established in the CAFTA-DR.
Competing with multinationals under DR-CAFTA requires companies to comply with all the necessary processes to protect their brands, processes and products.
The arrival of multinational companies in Central America competing in legal equality with local or regional firms as a result of DR-CAFTA, highlights gaps in legal implementation and best practices for business on issues such as the protection of trademarks and intellectual property. In an analysis piece by Nacion.com, the need for companies and entrepreneurs to protect the product development process, their formulation and their brands is highlighted.
A meeting is being convened for the textile and clothing industry on March 16 in El Salvador, where the overall situation in the sector will be discussed.
From a statement issued by Proesa:
El Salvador is preparing for the third edition of the Forum of Textiles and Apparel (FOROTEX) 2016, a space where high-level international speakers present trends and strategies for competing in international markets.
As reported at the end of 2015, from February 16 a reduction from 15% to 13.8% will be in effect on the import duty incurred on chicken rump.
The tax paid by importers for rump chicken went from 15% in 2015 to 13.8% in 2016, confirmed the Deputy Minister of Integration and Foreign Trade, Enrique Lacs to Siglo21.com.gt.
Most of the products which Nicaragua exports to the USA will continue to enjoy, for at least 10 years, tariff advantages compared to those products sold within the Transpacific Association Agreement.
From a statement issued by the US Embassy in Managua:
In 2016 scheduled tariff reductions for rice imports begin as part of the DR-CAFTA, posing a threat to local producers.
Nicaraguan rice producers have pointed to the efforts made by the sector to achieve self-sufficiency in supplying the local market, and report that the main competitor unleashed by this tariff reduction is the US which they point out subsidizes rice production.
From January 2016 import tariffs will start to be phased out on chicken, rice and milk from the USA, reaching 0% in 2022 and 2025, under the DR-CAFTA agreement.
In Costa Rica local producers say they have been preparing for this for several years, but the country's loss of competitiveness due to high production costs and lack of action by the government to improve on this might prevent them from competing on equal terms.
Representatives from the poultry sector will meet on August 5th and 6th to discuss issues such as the elimination of chicken imports from the US.
This convention will be held at the Crowne Plaza Convention Center and the participation of over a hundred poultry entrepreneurs, representatives from universities and government authorities is expected. Among the topics to be discussed during the congress is the use of technologies, supplies and services globally applied to the domestic industry.
Between January and October foreign sales in the sector amounted to $1.281 billion, 5.9% more than the $1.21 billion generated in the same period in 2013.
From a statement issued by the Nicaraguan agency for promoting and exporting (PRO-NICARAGUA):
The Under Secretary of Commerce in the United States sees no need for renewal of preferential tariff arrangements, which up to now have favored Nicaragua's textile industry.
Statements by the senior official of the Obama administration fell like a bucket of cold water over textile entrepreneurs, who claim that without the renewal of TPL, production costs will increase by up to 40%.
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