RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/94
14 December 2001
(01-6267)
Trade Policy Review Body
TRADE POLICY REVIEW
GUATEMALA
Report by the Secretariat
This report, prepared for the first Trade Policy Review of Guatemala, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from  the Government of Guatemala on its
trade policies and practices.
Any technical questions arising from this report may be addressed to Mr. Arne
Klau 739 5706 and Mr. Raymundo Valdés 739 5346.
Document WT/TPR/G/94 contains the policy statement submitted by the
Government of Guatemala.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Guatemala.Guatemala WT/TPR/S/94
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS
(1) I NTRODUCTION xiii
(2) E CONOMIC DEVELOPMENTS xiii
(3) I NSTITUTIONAL ENVIRONMENT xiv
(4) M ARKET ACCESS FOR GOODS xv
(5) O THER MEASURES AFFECTING TRADE IN GOODS xv
(6) S ECTORAL POLICIES xvi
I. ECONOMIC ENVIRONMENT 1
(1) I NTRODUCTION 1
(2) M AIN ECONOMIC DEVELOPMENTS 1
(i) Output and employment 1
(ii) Fiscal policy 3
(iii) Monetary and exchange rate policies 4(iv) Balance of payments 6
(3) T
RADE AND INVESTMENT FLOWS 7
(i) Composition of trade 7
(ii) Direction of trade 9
(iii) Foreign direct investment 9
(4) O UTLOOK 11
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 12
(1) I NTRODUCTION 12
(2) T RADE POLICY FORMULATION AND IMPLEMENTATION 12
(i) General legal and institutional framework 12
(ii) Trade policy objectives and formulation 14(iii) Main trade laws and regulations 14
(3) F
OREIGN INVESTMENT REGIME 16
(4) I NTERNATIONAL RELATIONS 17
(i) World Trade Organization 17
(ii) Preferential agreements 21
(iii) Other Arrangements 23
III. TRADE POLICIES AND PRACTICES BY MEASURE 25
(1) O VERVIEW 25
(2) M EASURES AFFECTING IMPORTS 25
(i) Procedures 25
(ii) Customs valuation and rules of origin 27
(iii) Tariffs 28(iv) Tariff quotas 33(v) Other charges affecting imports 34(vi) Import prohibitions, restrictions, and licensing 34
(vii) Local-content schemes 38
(viii) Contingency measures 38WT/TPR/S/94 Trade Policy Review
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(ix) Standards and other technical requirements 39
(x) Government procurement 43(xi) Other measures 44
(3) M
EASURES AFFECTING EXPORTS 44
(i) Registration and documentation 44(ii) Export taxes, charges, and levies 45(iii) Export prohibitions and other restrictions 45(iv) Subsidies 46
(v) Export-processing zones and similar arrangements 46
(vi) Export finance, insurance, and guarantees 47(vii) Export promotion and marketing assistance 48(viii) Measures applied in foreign markets 48
(4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE 49
(i) Legal framework for businesses, including registration 49
(ii) Incentives 50
(iii) State-trading companies, state-owned enterprises, and privatization 51(iv) Competition policy 53(v) Intellectual property rights 53
IV. TRADE POLICIES BY SECTOR 58
(1) I
NTRODUCTION 58
(2) A GRICULTURE 59
(i) Main features and policy objectives 59(ii) Key subsectors 61
(3) M
INING AND ENERGY 67
(i) Mining 67(ii) Energy 67
(iii) Hydrocarbons 69
(4) M
ANUFACTURING 70
(5) S ERVICES 73
(i) Principal characteristics 73(ii) Overall commitments under the GATS and other agreements 73
(iii) Banking and insurance 75
(iv) Communication services 79(v) Transport 81
(vi) Tourism 84
BIBLIOGRAPHY 87
APPENDIX TABLES 89Guatemala WT/TPR/S/94
Page v
CHARTS
Page
I. ECONOMIC ENVIRONMENTI.1 Merchandise trade by product, 1995 and 2000 8
I.2 Merchandise trade by partner, 1995 and 2000 10
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Distribution of MFN tariff rates, April 2001 30
III.2 Tariff escalation for certain manufactured products, 2001 31III.3 In-quota and out-of-quota tariffs and fill rates 35
IV. TRADE POLICIES BY SECTOR
IV.1 Production, export and export price for coffee and sugar, 1991-2000 62
IV.2 Tariff protection in the industrial sector 2001 72
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Basic economic indicators, 1995-2000 2
I.2 Employment by sector, 1990-2000 3I.3 Government finances, 1998-2001 4I.4 Balance of payments, 1995-2000 6I.5 Trade in services, 1995-2000 7
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
II.1 Main laws and regulations relating to foreign trade, July 2001 15
II.2 Guatemala's notifications under the WTO Agreements (as of 20 October 2001) 18
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Summary analysis of Guatemala's tariff, 2001 29
III.2 Trend of Guatemala's applied tariff 1998-2001 30III.3 Foreign-trade-related fiscal revenue 31
III.4 Guatemala's preferential tariff with Mexico, 2001 33
III.5 Products subject to import permits 36III.6 Classification of COGUANOR's standards and technical regulations, April 2001 40III.7 Privatization of state-owned enterprises 52III.8 Registration of intellectual property, 1995-2000 54
IV. TRADE POLICIES BY SECTOR
IV.1 Shares of GDP 1991-2000 58
IV.2 Banana production and export, 1992-2000 64IV.3 Cardamon production and export, 1992-2000 65IV.4 Export of selected non-traditional agricultural products, 1992-2000 65IV.5 Manufacturing industry, 1995-2000 71
IV.6 Performance of principal services sectors, 1991-2000 73WT/TPR/S/94 Trade Policy Review
Page vi
Page
IV.7 Summary of Guatemala's commitments under the GATS 74
IV.8 Principal laws and regulations governing the financial sector, including insurance 76IV.9 Telephone connections in Guatemala, 1990-2000 79IV.10 Transport sector, 1993-2000 81IV.11 Guatemalan ports, handled cargo, 1996-2000 83
IV.12 Tourism 1995-2000 84
APPENDIX TABLES
I. ECONOMIC ENVIRONMENT
AI.1 Imports by products, 1994-2000 91
AI.2 Exports by products, 1994-2000 92
AI.3 Imports by partner, 1994-2000 93AI.4 Exports by partner, 1994-2000 94Guatemala WT/TPR/S/94
Page vii
GLOSSARY
(The translations into English should not be considered official)
Administration of the Radioelectric Wave Spectrum Administración del Espectro Radioeléctrico
Association of Exporters of Nontraditional Products Asociación Gremial de Exportadores de Productos No
Tradicionales, AGEXPRONT
Bank Law Ley de Bancos
Central American Bank for Economic Integration,
CABEIBanco Centroamericano de Integración Económica, BCEI
Central American Common Market, CACM Mercado Común Centroamericano, MCCA
Central American Convention for the Protection of
Industrial PropertyConvenio Centroamericano para la Protección de la
Propiedad Industrial
Central American Council for Tourism Consejo Centroamericano de Turismo, CCT
Central American Economic Integration Secretariat Secretaría de Integración Económica Centroamericana,
SIECA
Central American Export Promotion Fund Fondo para el Fortalecimiento de las Exportaciones
Centroamericanas, FOEXCA
Central American Integration System Sistema de Integración Centroamericana, SICA
Central American Legislation on Customs Value Legislación Centroamericana sobre el Valor Aduanero de
las Mercancías
Central American Regulations on the Origin of
GoodsReglamento Centroamericano sobre el Origen de las
Mercancías
Central American Regulations on Safeguard
MeasuresReglamento Centroamericano sobre Medidas de
Salvaguardia
Central American Regulations on Sanitary and
Phytosanitary MeasuresReglamento Centroamericano Sobre Medidas y
Procedimientos Sanitarios y Fitosanitarios
Central American Regulations on Standardization
Measures, Metrology and Authorization ProceduresReglamento Centroamericano de Medidas de
Normalización, Metrología y Procedimientos deAutorización
Central American Regulations on Unfair Business
PracticesReglamento Centroamericano sobre Prácticas Desleales de
Comercio
Central American Tariff and Customs Council Consejo Arancelario y Aduanero Centroamericano
Central Bank of Guatemala Banco de Guatemala, BANGUAT
Chamber of Tourism Cámara de Turismo, Camtur
Code of Civil Procedure Código Procesal Civil y Mercantil
Code on Postal Services Código Postal
Coffee Policy Council Consejo de Política Cafetera
Commercial Code Código de Comercio
Commercial Registry Registro Mercantíl
Committee for the Coordination of Technical
RegulationsComité de Coordinación de la Reglamentación Técnica,
CRETEC
Committee for Sugar Analysis Comité de Análisis Azucarero
Committee for Trade in Agricultural Goods Comité de Comercio Agropecuario
Committee on Trade in Services and Investment Comité de Comercio Transfronterizo de Servicios e
Inversión
Consumer Protection Law Ley de Protección al Consumidor
Coordinating Committee of Business Associations Comité Coordinador de Asociaciones Agrícolas,
Comerciales, Industriale s y Financieras, CACIF
Council of Ministers Responsible for Economic
Integration and Regional DevelopmentConsejo de Ministros Responsables de la Integración
Económica y Desarollo Regional, COMRIEDRE
Customs Authority Intendencia de Aduanas
Customs Declaration for Exports Declaración Aduanera de Exportación
Declaration for the Registry and Control of Exports Declaración para Registro y Control de Exportaciones
Department for Consumers Affairs Dirección de Atención y Asistencia al Consumidor
Department for Investment Promotion Departamento de Promoción de Inversión
Department for the Promotion of Competition Dirección de Promoción de la CompetenciaWT/TPR/S/94 Trade Policy Review
Page viii
Department of Industrial Policy Dirección de Política Industrial
Department of Trade and Investment Services Dirección de Servicios al Comercio y la Inversión
Electricity Law Ley General de Electricidad
Export Promotion and Maquila Law Ley de Fomento y Desarollo de la Actividad Exportadora y
de Maquila
Farmers' Association Asociación General de Agricultores
Food Enrichment Law Ley General de Enriquecimiento de los Alimentos
Foreign Investment Law Ley de Inversión Extranjera
Forest Law Ley Forestal
Free Trade Zones Law Ley de Zonas Francas
Fund for the Development of Telecommunications Fondo para el Desarollo de las Telecomunicaciones
General Central American Economic Integration
TreatyTratado General de Integración Económica
Centroamericana
General Customs Law Ley General de Aduanas
General Direction of Internal Revenue Dirección General de Rentas Internas
General Direction of Customs Dirección General de Aduanas
General Direction of Mining Dirección General de Minería
Government Contracts Law Ley de Contrataciones del Estado
Governmental Decision Acuerdo Gubernativo
Guatemala's Engineering College Colegio de Ingenieros de Guatemala
Guatemalan Centre for Sugarcane Research Centro Guatemalteco de Investigación y Capacitación de la
Caña de Azúcar, CENGICAÑA
Guatemalan Commission for Standards and
Technical RegulationsComisión Guatemalteca de Normas, COGUANOR
Guatemalan Electricity Company Empresa Eléctrica de Guatemala S.A., EEGSA
Guatemalan Institute for Social Security Instituto Guatemalteco de Seguridad Social, IGSS
Guatemala Protocol to the General Treaty on Central
American Economic IntegrationProtocolo al Tratado General de Integración Económica
Centroamericana (Protocolo de Guatemala)
Guatemalan Telecommunications Company Telecomunicaciones de Guatemala, TELGUA
Health Code Código de Salud
Income Tax Impuesto Sobre la Renta
Indicative Plan for the Electric Subsector Plan Indicativo del Subsector Eléctrico
Industrial Property Law Ley de Propriedad Industrial
Information and Promotion Centre on Renewable
EnergiesCentro de Información de Energías Renovables
Institute for Agricultural Science and Technology Instituto de Ciencia y Tecnología Agrícolas, ICTA
Insurance Law Ley sobre Seguros
Integrated Programme to Protect the Agriculture and
the EnvironmentPrograma Integral de Protección Agrícola y Ambiental
International Convention on Phytosanitary
ProtectionConvención Internacional de Protección Fitosanitaria
Investment Bank Sociedad Financiera Privada
Invitation to Bid for Exploration and Exploitation
ContractsConvocatoria Para Presentar Ofertas con el Objeto de
Celebrar Contratos de Exploración y Explotación deHidrocarburos
Law against Drug-Related Activities Ley Contra la Narcoactividad
Law against Money Laundering Ley contra el Lavado de Activos
Law Establishing the Central Bank Ley Orgánica del Banco de Guatemala
Law on the Abolition of Fiscal Privileges Ley de Supresión de Privilegios Fiscales
Law on the Abolition of Fiscal Incentives Ley de Supresión de Exenciones, Exoneraciones y
Deducciones en Materia Tributaria y Fiscal
Law on Animal and Plant Health Ley de Sanidad Vegetal y Animal
Law on Arms and Munitions Ley de Armas y Municiones
Law on CFCs Ley que Prohíbe la Importación y Regula el Uso de los
Clorofluorocarbonos en sus Difererentes PresentacionesGuatemala WT/TPR/S/94
Page ix
Law on the Commercialization of Hydrocarbons Ley de Comercialización de Hidrocarburos
Law on Copyright and Related Rights Ley de Derecho de Autor y Derechos Conexos
Law on Fishery and Agriculture Ley General de Pesca y Agricultura
Law on Deposit Facilities Ley de Almacenes Generales de Depósito
Law on the Domestic Use of Foreign Exchange Ley de Libre Negociación de Divisas
Law on Hydro carbons Ley de Hidrocarburos
Law on Investment Banks Ley de Sociedades Financieras Privadas
Law on Licenses for Maritime Fishing Decreto Relacionado con Licencias para la Pesca Marítima
Law on Maritime Fishing Decreto Relacionado con Licencias para la Pesca Marítima
Law on Mortgages Ley del Fomento de Hipotecas Aseguradas
Law on the Promotion of National Scientific and
Technological DevelopmentLey de Promoción del Desarollo Científico y Tecnológico
Nacional
Law on Protected Areas Ley de Áreas Protegidas
Law on the Protection and Improvement of the
EnvironmentLey de Protección y Mejoramiento del Medio Ambiente
Law on the Protection of Savings Ley para la Protección del Ahorro
Law on Rational Exploitation of Maritime
ResourcesLey sobre Explotación Racional de los Recursos Pesqueros
del País
Law on Savings Banks Ley de Bancos de Ahorro y Préstamo para la Vivienda
Familiar
Law on the Specification of Money Ley de Especies Monetarias
Law on Transports Ley de Transportes
Law to Promote the Development of Renewable
EnergyLey  de Incentivos para el Desarrollo de Proyectos de
Energías Renovables
Maquila Law Ley de Fomento y Desarrollo de la Actividad Exportadora y
de Maquila
Matrix on Economic Policy Matriz de Política Económica
Matrix on Environmental Policy Matriz de Medio Ambiente
Mining Law Ley de Minería
Ministerial Decision Acuerdo Ministerial
Ministry of Agriculture, Livestock and Food Ministerio de Agricultura, Ganadería y Alimentación
Ministry of Infrastructure Ministerio de Comunicaciones, Infraestructura y Vivienda
(new name)
Ministry of Infrastructure Ministerio de Comunicaciones, Transporte y Obras
Públicas (former name)
Ministry of Defence Ministerio de Defensa Nacional
Ministry of Energy and Mining Ministerio de Energía y Minas
Ministry of Environment Ministerio de Ambiente y Recursos Naturales
Ministry of Finance Ministerio de Finanzas Públicas
Ministry of Foreign Affairs Ministerio de Relaciones Exteriores
Ministry of Public Affairs Ministerio Público
Ministry of Public Health Ministerio de Salud Pública y Asistencia Social
Monetary Board Junta Monetaria
National Association of Non-Governmental
Organisations for Environmental ProtectionAsociación Nacional de Organizaciones no
Gubernamentales de lo s Recursos Naturales
National Authority of Free Trade Zones Autoridad Nacional de Zonas Francas
National Coffee Association Asociación Nacional del Café, ANACAFE
National Commission for Electric Energy Comisión Nacional de Energía Eléctrica
National Commission for Textile Quotas Comisión Nacional de Administra ción de Cuotas de Textiles
y Prendas de Vestir
National Council for Protected Areas Consejo Nacional de Áreas Protegidas, CONAP
National Export Coordination Commission Comisión Nacional Coordinadora de Exportaciones,
CONACOEX
National Council for Export Promotion Consejo Nacional de Promoción de Exportaciones,
CONAPEXWT/TPR/S/94 Trade Policy Review
Page x
National Forest Institute Instituto Nacional de Bosques, INAB
National Institute of Electrification Instituto Nacional de Electrificación, INDE
National Petroleum Commission Comisión Nacional Petrolera
National Plan of Telephone Numbers Plan Nacional de Numeración
National Ports Commission Comisión Portuaria Nacional
National Programme for Competitiveness Programa Nacional de Competitividad
National School for Agriculture Escuela Nacional Central de Agricultura
National Science and Technology Council Consejo Nacional de Ciencia y Tecnología, CONCYT
National Sugar Producers Association Asociación de Azucareros de Guatemala, ASAZGUA
National Tourism Strategy Estrategia Nacional de Turismo
One-stop Investment Office Ventanilla Única para las Inversiones
One-stop Export Office Ventanilla Única para las Exportaciones
Patent Law Ley de Patentes de Invención, Modelos de Utilidad, Dibujos
y Diseños Industriales
Penal Code Código Penal
Program of Support for Central American
Exportable ProductionPrograma de Apoyo a la Producción Exportable de
Centroamérica, PAPECA
Register of Insurance Companies Registro de Empresas de Seguro
Register of Telecommunications Registro de Telecomunicaciones
Regulations for Contractors and Subcontractors in
the Petroleum SectorReglamento para Operar como  Contratista de Servicios
Petroleros o Subcontratista de Servicios Petroleros
Regulations for Food Safety Reglamento para la Inocuidad de los Alimentos
Regulations for the Fortification of Salt with Jodine Reglamento para la Fortificación de la Sal con Yodo
Regulations for the Fortification of Wheat Flour Reglamento para la Fortificación de la Harina de Trigo
Regulations for Hotels and Guesthouses Reglamento para Establecimientos de Hospedaje
Regulations for the Import of Vegetables, Related
Products and SeedsRegulaciones para la Importación de los Vegetales, sus
Productos, Subproductos y Semillas
Regulations for the Incorporation of Banks Reglamento para la Constitución y Fusión de Bancos
Regulations for International Telephone Services Reglamento para la Prestación del Servicio Telefónico
Internacional
Regulation for the Recognition of Testing
ProceduresReglamento para el Reconocimiento de Prueba de Análisis
y Diagnóstico de Laboratorios
Regulations for the Register of Commercial Tourist
OfficesRegulaciones para el Registro de las Empresas
Comerciales de Info rmación Turística
Regulations for Satellite Systems Reglamento para la Explotación de Sistemas Satelitales en
Guatemala
Regulations for Spanish Language Schools Reglamento para la Inscripción y Funcionamiento de las
Academias de Enseñanza del Español como Segundo
Idioma
Regulations for Tourist Guides Regulaciones para Inscripción y Funcionamiento de Guías
de Turismo
Regulations for Vitamin A Sugar Fortification Reglamento para la fortificación del azúcar con vitamina A
Regulations on Local Tourist Committees Reglamento de los Comi tés Locales de Turismo
Regulations on the Operation of Tourist Marina Reglamento de Operadores de Marinas Turísticas
Regulations on Tender Procedures for Hydrocarbon
Exploration and Exploitation ContractsReglamento de Convocatoria para la Celebración de
Contratos de Exploración y Explotación de Hidrocarburos
Regulations on Transport and Delivery of Postal
CorrespondenceReglamento para el Servicio Público de Transporte y
Entrega de Correspondencia Postal Prestado porParticulares
Secretariat of Planning and Programming for the
PresidencySecretaría de Planificación y Programación de la
Presidencia, SEGEPLAN
Service for Agricultural Protection Servicio de Protección Agropecuaria
Special Prosecutor's Office for IPR violations Fiscalía Especial Contra el Delito Intelectual
Stock Market Law Ley del Mercado de Valores y Mercancías
Superintendency of Banks Superintendencia de Bancos
Superintendency of Tax Administration Superintendencia de Administración Tributaria, SATGuatemala WT/TPR/S/94
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Tegucigalpa Protocol to the Charter of the
Organization of Central American StatesProtocolo de Tegucigalpa a la Carta de la Organización de
los Estados Centroamericanos
Telecommunications Law Ley General de Telecomunicaciones
Tourism Law Ley de Fomento Turístico Nacional
Trade Offices of Guatemala Programa de Agregados Comerciales, PACIT
Transitory Law on the Exchange Rate Regime Ley Transitoria de Régimen Cambiario
Uniform Central American Customs Code Código Aduanero Uniforme Centroamericano, CAUCA
Uniform Central American Customs Form Formulario Aduanero Único Centroamericano, FAUCA
Unit for Norms and Regulations Unidad de Normas y Regulaciones
Value-Added Tax (VAT) Impuesto Sobre el Valor Agregado, IVA
Vice-Minister for SME Development Viceministro de Desarrollo de la Microempresa, Pequeña y
Mediana EmpresaGuatemala WT/TPR/S/94
Page xiii
SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. In recent years, trade has played an
important role in promoting growth and
development in Guat emala.  Increases in
exports have outpaced GDP each year since1996.  There has been considerable progress
in reducing tariff and non-tariff trade barriers,
although protection remains significant in a
few areas. Most restrictions to foreign
investment have also been eliminated, and awide-ranging privatization programme has led
to reduced state involvement in production
activities and increased efficiency in key
activities.  Moreover, legislation to improve
government procurement regulations and theprotection of intellectual property rights has
been adopted.  These efforts have been part of
a multi-pronged strategy that encompasses
unilateral, regional, and multilateral
initiatives aimed at achieving sustainable
economic growth through economic
liberalization and public-sectormodernization.
2. Economic growth in Guatemala has
been steady but will need to be stepped up to
effect a significant improvement in living
standards.  This will require in particular aconsolidation of, and further forward
movement in, Guatemala's liberalization
efforts.  In trade-related areas, further
initiatives may be required to achieve greater
efficiency in the domestic market, including bycontinuing with the privatization programme
and strengthening pro-competitive policies
and regulations.  Non-distortionary sectoral
policies will need to be favoured, bearing in
mind that export-promotion programmes oftenresult in discrimination against domestically
oriented activities.  Consolidation of
Guatemala's liberalization efforts would also
be aided through specific capacity-building
programmes.  Ultimately the success of these
efforts is contingent upon securing lasting
institutional stability.  In all these areas theinternational community can continue to play
an important role.(2) E
CONOMIC DEVELOPMENTS
3. Guatemala has Central America's
largest economy, with a population of
11.4 million and a per capita GDP of close to
US$1,700.  Since the signing of the
Peace Accords in December 1996, whichended 36 years of internal armed conflict, one
of the main objectives of the authorities has
been to achieve stable and sustainable
economic growth.  Between 1995 and 1998
real GDP grew at an average annual rate ofabout 4.4%;  subsequently, stagnant private
consumption and reduced investment spending
led to a slowdown in 1999 and 2000, with
GDP growth rates of 3.6% and 3.3%
respectively.  Despite this relatively solidgrowth performance, due to Guatemala's
strong population growth, per capita GDP has
expanded too slowly to improve living
standards significantly;  poverty thus
continues to be a serious problem.
4. In order to meet an agreed Peace
Accords target to fund social programmes,efforts are being made to expand tax revenue;
for this purpose, the value-added tax was
increased to 12% in mid 2001.  The
Government has also undertaken efforts to
strengthen the tax administration and broadenthe tax base, although tariffs and value-added
tax on imports still account for a large part of
state income.  The fiscal deficit has ranged
between 0.1% and 2.8% since 1995.
5. Guatemala maintains a flexible
exchange rate system;  the Central Bank
intervenes in the market only to moderate
exchange rate fluctuations.  A law passed in
late 2000 allows the free circulation of foreign
currency, with a view to increasing confidencein the banking system.  Disciplined financial
policy has contributed to a reduction in
inflation from double-digit rates at the
beginning of the 1990s to 5% in 2000, and has
played a role in keeping the exchange rate to
the U.S. dollar relatively stable since 1999.
Real interest rates have shown a rising trendin recent years and reached almost 15%
in 2000.WT/TPR/S/94 Trade Policy Review
Page xiv
6. Guatemala's current account has
registered important deficits in recent years,
due mainly to persistent and growing trade
deficits.  The deficit has been financed largely
by remittances and privatization income.
Returning capital and privatization inflowsincreased international reserves to nearly
US$1.9 billion in 2000, equivalent to five
months of total imports.
7. The United States is Guatemala's most
important trading partner, being the marketfor 36% of Guatemalan exports and the source
of  40% of its imports.  Other important
trading partners are other members of the
Central American Common Market, the
European Union, and Mexico.  Between 1995and 2000, the U.S. dollar value of Guatemalan
imports grew at an average rate of 8.2%
annually, well above the 6.9% growth rate of
exports, reflecting in great part unfavourable
terms of trade.
8. Agricultural goods (WTO definition)
account for about 60% of Guatemalan exports.Despite their declining shares in total exports,
coffee, sugar, and bananas continue to be
Guatemala's strongest export products.  Over
the past years, tourism and exports of apparel
and non-traditional agricultural products haveincreased in importance.  Intermediate and
capital goods dominate Guatemala's imports.
(3) I
NSTITUTIONAL ENVIRONMENT
9. Guatemala is in the process of
consolidating its legal and institutionalframework;  the strengthening of governance
is a priority and a necessary condition for
Guatemala to achieve its ambitious
development objectives.  The Ministry of
Economy is the lead agency for all issuesrelated to foreign trade.  Guatemala joined the
GATT in 1991 and became a WTO Member in
July 1995.  As an international treaty, the
WTO Agreements take precedence in
Guatemala over domestic legislation.
Guatemala has been active in the multilateral
trading system, taking part in the negotiationson telecommunications services, and making
use of the dispute settlement mechanismon a few occasions.  Guatemala has also
participated in the mandated negotiations on
services and, as a member of the Cairns
Group, on agriculture.
10. Guatemala has increasingly
participated in preferential tradearrangements;  the Central American
Common Market is at the centre of its regional
trade relations.  Guatemala has a Free Trade
Agreement (FTA) with Mexico, now supported
by new initiatives for closer physicalintegration between the two and with other
countries in the region.  Negotiations for FTAs
with Canada, Chile, the Dominican Republic,
and Panama have been initiated or concluded;
the Agreement with the Dominican Republicwas expected to enter into force in late 2001.
Further negotiations with El Salvador,
Honduras, and Nicaragua on the formation of
a customs union, and an agreement on trade in
services and investment are under way.
Guatemala also has Partial Scope Agreements
with Colombia, Cuba, and Venezuela, andparticipates in the negotiating groups of the
Free Trade Area of the Americas.
11. The number and scope of these
preferential initiatives, each imposing its own
negotiating and implementation demands,combined with Guatemala’s institutional
weaknesses, raises questions about its
capacity to participate effectively in all such
initiatives.  New FTAs are compounding trade
policy implementation difficulties by, interalia, requiring the administration of different
tariff-reduction programmes and rules of
origin.  Incompatibilities between agreements
may also emerge, for example with respect to
customs valuation or safeguard measures;provisions in some of Guatemala’s FTAs take
precedence over multilateral rules.
12. Between 1996 and 1998, Guatemala
implemented an ambitious privatization
programme;  however, the programme
has since slowed considerably and a number
of enterprises, mostly in the services sector,remain state-owned.  The privatization
programme was accompanied by the
enactment of new telecommunications andGuatemala WT/TPR/S/94
Page xv
electricity laws that ended state monopolies
in these sectors and opened them to private-
sector participation.  The Foreign Investment
Law of 1998 grants national treatment to all
foreigners with only few sectoral exceptions,
notably transport.
(4) MARKET ACCESS FOR GOODS
13. Guatemala grants at least MFN
treatment to all its trading partners.  Tariffs
are Guatemala's main instrument of border
protection;  the average applied MFN rate is7.0%.  Agricultural imports (WTO definition)
are levied an average tariff of 10.2%, while
non-agricultural products excluding petroleum
are levied a 6.4% tariff on average.  Alcoholic
beverages and spirits face the highest tariffswith an average rate of 24.8%.  Guatemala
maintains import tariff quotas for a number of
agricultural products under its Uruguay
Round minimum access commitments.
14. In the Uruguay Round, Guatemala
bound all its tariffs.  While non-agricultural
products were bound at a ceiling rate of 45%,Guatemala's final bound rates for agricultural
products range from 10% to 257%.  Closing
the wide margin between applied and bound
rates would further increase the predictability
of market access conditions.
15. Tariff reductions under preferential
agreements have contributed to improved
access to the Guatemalan market for partners.
Duty-free access is offered to most imports
from the Central American Common Market.Preferential tariffs are also offered to Mexico
under a bilateral free-trade agreement, and to
Colombia, Cuba, Panama, and Venezuela.
16. Irrespective of their origin and in
accordance with the national treatmentprinciple, imports are subject to domestic
taxes, most notably a 12% value-added tax,
applicable on the c.i.f. value of imported
goods.  In addition, various goods, such as
alcoholic beverages, cement, and vehicles, are
subject to specific consumption taxes.17. In order to strengthen customs
procedures, Guatemala obtained a delay until
November 2001 on the application of the WTO
Agreement on Customs Valuation.  Minimum
import prices for customs valuation purposes
are in place for rice, used clothes, and second-hand vehicles.  A new customs law is expected
to be enacted in 2002.
18. The use of non-tariff trade barriers
appears limited.  Guatemala maintains
various import restrictions and prohibitions,which apply equally to all trading partners,
for reasons of security, health, and
environmental protection.  Guatemala has not
taken recourse to contingency measures, with
the exception of one anti-dumping case, whichwas withdrawn by the authorities after a panel
was established to examine its WTO
consistency.
(5) O
THER MEASURES AFFECTING
TRADE IN GOODS
19. Legislation on free-trade zones and
maquila enterprises constitute Guatemala'smain instruments for export promotion.
Pursuant to these arrangements, exporting
enterprises may, under certain conditions,
benefit from exemptions from import duties
and various internal taxes.  Guatemala doesnot make use of official export credits or
insurance programmes to promote exports.
20. Guatemala benefits from various GSP
schemes and the unilateral U.S. Caribbean
Basin Initiative.  Guatemalan raw cane sugarexports to the United States benefit from
preferential tariff quotas.  Guatemala's textiles
and clothing exports to the United States are
also subject to quotas.  Export quotas are in
place for products covered by the WTOAgreement on Textiles and Clothing.
Guatemala maintains export taxes only for the
coffee sector.
21. Government procurement is regulated
by the Government Contracts Law of 1992,
which accords national treatment to foreign
suppliers of goods and services.  Guatemaladoes not have a comprehensive legalWT/TPR/S/94 Trade Policy Review
Page xvi
framework for competition policy but the
authorities are preparing such a framework.
Although there are sector-specific regulations
to ensure that domestic markets remain
competitive, the information available
suggests that competition is restricted in somekey sectors, such as financial services.
22. The WTO Agreement on Trade-
Related Aspects of Intellectual Property Rights
(TRIPS) became part of Guatemala's
legislation through its ratification of theMarrakesh Agreement.  Subsequently,
Guatemala has undertaken legal and
administrative reforms to facilitate the
protection of intellectual property rights, such
as the enactment of new copyright andindustrial property laws.  Annual registrations
of intellectual property rights have increased
substantially since 1995.
(6) S
ECTORAL POLICIES
23. Agriculture generates about 23% of
Guatemala's GDP.  Despite its decreasing
share in GDP, agriculture remains a centralsector of the Guatemalan economy due to its
contribution to employment and export
earnings.  However, Guatemala's two main
agricultural exports, coffee and sugar, have
come under considerable pressure in recentyears due to adverse international market
conditions.
24. The industrial sector, including
manufacturing, construction, mining,
electricity and water, accounts for 20% ofGDP.  Manufacturing, which accounts for
some 13% of GDP, is largely concentrated in
the processing of agricultural products,
geared to the domestic, Central American and
U.S. markets.  Other important manufacturingsubsectors are footwear, textiles, metals, and
chemical products.
25. Guatemala's special fiscal
arrangements for free trade zones and
maquila enterprises appear to have favoured
particularly the production of various non-
traditional goods, although no preciseestimates exist.  These goods comprise
agricultural products such as cut flowers and
specialty vegetables, fishery products such as
shrimps, and manufactures, in particular
textiles and apparel.  As foreign trade under
these special arrangements is not recorded,actual exports in these sectors as well as
imports of necessary inputs may be
underestimated in official trade statistics.
26. The services sector contributes some
57% to GDP, with commerce being thedominant subsector.  Pursuant to the Foreign
Investment Law, market access to most
services sectors on a non-discriminatory basis
is guaranteed to foreign investors.  Market
access to financial services is regulated byspecific sectoral legislation.  Subject to
approval of the regulatory authorities,
insurance companies and banks may
incorporate a Guatemalan enterprise;  foreign
banks may also establish branches or
subsidiaries.
27. Guatemala's commitments under the
GATS are relatively limited, covering only five
service categories, as they bound the policy
framework in place before the beginning of
Guatemala's privatisation programme and the
enactment of the Foreign Investment Law.
28. State-owned enterprises continue to
operate in financial services, maritime
transports and telecommunications;  however,
they represent only a minor share of the
respective sector's output.  Minimum localcapital requirements are in place only in the
transport sector.  The enactment of a new
Telecommunications Law in 1996, together
with the privatization of the state-owned
telecommunications company, prepared theground for the rapid growth observed in this
sector in recent years.  Tourism has developed
into an important source of foreign exchange,
generating more than US$500 million
annually.  Despite the significant improvement
made in upgrading the Guatemala's
infrastructure, problems remain in certainsectors, such as financial services and port
facilities.