ORGANISATION MONDIALE
DU COMMERCEWT/TPR/M/94/Add.1
1er mars 2002
(02-1033)
Organe d'examen des politiques commerciales
16 et 18 janvier 2002
EXAMEN DES POLITIQUES COMMERCIALES
GUATEMALA
Compte rendu de la réunion
Addendum
Président:  S.E.  M. Pekka Huhtaniemi (Finlande)
Le présent document contient les questions écrites communiquées à l'avance, et les réponses
fournies par le gouvernement guatémaltèque.1
                                                     
1 En anglais seulement.WT/TPR/M/94/Add.1
Page 3
ADVANCE WRITTEN QUESTIONS AND REPLIES PROVIDED BY THE
GOVERNMENT OF  GUATEMALA
Report by the Government
III. TRADE POLICY DEVELOPMENTS 1991-2001
1. EU:  We are pleased by Guatemala's commitment to multilateral trade liberalization
and to maintaining an open market.  We would be grateful if the Government could elaborate
on Guatemala's priorities and concerns for fu ture negotiations other than agriculture and
services.
Answer:  Guatemala has high hopes of the Development Round and considers these
negotiations of the utmost importance for strengthening the multilateral trading system.  For
Guatemala, like many other WTO Members, agriculture is a major issue.  In that respect, further
actual and effective liberalization of this sector will set the pace for Guatemala’s acceptance ofadditional commitments in other areas.
One matter of particular concern to Guatemala is the relationship which could be seen to exist
between environment and agriculture.  It is also concerned that some developed countries are not
willing to eliminate their agricultural subsidies, whilst countries like Guatemala are making major
efforts to meet commitments with regard to disman tling their export promotion programmes, in spite
of the fact that such programmes have no impact whatsoever on international trade.
Another matter of interest to Guatemala is the full integration of trade in textiles into the
multilateral system and finding solutions to other problems related to the implementation of the
Agreement on Textiles and Clothing.  In this context, Guatemala is actively involved with the work of
the International Textiles and Clothing Bureau.  Guatemala also hopes that negotiations on rules (anti-dumping and countervailing duties), inter alia , will prevent them from being used as trade barriers.
With regard to small developing economies, Guatemala is waiting for the General Council work
programme to get under way since this will prove a key tool for identifying the needs of and
difficulties faced by developing countries integrating into the multilateral system.  Finally, putting the
principle of special and differential treatment into effect will prove a crucial factor in the outcome ofthe Development Round.
Report by the Secretariat
SUMMARY OBSERVATIONS
(1) INTRODUCTION, Paragraph 2
2. USA:  The Secretariat's Report notes that "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 a consolidation of, and further forward movement in,
Guatemala's liberalization efforts".  What steps is the Government of Guatemala taking or
considering taking to consolidate its liberalization efforts?
Answer:  Guatemala considers that liberalization efforts form part of an integrated
development strategy which should go hand in hand with programmes which help it to enhance
competitiveness and institutional strengthening.WT/TPR/M/94/Add.1
Page 4
Its implementation of an open trade policy is well advanced, which has led to requirements in
relation to institutional modernization, in particular the mandatory capacity building of entities with
objectives and functions directly related to export and trade development, the enhancement of the
competitiveness of both economic activity and the markets, and the promotion of investment in the
country.
The 2000 institutional restructuring of the Ministry of Economy, in its capacity as the body
responsible for Guatemala’s trade policy, is of particular importance from this point of view.  The
Vice-ministries of Investment and Competition an d of Development of the Micro, Small and Medium
Enterprise were created, the Vice-Ministry of Integration and Foreign Trade was strengthened and
efforts have been made to modernize the Registry of Securities, Commercial Registry and Intellectual
Property Registry.
This is complemented by active and effective participation in the multilateral trading system,
the Free Trade Area of the Americas (FTAA) and also with the liberalization objectives of otherinternational organizations and groups of countries.
3. EU:  We would like to encourage Guatemala to continue the consolidation of its
liberalization efforts in order to achieve greater efficiency in the domestic market.  The report
states that Guatemala would be aided through specific capacity building programmes.  It also
refers to the important role the international community can continue to play in this respect.
We should like to mention here that it is of high importance to enhance trade-related technical
assistance to build regulatory, legislative and institutional capacities and to help countries in
complying with existing WTO rules, to effectively negotiate in the next negotiations and to
implement the results.  We would therefore be grateful if Guatemala could specify its trade-
related technical assistance needs.
Answer:   Guatemala requires technical and financial assistance to enhance the
competitiveness of its production sector and to implement and administer trade agreements.  Technical
training is also required in Development Round negoti ating topics and the issues to be reviewed at the
Fifth Ministerial Conference.  Similarly, co-operation is needed to implement the National Quality
System, design the database forming part of the customs modernization process and strengthen theinstitutional capacity of trade bodies.
I. ECONOMIC ENVIRONMENT
(2) MAIN ECONOMIC DEVELOPMENTS
(ii) Fiscal policy, Paragraph 10
4. USA:  The Secretariat's Report notes that "Due to Guatemala's relatively low level of
overall tax revenue, taxes on imports (including tariffs and value-added tax) still account for a
large part of fiscal revenue".  What steps is the Government of Guatemala taking to reduce this
dependence on taxes on imports?
Answer:  Guatemala’s tariff reduction policy is consistent with the State's ability to maintain
the required level of revenue.  At present, tariff lines with high rates correspond to final goods;
reducing tariffs on these goods means an increase in their consumption and therefore increased
collection of the domestic taxes to which they are subject.  It should be pointed out that theGovernment gives greater priority to the foreign trade policy benefits which it hopes to receive from a
reduction in tariffs than to the fiscal loss which could result from such a measure.WT/TPR/M/94/Add.1
Page 5
In 2001, the Guatemala government carried out a tax reform geared towards increasing State
revenue, facilitating and simplifying tax administration and control, ensuring compliance with tax
obligations and stepping up the prosecution of tax offences and offences relating to the
misrepresentation of material in sworn declarations and tax-related accounting documents.
The main amendments to the tax laws stemming  from this reform relate to value-added tax
(VAT), the rate of which was increased from 10 to 12 per cent, and the tax on commercial andagricultural companies, which was fixed at 3.5 per cent for assets and 2.5 per cent for income.
Amendments were also made to the Tax Code, Penal Code and the Law on Customs Fraud and
Smuggling, introducing harsher sentences and larger fines for tax offenders.
Finally, as stated in the Secretariat Report, the percentage of total fiscal revenue represented
by tariffs has decreased from 21.3 per cent to 12 per cent over the last decade.
5. Norway:  As pointed out by the WTO Secretariat's report, increased tax revenue is
important to reach a Peace Accord target to fund social programmes and efforts have beenmade by the government to bring total tax revenue to 12 per cent of GDP.  Do you expect to
reach this objective this year?
Answer:   In 2001, the Government, with a view to increasing tax collection, implemented a
reform of tax legislation which resulted in a rise in the rates of some taxes.  The aim of this reform is
for fiscal charges to reach around 10.8 per cent in 2002, i.e., an increase of 0.8 percentage points inrelation to 2001.
(3) TRADE AND INVESTMENT FLOWS
(i) Composition of trade, Paragraph 28
6. USA:  The Secretariat's Report notes that "Guatemala's commodity trade statistics do
not include exports and imports taking place under the Maquila and Free-Trade Zone Laws.[…] This is likely to result in a strong underestimation of exports in subsectors such as textiles,
apparel and non-traditional agricultural goods, as well as of imports of necessary inputs".  Does
the Government of Guatemala have other statistics that include these exports and imports?
Answer:   Guatemala's statistical system is unfocussed and lacks institutional coordination.  In
particular, its shortcoming with regard to foreign trad e statistics is made evident by the fact that they
do not include systems subject to special provisions.  To rectify this situation, a preliminary draft law
on the National Statistics System, aiming to strengthen institutional coordination and create
mechanisms for improving statistical quality, is currently being promoted.  The preliminary draft law
is pending presentation to Congress for approval.
7. Canada:  In paragraph 28, you indicate that Guatemala's commodity trade statistics do
not include exports and imports taking place under the Maquila and Free-Trade Zone Laws.
Please provide available statistics with respect to  trade activities that occur within Guatemala's
free-trade zone regimes.  Also please indicate  whether you plan to change the manner in which
trade associated with the trad e zone regimes are recorded.
Answer:  Idem  answer to question 6 from the USA.
(4) OUTLOOK, Paragraph 32
8. USA:  The Secretariat's Report notes that Guatemala's “future policies are outlined in
the Matrix on Economic Policy for 2000 to 2004.  […] To this end, the Matrix underlines theWT/TPR/M/94/Add.1
Page 6
necessity of sound macroeconomic policies, based on fiscal and monetary discipline, an
appropriate investment climate, open and competitive markets and an intensification of the
fight against poverty”.  What does the Matrix provide regarding policies to promote open and
competitive markets?
Answer:   The Matrix on Economic Policy provides for the following policies for promoting
open and competitive markets:
1. Healthy macroeconomics: Rectification of the marked macroeconomic imbalances
(fiscal, external and financial) which are affecting the Guatemalan people and preventing
stability.  To this end, what is needed is the impetus of an economic policy based, on the one
hand, on a disciplined fiscal policy geared towards recovering fiscal credibility and promoting
budgetary balance, thereby relieving future generations of the burden of public debt, and, on
the other, a disciplined and autonomous monetary policy aiming at price stability.  Such a
policy will make for the following:
(a) Competitive interest rates;
(b) Restoration of confidence in the local currency;
(c) Strengthening of the national financial system and credit channel for
production activities.
2. Appropriate investment climate: Establishment of clear, positive and stable rules
which, in a context of respect for basic market principles, instil certainty and confidence in
economic operators and thus create macroeconomic and security conditions favourable to
domestic and foreign private investment, whilst strengthening the rule of law.
3. Market opening: Promotion of the integration of the economy into international
markets by expanding export markets, stepping up the integration process and negotiating newfree-trade treaties with countries in the region and the rest of the world on a reciprocal basis.
4. Accelerated growth and employment: Overcome low income levels, increase the
employment rate and accelerate the growth of production activity by way of policies geared
towards:
(a) supporting activities with greater competitive potential;
(b) improving labour productivity to pave the way for higher wages;
(c) making market forces work efficiently;
(d) maintaining sound and judici ous handling of macroeconomics;
(e) boosting saving and investment levels.
5. Fight against poverty: Stepping up the fight against poverty to achieve social equity
and the sustainability of economic growth in the context of meeting the economic objectives
established in the peace agreements.
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) INTRODUCTION, Paragraph 3
9. USA:  The Secretariat's Report notes that "Guatemala's institutional weaknesses bring
into question its capacity to participate effectiv ely in simultaneous initiatives in different fora,WT/TPR/M/94/Add.1
Page 7
each imposing its own negotiating and implementation demands".  What is the Government of
Guatemala currently doing to strengthen its trad e institutions to participate in simultaneous
trade initiatives and what more needs to be done?
Answer:   Great efforts have been made to ensure that Guatemala plays an active role in all
initiatives geared towards its integration into the global market.  Thus, by way of Governmental
Decision 182-2000 of 18 May 2000, the Guatemalan government conferred specific powers upon theVice-Ministry of Integration and Foreign Trade, one being to give impetus to foreign trade policy.
The Vice-Ministry of Integration and Foreign Trade has three divisions helping it to fulfil its
objectives: Foreign Trade Policy, Foreign Trade Administration and Economic Analysis.
The Foreign Trade Policy Division has the following four departments:
• Department of International Trade Negotiations
• WTO Department
• Department of Economic Integration
• Department of Export Promotion
Each of these departments is staffed by high-l evel professionals who have attended a range of
international training programmes.
Guatemala is currently party to two free-trade treaties (with Mexico and the Dominican
Republic), two Bilateral Partial Scope Agreements (with Panama and Cuba), two Unilateral Partial
Scope Agreements (granted by Colombia and Venezuela) and fourteen tariff preference schemes, allof which are being efficiently administered.  However, in the light of its current trade agreement
negotiations (with Canada, Chile and Panama, inter alia ), the Guatemalan government contracted a
loan from the Inter-American Development Bank (I DB) which has already been granted and has the
following objectives:
• To modernize the computer systems;
• To train personnel in trade matters;
• To hire skilled personnel;
• To strengthen coordination with the Superintendency of Tax Administration (SAT).
It is hoped that this will render the process of negotiating and administering trade agreements
more dynamic and efficient.
(2) TRADE POLICY FORMULATION AND IMPLEMENTATION
(ii) Trade policy objectives and formulation, Paragraph 13
10. USA:  The Secretariat's Report notes th at “by creating linkages between modern,
dynamic sectors and the rest of the economy, the cu rrent trade strategy is expected to intensify
Guatemala's insertion into the world economy”.  What is the Government of Guatemala doing
to create or strengthen these linkages?
Answer:   The Guatemalan Government established the National Competitiveness Programme
with a view to promoting long-term objectives contributing to the creation of a programme to ensure
that production, investment and conduct of business enjoy competitive conditions and form the basisWT/TPR/M/94/Add.1
Page 8
for sustainable social and environmental development in Guatemala.  To this end, identification,
prioritisation, training, orientation and follow-up activities are being conducted in the textiles and
clothing, agro-industrial, forestry and tourism subsec tors.  Cluster methodology is used to stimulate
growth, employment and development across all sectors and reduce poverty in the medium and long
term.  Cluster initiatives increase private-sector capacity to export, invest and create employment
opportunities.
(4) INTERNATIONAL RELATIONS
(i) World Trade Organization, Paragraph 28
11. USA:  The Secretariat's Report notes that "Guatemala did not participate in the
extended negotiations on financial services nor has it acceded to the Information Technology
Agreement".  Is the Government of Guatemala pl anning to move towards liberalization in these
areas?
Answer:   Guatemala has been modernising and liberalising its financial system since 1993 in
accordance with the Matrix on the National Financial System Modernization Programme, approved by
the Monetary Board by way of Resolution JM-647-93 of 22 September 1993.
In this context, two partial reforms of the financial laws have been conducted since then (in
1995 and 1999) and a corresponding regulation has been issued, enabling the following to be achieved
in terms of financial liberalization:
1. Unlimited participation of foreign capital in banking activities;
2. Establishment of national banks abroad;
3. Signing of data exchange agreements with other monitoring entities, under the powers
conferred by the law;
4. Efforts at regional level to harmonize prudential regulations on the basis of the
adoption of international standards;
5. Free negotiation of foreign currency;
6. Free movement of capital.
At present, as part of Phase II of the Financial Modernization Programme, the Monetary
Board approved, by way of Resolution JM-235-2000, the Matrix on the Programme to Strengthen theNational Financial System, one of the objectives of which is a comprehensive reform of the country's
financial laws.
This reform, encompassing the draft Laws on Banks and Financial Groups and on Financial
Supervision which establish a range of provisions geared towards the integration of Guatemalan banks
in international markets, is currently underway.  Issues such as the following are being developed:
1. Regulation of financial groups;
2. Powers to exercise consolidated supervision (locally and extraterritorially);
3. Transparency and disclosure;
4. Risk management;
5. Risk capital adequacy;
6. Extensive powers to sign cooperation agreements with other monitoring entities.WT/TPR/M/94/Add.1
Page 9
The above-mentioned draft laws are pending approval by Congress, subsequent to which
Guatemala may consider participating in financial services negotiations.
Guatemala is still considering the possibility of acceding to the Information Technology
Agreement.
Paragraph 29
12. USA:  The Secretariat's Report notes that "Reflecting the sector's economic importance,
Guatemala has participated actively in th e ongoing WTO negotiations on agriculture.
Guatemala has made proposals in this regard as pa rt of the Cairn's Group".  What else is the
Government of Guatemala doing to encourage the multilateral agricultural reform process?
Answer:   Guatemala supports liberalization of the agriculture sector, for which reason it is a
member of the Cairns Group which advocates the full liberalization of agricultural trade.
At national level, Guatemala continues to assess opening its quotas, in terms of both volume
and the tariff rates for imports within and in excess of quota levels.
In its statements at the special sessions on agriculture, Guatemala has maintained a firm stance
that developed countries in particular should eliminate export subsidies, improve market access
conditions, eliminate tariff escalation and peaks and considerably reduce domestic support for
production and trade.  We have also stated the importance of granting special and differential
treatment to countries like Guatemala.
(ii) Preferential agreements
(a) The Central American Common Market
13. USA:  Under the Protocol to the General Treaty on Central American Economic
Integration, the contracting parties in September 1996 decided to transfer certain powers to the
Council of Ministers for Economic Integration which is responsible for the coordination,harmonization, convergence and unification of countries' tariff policies.  Accordingly, the
Minister of Foreign Trade, as a member of CO MIECO, can change customs duties by Executive
Decree without the need for such changes to be approved by the Legislative Assembly.  How
often has this provision been used?
Answer:  COMIECO will issue the amendments it deems pertinent until a common external
tariff (CET) is bound for Central America.  These provisions will be adopted by way of COMIECO
resolutions which come into force upon the publicat ion of an Executive Decree without the latter
having to be submitted to Congress for consideration, these duties having been transferred to a
regional body.
Paragraph 41
14. USA:  The Secretariat's Report notes that the Central American “Common Market
rules have been modified in recent years to facilitate intra-regional trade and to align them with
the WTO commitments of CACM members.  New regulations have thus been approved
concerning rules of origin, safeguard measures , standardization measures and sanitary and
phytosanitary measures".  Does the CACM have ot her regulations it is presently negotiating or
considering negotiating?WT/TPR/M/94/Add.1
Page 10
Answer:   Within the framework of the Central American Common Market, the Customs
Union has necessitated, inter alia , the establishment of peripheral, adjacent and trinational customs
posts.  COMIECO has also issued resolutions on regi stration and the signing within the near future of
an Agreement on Investment and Trade in Services.
(b) Free-trade agreements (FTAs), Paragraph 52
15. USA:  The Secretariat's Report notes that "Guatemala also participates in the
negotiating groups of the Free-Trade Area of the Americas (FTAA).  […] Participation in the
FTAA is of priority for Guatemala, reflecting in great part the economic importance of some
countries of the region as Guatemala's main tr ading partners".  What has the Government of
Guatemala done to prepare itself for such participation?
Answer:  Guatemala has played an active role in the whole FTAA process and successfully
held the chairmanship of the Consultative Group on Small Economies and vice-chairmanship of the
Committee on Electronic Commerce and is currently chairing the Negotiating Group on Agriculture.
The negotiating team has also worked in conjunction with the CA4 group (Guatemala, El
Salvador, Honduras and Nicaragua) to present joint negotiating positions throughout the process.
Furthermore, and as mentioned earlier on, Guatemala has contracted an IDB loan to support
the Vice-Ministry of Foreign Trade.
16. EU:  We note the problems arising from Guatemala's extensive involvement in FTAs,
each imposing its own negotiating and implementation demands combined with Guatemala's
institutional weakness, in particular in relati on to the need for the government to administer
and traders to deal with the very complex system of rules of origin.  In this respect, has
Guatemala considered the possible trade diversio nary effects of its involvement in FTAs, given
the structure of Guatemala's import trade and the high proportion of imports coming from non-FTA countries?
Answer:  Guatemala considers free-trade agreement negotiations to be of the utmost
importance and they have enabled it to strengthen its participation in the respective markets.  We
believe that the FTAA negotiations will pave the way for real, stable and predictable access to
Guatemala's main export and import markets.  We are aware that free-trade agreements have to beconsistent with WTO rules.
(iii) Other Arrangements, Paragraph 58
17. USA:  The Secretariat's Report notes that “Guatemala, other Central American
countries and Mexico launched in 2001 the Puebla-Panama Plan [which] aims to foster
economic development […] by creating infrastructure corridors.  […] The trade facilitation
initiative is aimed at promoting the elimination of non-tariff barriers and other obstacles to
intra-regional commerce, emphasising the modern ization of customs to streamline and speed up
procedures”.  What is the status of the trade facilitation initiative?
Answer:   It is in the project design stage.
III. TRADE POLICIES AND PRACTICES BY MEASURE
(2) MEASURES AFFECTING IMPORTS(i) Procedures, Paragraph 6
18. COSTA RICA:  Paragraph 6 of MEASURES AFFECTING IMPORTS states that “the
Superintendency of Tax Administration (SAT) was established in 1998, replacing the formerGeneral Direction of Internal Revenue and the General Direction of Customs”.  What was theWT/TPR/M/94/Add.1
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reason for this amalgamation? What were the main objectives and goals which motivated the
move? What are the main problems and difficulties which have arisen as a result of this change?
What is the Guatemalan government’s assessment of this step to date? Are government and user
expectations prior to the amalgamation  considered to have been satisfied?
Answer:
What was the reason for this amalgamation?
The need for a structural reform of tax administration to ensure that the level of revenue
required by the State to meet its constitutional obligations is collected, in particular that related to
social expenditure on health, education, civil protec tion, housing and infrastructure as well as State
modernization.
What were the main objectives and goals which motivated the move?
The need to encourage compliance with tax obligations; this must be achieved by combatting
tax evasion, fraud and smuggling, simplifying tax collection systems and improving taxpayer services
in order to boost the tax morale of responsible taxpayers who fulfil their obligations.  The Peace
Agreements signed by the Guatemalan government in December 1996 include a commitment toimplement tax administration and legislation measures which lead to an increase in the country’s
fiscal charges.  The creation of the Superintendency of Tax Administration (SAT) was essential for
fulfilling this commitment, since it became a decen tralized institution with its own legal personality,
equity and resources, to which the State delegate s powers to administer, collect, monitor and control
taxes and which enjoys economic, functional and administrative independence.
What are the main problems and difficulties which have arisen as a result of this
change?
There have not been any problems and difficulties as such; Decree No. 1-98 of the
Guatemalan Congress, the "Law Establishing the Superintendency of Tax Administration", entered
into force in January 1998 and introduced a process of administrative unification which took as long
as an adjustment process normally would.
What is the Guatemalan government’s assessment of this step to date?  Are government
and user expectations prior to the amalgamation considered to have been satisfied?
Sustainability of tax receipt growth was achieved as a result of three basic factors: (a) the
government's political decision to continue furthering and strengthening the structural reform of tax
administration; (b) the implementation by the Supe rintendency of Tax Administration (SAT) of fiscal
presence programmes, control of the country’s major taxpayers, eradication of tax evasion and
customs contraband and a tax census with a view to broadening the tax base; (c) approval by the
Guatemalan Congress of a package of tax reforms.
The SAT has met all expectations.  As can be seen, in 2000 and 2001 the activities undertaken
by this body to boost tax receipts included measures to combat tax evasion and avoidance.Amendments to the Tax Code began to be implemented in 2001, as a result of which several
companies were closed down for invoicing irregularities and other tax anomalies.
The endeavours of the SAT to combat smuggling by monitoring and inspecting containers at
customs have proved effective.WT/TPR/M/94/Add.1
Page 12
Paragraph 9
19. COSTA RICA:  Paragraph 9 of MEASURES AFFECTING IMPORTS states that
physical inspections of goods by customs author ities take place randomly and that some goods,
for example products susceptible to under-invoicing or misclassification, are subject to a more
rigorous inspection.  It gives examples of goods which are typically inspected more rigorously,
such as textiles and electric household appliances.  It also states that between 20 and 40 per centof shipments are subject to such inspections.   How do the Guatemalan customs authorities
determine which goods are to undergo a rigorous inspection and which not? Has Guatemala
developed a review plan based on risk analys is techniques or are customs review processes
conducted in accordance with empirical criteria? It would be interesting if the Guatemalan
authorities could conduct an in-depth study of this issue, especially since in the region of 20 to 40
per cent of shipments are subject to physical or  documentary inspection, which seems somewhat
excessive and onerous for firms, especially at present when governments should beincorporating trade facilitation measures into their customs policies.
Answer:   Guatemala's customs computer system has a random selectivity module (installed in
all of the country's customs offices), a computer c onnected on-line to the rest of the system and a bar
code reader.  The respective bi-dimensional code is read for approval by the system, a process which
takes 30 seconds.  It is the system which automatically determines the result of the customs trafficlight; no customs officials are involved in its oper ation.  The module is programmed with risk indices
prepared on the basis of the results of the various import declarations submitted by ancillary staff
(customs agents, carriers and companies) in which problems of undervaluation and tariffmisclassification were detected.
(ii) Customs valuation and rules of origin, Paragraph 15
20. USA:  The Secretariat's Report notes that “Guatemala has obtained from the
Committee on Customs Valuation a moratorium until November 2001 on the application of the
Agreement on Implementation of Article VII of GATT 1994 in order to strengthen customs
procedures”.
(a) Is Guatemala now implementing the Customs Valuation Agreement?
Answer:   The technical part of the preliminary draft law has been completed and is waiting to
be transmitted to the Executive Committee for presentation as a draft law before the Guatemalan
Congress.  The Superintendency of Tax Administration (SAT) has, nevertheless, endeavoured to
comply with the undertaking to apply the principl es of customs valuation pursuant to the Agreement
on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT) 1994 (theCustoms Valuation Agreement).
(b) The Secretariat's report indicates that Gu atemala maintains minimum import prices on
rice, used clothing and used vehicles.  Will the minimum import prices be eliminated as part of
the new customs law?
Answer:   Members of the Committee on Customs Valuation approved Guatemala's request
with regard to a reservation under paragraph 2 of Annex III of the Agreement on Implementation of
Article VII of the General Agreement on Tariffs and Trade 1994.  The four products to whichminimum values apply are as follows:WT/TPR/M/94/Add.1
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Product Description HS Tariff Classification
Poultry, not cut in pieces, fresh, chilled or frozen 0207
Rice 1006
Used or new rags, scrap twine, cordage, rope and cables and worn out
articles of twine, cordage, rope or cables, of textile materials6310
Used motor vehicles ex 8701, ex 8702, ex 8703,
ex 8704, ex 8711
The application period for Guatemala for these four products is as follows: poultry not cut in
pieces (one year), rice (18 months), worn clothing  and worn articles (three years) and used motor
vehicles (three years).
(N.B.:  This decision is set forth in official WTO document G/VAL/43 of 5 December 2001.)
21. EU (paragraph 15):  We notice that Guatem ala has obtained an extra waiver for the
implementation of the WTO Customs Valuation Agreement which should finally have entered
into force in November 2001.  The EU attaches great importance to the correct application of
this agreement.  We would be pleased if Guatemala could confirm whether or not it has now
applied Article VII of the GATT 1994, in particular that it does not use anymore the BrusselsDefinition of Value or list of minimum values and, if not, when does Guatemala anticipate doing
so?
Answer:   Idem  answer to question 20, point (a), from the USA.
22. HONG KONG, CHINA (page 25, paragraph 2, and page 27, paragraph 15): We note
that the moratorium for Guatemala to appl y the WTO Agreement on Customs Valuation
expired in November 2001 and that a new customs law will apply in 2002.  We are interested in
knowing if Guatemala has already implemented the new customs law and applies the WTOAgreement on Customs Valuation.
Answer:   Idem  answer to question 20, point (a), from the USA
23. JAPAN (paragraph 13):  According to the Report, Guatemala applies the Central
American Legislation on Customs Value which is based on the Brussels Definition of Value.
However, we note that Guatemala is already applying WTO rules on customs valuation for
imports from Mexico in accordance with the FT A with Mexico.  How does Guatemala ensure
the overall consistency of its customs valuation system with WTO rules?
Answer:   All goods imported into Guatemala are valued on the basis of the Brussels
Definition of Value; under this method, customs value is determined according to the price paid orpayable.  If the Customs Administration has grounds for questioning the price paid or payable, a price
is estimated for the purposes of establishing a guarantee sufficient to cover the ultimate payment of
customs duties to which the goods may be liable and allow the goods to clear customs, pursuant to
Article 13 of the WTO Customs Valuation Agreement, as well as the right of appeal by importers in
the event of a disagreement.
(iii) Tariffs
(b) Tariff bindings24. USA:  The Secretariat's Report notes that, “In the Uruguay Round, Guatemala bound
all its tariffs.  All non-agricultural products were initially bound at 45 per cent; these rates being
reduced to 40 per cent by 2004”.  It also notes that the “average applied MFN rate is seven perWT/TPR/M/94/Add.1
Page 14
cent”.  Is the Government of Guatemala considering reducing the bound rates to applied rates
to help increase predictability?
Answer:   Guatemala considers that this will be one of the main subjects of negotiation of the
Development Round launched in Doha.
25. EU (paragraph 28):  Despite Guatemala’s intention to reduce the level of its tariff
bindings from 45 per cent to 40 per cent, which is  encouraging, bindings are still significantly
higher than applied tariffs (average of seven p er cent).  Could Guatemala please inform about
its plans to reduce its bindings further in the medium to longer term?
Answer:   Idem  answer to question 24 from the USA.
(c) Tariff preferences, Paragraph 29
26. USA:  The Secretariat's Report notes that Guatemala has Partial Scope Agreements
with Colombia, Cuba, Panama and Venezuela.  What other than tariff preferences, are included
in these agreements? How extensive are the tariff preferences?
Answer:
Tariffs
Tariff Preferences, Preferential Agreement between Guatemala and Panama
Tariff preferences granted by Guatemala
No. of Products Tariff Preferences
849 100 per cent
295 100 per cent (import control)
22 Annual quota
Tariff preferences granted by Panama
No. of Products Tariff Preferences
441 100 per cent
2 75 per cent
3 50 per cent
6 30 per cent
3 25 per cent
7 20 per cent
9 15 per cent
3 12 per cent
60 10 per cent
2 8 per cent
5 7.5 per cent
42 5 per cent
10 3 per cent
98 Specific tariff rate
284 100 per cent (import control)
20 Annual quotaWT/TPR/M/94/Add.1
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Tariff Preferences
Partial Scope Agreement between Guatemala and Cuba
Tariff preferences granted by Guatemala
No. of Products Tariff Preferences
221 100 per cent
14 75 per cent
19 50 per cent
Tariff preferences granted by Cuba
No. of Products Tariff Preferences
364 100 per cent
21 75 per cent
11 50 per cent
Tariff Preferences
Partial Scope Agreement between Guatemala and Colombia
Unilateral concessions granted by Colombia
No. of Products Tariff Preferences
9 100 per cent
1 66 per cent
1 60 per cent
4 50 per cent
1 42 per cent
1 40 per cent
1 30 per cent
1 25 per cent
1 23 per cent
1 15 per cent
Tariff Preferences
Partial Scope Agreement between Guatemala and Venezuela
Unilateral concessions granted by Venezuela
No. of Products Tariff Preferences
311 100 per centWT/TPR/M/94/Add.1
Page 16
(iv) Tariff quotas, Paragraph 36
27. USA:  The Secretariat's Report notes that “The authorities indicated that the tariff
quota for poultry meat was abolished in May 2001”.  How does the Government of Guatemala
determine reference prices for poultry products?
Answer:   As part of the decision by the WTO Committee on Customs Valuation (G/VAL/43)
on Guatemala's request with regard to the application of officially established minimum values, theGuatemalan government undertook to present the methodology, criteria and basis for calculating the
value of the products to which minimum values are applied to the Committee within the six-month
period specified and to issue the corresponding notification to Members on the stipulated date
(21 May 2002).
The measure has, however, been in abeyance since May 2001 with regard to the tariff quota
and minimum import value, with a view to assessing market performance.
(v) Other charges affecting imports, Paragraph 37
28. USA:  The Secretariat's Report notes th at “Various goods are subject to specific
consumption taxes”.  This tax appears to be on  the distribution of the goods rather than the
importation of the goods.  When is the tax asse ssed on imported goods? When is it assessed on
domestic goods?
Answer:   Taxes are levied on imported products upon entry and on domestic products
ex-works.
Imported goods are only subject to customs import duties.  VAT and the specific distribution
tax are internal taxes.
29. EU:  What position will the Government of  Guatemala take if the Constitutional Court
declares the new tax on alcoholic beverages unconstitutional for failing to comply with
Guatemala’s WTO obligations?
Answer:   When the Constitutional Court rules that an entire law, regulation or provision is
unconstitutional, it does not enter into force.  If only part is declared unconstitutional, then the part in
question does not enter into force.
30. CHILE:  We should like to know a) the rate of and methodology for applying specific
consumption taxes, b) whether there is another in ternal tax on alcoholic beverages, in particular
wine, and c) which taxes are levied on imports of alcoholic beverages, in particular wine.
Answer:
(a) There are no specific consumption taxes at present.
(b) There is a specific tax on the distribution of wine, cider, Vermouth, sparkling wine
and other fermented beverages.  Distribution is subject to specific tariffs, expressed in US$
per litre.WT/TPR/M/94/Add.1
Page 17
Domestic Production
Tariff Heading Description Tariff
2204 Wine 0.20
2206.00.00 Cider 0.15
2205 Vermouth 0.30
2204.10.00 Sparkling wine 0.40
2206.00.00 Other fermented beverages 0.15
Imported Products
Tariff Heading Description Tariff
2204 Wine 1.00
2206.00.00 Cider 0.75
2205 Vermouth 1.00
2204.10.00 Sparkling wine 2.50
2206.00.00 Other fermented beverages 0.75
(c) The only import tax on alcoholic beverages is the import duty established by the
Central American Tariff System (SAC); the tariff rates for wine are as follows:
Tariff Heading Description Tariff
2204.10.00 Sparkling wine 40
2204.21.00 Wine in containers holding two litres or less 35
2204.29.00 Other wine 35
2204.30.00 Other grape must 40
2206.00.00 Cider 40
2205 Vermouth 40
2206.00.00 Other fermented beverages 40
(vi) Import prohibitions, restrictions and licensing
31. EU:  We would be interested in learning ab out the Government’s intentions to take the
necessary procedures for the import of meat products from the rest of the world without
affecting free trade and, at the same time, avoiding the increase of products that could affect the
health of the people of Guatemala.  We understand that the Ministry has contracted external
consultants in order to elaborate guidelines which would be made available to importers for
facilitating their activities and promoting free trade.
Answer:   In the second half of 2001, the Ministry of Agriculture's Standards and Regulations
Unit reviewed the procedures and requirements for importing products and by-products of animalorigin following outbreaks of foot-and-mouth diseas e.  To this end, the Ministry of Agriculture
contracted external consultants to develop standards harmonized with those of the competent bodies,
such as the World Organization for Animal Health  (OIE), and administrative mechanisms favouringWT/TPR/M/94/Add.1
Page 18
trade flows.  The changes arising from the procedures and requirements review have now been
incorporated in the Standards and Regulations Unit's internal operations manual and published.
(ix) Standards and other technical regulations, Paragraph 53
32. USA:  The Secretariat's Report notes that “Guatemala has yet to accept the WTO Code
of Good Practice for the Preparation, Adopti on and Application of Standards”.  Is the
Government of Guatemala considering accepting this code?
Answer:   The Code of Good Practice for the Preparation, Adoption and Application of
Standards is voluntary.  It is open for acceptance by all central government and governmental regional
standardising bodies.  Guatemala is implementing the national quality system as part of its
institutional strengthening process and takes a fav ourable view of acceptance of the Code of Good
Practice.
33. CANADA:  Accordin g to paragraph 53, Guatemala has yet to accept the WTO Code of
Good Practice for the Preparation, Adoption and Application of Standards.  Does Guatemalaintend to adopt the Code and if so, when?
Answer:   Idem  answer to question 32 from the USA.
34. EU:  Does Guatemala foresee acceptance of the Code of Good Practice for the
Preparation, Adoption and Application of Standards?
Answer:   Idem  answer to question 32 from the USA.
35. CANADA:  Paragraph 54 outlines a plan to shift part of COGUANOR’s responsibilities
to a new committee.  It states that COGUANOR will then be responsible for standards
development only.  Does Guatemala intend to provide for greater leadership by the private
sector and consumers, together with a substantia l reduction in the role of government, in the
development of voluntary standards?
Answer:   COGUANOR is currently in the midst of organizational restructuring and a
redefinition of its functions, for which reason the roles of the private sector and consumers in the
development of voluntary standards have not yet been defined.
36. CANADA:  Paragraph 55 states that standards may be developed by COGUANOR and
by other ministries.  Does Guatemala intend for mi nistries in future to develop only technical
regulations and not standards?
Answer:   Idem  answer to question 35.
37. CANADA:  Paragraph 56 states that, in some cases, COGUANOR circulates proposals
to the wider public and to other institutions interested in the matter.  In the development of
technical regulations and standards, there is currently no requirement for COGUANOR tonotify members or to allow them to comment.  Does Guatemala plan to change this procedure in
order to ensure members are notifi ed in a timely manner of sta ndards and technical regulations
and allowed to make comments in writing?
Answer:   Guatemala's domestic standards adoption procedure involves all draft mandatory
COGUANOR  standards and all recommended COGUANOR  standards being submitted to the
interested sectors for consideration.  Two processes exist for this purpose: the first is a public inquiry
(lasting 60 to 90 days) and the second, the establishment of technical working committees.WT/TPR/M/94/Add.1
Page 19
Both processes afford all interested sectors th e opportunity of commenting on the draft standards.
Article 6 of the Law establishing COGUANOR provides that once standards have been adopted by
COGUANOR pursuan t to national law, they shall be fo rwarded to the Executive Committee for
approval by Governmental Decision and published in the Official Gazette within thirty days.
Before being forwarded to the Executive Committee for approval, draft mandatory
COGUANOR  standards are notified to the WTO by the WTO Department of the Foreign Trade Policy
Division of the Ministry of Economy so that  WTO Members may submit any comments and
observations they may have within a sixty-day period.  As regards taking such comments into account,
COGUANOR then convenes  the specific technical committee which developed the draft standard in
question to assess the comments received and establish whether they are technically valid.
38. CANADA:  Paragraph 56 also states that the interval between the publication and the
coming into force of technical regulations in Guatemala is currently eight (8) days.  This does
not seem to be a reasonable interval in whic h to allow members to adapt to new technical
regulations.  Is Guatemala considering length ening this interval and, if so, when?
Answer:   At present, Guatemalan standards constitute Governmental Decisions and the
interval prior to their entry into force does not depend directly on COGUANOR.  The interval
between the adoption of a standa rd by COGUANOR's Council of Direct ors and its publication in the
Official Gazette  is therefore a minimum of two months, during which the final draft is made available
to the public for consultation.  Standards and technical regulations enter into force eight days after
their publication in the Official Gazette.
39. COSTA RICA: Paragraph 56, page 40, refers to the procedure used by the Guatemalan
Standards Commission (COGUANOR) for drawin g up standards and technical regulations.
Does the Guatemalan procedure allow WTO Members the possibility of making comments ondraft technical regulations before they enter into force, as provided for in the Agreement on
Technical Barriers to Trade? If so, could you please explain how any comments submitted are
taken into consideration?
Answer:   Idem  answers to questions 37 and 38 from Canada.
40. EU:  Could Guatemala please inform if COGUANOR is the country’s TBT Enquiry
Point? Does COGUANOR have a Web site?
Answer:   Guatemala's National Enquiry Point is the WTO Department of the Ministry of
Economy, as notified in WTO document G/TBT/ENQ/19 of 26 September 2001.  The website with
further information on C OGUANOR is www.mi neco.gob.gt.
41. EU:  We would also like to know whether the Guatemalan system makes a clear
distinction between mandatory regulations and voluntary standards.  Are there any mandatory
elements in the standards?
Answer:   COGUANOR, in its capacity  as a national standardising body, develops both
mandatory Guatemalan standards (technical regulations) and recommended Guatemalan standards
(voluntary standards).  Voluntary standards do not have any mandatory elements.
42. EU (paragraph 55):  The report states that “standards may also be developed by other
ministries”.  Could Guatemala please inform whether these standards are voluntary?
Answer:   The standards developed by other ministries, and coordinated by the Committee for
the Coordination of Technical Regulations (CRETEC), are technical regulations.WT/TPR/M/94/Add.1
Page 20
43. EU:  Does the Guatemalan system include the possibility of a suppliers’ declaration of
conformity?
Answer:  Guatemalan does not have a system for supplier declarations of conformity.
44. EU:  Is Guatemala participating in international standardization bodies?
Answer:   Guatemala is a correspondent member of the International Organization for
Standardization (ISO) and a full member of the Pan-American Standards Commission (COPANT).
45. COSTA RICA:  Paragraph 73, page 43, stat es that the Guatemalan authorities are
“analysing the possibility of an import prohibit ion for genetically modified products”.  On the
basis of which scientific studies or criteria is  Guatemala considering such a ban? Are there any
special requirements at present for importing these products (e.g., labelling)?
Answer:   Guatemala has no ban on the importation of genetically modified products at
present.  The Committee for the Coordination of Technical Regulations (CRETEC) was established as
part of the National Quality System (made up of various governmental bodies) to harmonize technicalstandards.
CRETEC in turn created the "Group on Biologically Modified Organisms" (GOB) to tackle
this issue; its regular work will involve developing new technical regulations and standards for
imports of such products which take the treatment of this issue at trade and environmental fora into
account.
This group is still being set up and therefore no ban exists as yet.
(x) Government Procurement, Paragraph 74
46. USA:  The Secretariat's Report notes that “Guatemala is not party to the WTO
Plurilateral Agreement on Government Procurement”.  How does the Government of
Guatemala ensure that Government contract s are awarded in accordance with prescribed
procedures?
Answer:  The contracts signed by the Guatemalan government with its suppliers and
contractors are regulated by the Government Contracts Law (Decree 57-92) and amendments thereto.
Procurement procedures, such as the publication of tenders in the Official Gazette , are followed before
such contracts are signed in order to guarantee th eir transparency.  This law allows foreign firms to
participate in the various procurement modalities.
The Guatemalan Government is currently striving to guarantee the transparency of its
procurement processes.  For example, the Regulatory Directorate for Government Procurement, in
conjunction with consultants from the Financial Management Programme of the Integrated Financial
Management System (SIAF), is reviewing a new model Government Procurement Act based on theUnited Nations Commission on International Trade Law (UNCITRAL).
This Directorate, with the backing of the Ministry of Public Finance, the Inter-American
Development Bank (IDB) and the World Bank, is promoting a Government Procurement
Dissemination Programme which publishes all information related to procurement on a web site.
47. CANADA (paragraph 74):  Guatem ala is not party to the WTO Plurilateral Agreement
on Government Procurement.  What is the intention of Guatemala with respect to bothWT/TPR/M/94/Add.1
Page 21
accession to the Agreement on Government Proc urement and status as an observer to the
Agreement?
Answer:   Guatemala has not considered either acceding or requesting status as an observer to
this Agreement.  The Government Contracts Law is open and has no restrictions on the treatment
granted to bidders.  The plurilateral agreement, however, does make such distinctions, for which
reason it would contravene legislation which has already been adopted by the Government.
48. COSTA RICA:  Paragraph 75 states that “Government procurement in Guatemala is
decentralized”.  Is there an independent or autonomous government body responsible for
supervising procurement? Of the total value of  government procurement in the year 2000, what
amount or percentage of the contracts were awarded to foreign suppliers (imports)?
Answer:   Governmental Decision 476-8000 of 10 October 2000 created the Regulatory
Directorate for Government Procurement, the entity responsible for government procurement.
Government procurement is decentralized, for which reason executive units award procurementcontracts and execute the budget.
The open contract system is centralized at the Regulatory Directorate for Government
Procurement, which is responsible for awarding such contracts, but it is the executive units which
inform suppliers awarded contracts under this system of procurement requirements.
We have no information on the percentage of contracts awarded to foreign suppliers.
49. CANADA:  In paragraph 76, you indicate that “Governme nt procurement is regulated
by the Government Contracts Law (Decree 57-92) of 21 October 1992 and its regulations”.
Please provide a further explanation of any im provements made to the regulations governing
government procurement in Guatemala, particularly measures aimed at ensuring
transparency? Also, please provide specific examples where foreign firms won a governmentcontract when facing Guatemalan competition?
Answer:   The Guatemalan Congress recently amended the Government Contracts Law.  Of
particular note is the amendment to Article 38 which states: "if the goods, supplies or remuneration for
services are subject to an open contract, no price quotation shall be requested.  Should this occur, then
the official who authorized it shall be responsible".
In the case of the open contract modality, the invitation to tender is published in both the
Official Gazette and a newspaper of major circulation and the time-limit for the presentation of offers
is twenty days.  Bidding is open to the public and attended by one observer designated by all of the
companies, one from the Chamber of Industry and one from the Chamber of Commerce who, once the
contract has been awarded, issue a report guaranteeing or otherwise the transparency of the process.All information related to such contracts is posted on the Directorate's Web site.
Furthermore, the Minister of Public Finances, through the intermediary of the Regulatory
Directorate for Government Procurement, is co -ordinating a loan with the IADB to create a
government procurement dissemination programme.  This will enable the Guatemalan Government to
design a Web site for information on procurement, thereby making all of the necessary information
available to foreign suppliers.
50. COSTA RICA:  With regard to paragraph 76, is there any standard apart from the
Government Contracts Law (Decree 57-92) of 21 October 1992 which accords different
treatment to domestic goods, services, public works or suppliers when they participate alongside
foreign ones?WT/TPR/M/94/Add.1
Page 22
Answer:  There are no laws which provide for different treatment for domestic and foreign
suppliers.
51. COSTA RICA:  With regard to the public procurement modalities used in Guatemalan
government procurement processes and mentioned in paragraph 77, would it be true to say that
the modality referred to as "price quotation" is  similar to or the same as that referred to
internationally as "limited" or "private"? Do the principles and procedures in the Government
Contracts Law apply to the "direct contracting"  and "open contract" modalities or are these
exceptions to this law?
Answer:   The "price quotation" modality is indeed similar to that referred to internationally as
"limited" or "private".
The "direct contracting" and "open contract" modalities are subject to Articles 43 and 46
respectively of the Government Contracts Law.
52. COSTA RICA:  With reference to paragraph 78, what does the payment of value-added
tax on Guatemalan government procurement consist of, how is it applied and what significance
does it have for foreign bidders? In spite of there being a register of suppliers, it states that there
are no nationality or residency requirements for registration; does this mean that a foreigner
can register as a supplier without having to be domiciled in Guatemala?
Answer:   National and foreign bidders are subject to payment of value-added tax (VAT).
Decree No. 27-92 establishes a rate of 12 per cent.  Payment is made when the corresponding
declaration is submitted to the collection body.
Foreigners may participate in any tender, provided that they comply with all of the established
requirements; notably they must work through the intermediary of a legally accredited representative
in Guatemala and the documentation attesting to such representation must be duly legalized.
53. COSTA RICA:  In paragra ph 81, Guatemala outlines its procurement procedures and
states that “there is no obligation for the procuring entity to explain why unsuccessful offers
were rejected”.  Is this not contrary to the prin ciples of transparency and due process? In this
same respect, it also states that “decisions can only be publicly appealed for reasons of
clarification or extension”.  It would therefore appear that there is no remedy of appeal, i.e., noappeal body other than that adjudicating.  Would Guatemala please clarify this point?
Answer:   Under Article 35 of the Government Contracts Law, the Bidding Committee must
notify each of the bidders of the reasoned resolution of the adjudication within three days, thereby
complying with the principles of transparency and due process.
54. KOREA:  Our understanding is that the Guatemalan Government is not a party to the
WTO Plurilateral Agreement on Government Procurement (GPA).  Please tell us whether the
Government has any plan to accede to the GPA in the near future.
Answer:   Idem  answer to question 47 from Canada.
55. KOREA: As far as we know, the Guatemalan Government’s Contract Act
(Decree 57-92) established in 1992 regulates in detail the bidding system for government
procurement. However, it seems as if there is some ambiguity as to how this Decree is
implemented. For example, a Korean pharmaceuti cal company is having difficulties in securing
a medical supplies contract, even though all the necessary requirements from the Decree have
been satisfied. Please let us know the Guatemalan Government’s point of view on this issue.WT/TPR/M/94/Add.1
Page 23
Answer:   In the case of Open Contract DNCAE No. 3-2001, the rating board, made up of
representatives of Guatemala's public health and financial sectors, awarded the procurement contract
for Denaspor (100 mg.), a product of Korean origin, to the firm AGEFINSA which distributes it.
In view of the fact that this medicament is  used by patients who have received a kidney
transplant, the Fundación AMOR, an association which safeguards the health of such patients, filed an
action for infringement of fundamental rights and freedoms against the Minister of Public Financewho was responsible for approving the award of this  contract. Furthermore, the firm Novartis, which
participated in the bidding process, filed appeals for judicial review and reversal under Articles 100
and 101 of the Government Contracts Law. Both are currently being settled.
The award of the contract for this product cannot be approved until the legal proceedings have
been concluded.
(3) MEASURES AFFECTING EXPORTS
(v) Export-processing zones and similar arrangements, Paragraph 9756. USA: The Secretariat's Report notes that “Free-trade zones are of increasing
importance for the Guatemalan economy […] more than 14,000 jobs have been created in these
zones”. What is the status of the eight new zones in development?
Answer:   The eight free-trade zones are in development or under construction.
(viii) Measures applied in foreign markets, Paragraph 112
57. USA: The Secretariat's Report notes that Guatemala “enacted new labour laws and
undertook additional measures to address related problems”. What is the current status of
labour in the free-trade zones?
Answer:  Guatemala's new  labour laws apply to the whole country.
(4) OTHER MEASURES AFFECTING PRODUCTION AND TRADE
(ii) Incentives
(a) Programs for enterprise development, Paragraph 125
58. USA: The Secretariat's Report notes that “The support of micro, small and medium
enterprises (SMEs) constitutes a key element in  Guatemala’s development strategy”.  What type
of technical cooperation and financial support  for SME development has proven to be most
useful?
Answer:   The major support programmes for micro, small and medium enterprises (MSMEs)
are as follows:
1. National Micro, Small and Medium Enterprise Development Programme
Objectives:   To enhance competitiveness, step up participation and integration in the market
and facilitate the access of micro, small and medium enterprises to new markets, promote and
facilitate access to funding and encourage the management, enterprise, technical, organisational and
marketing development of micro, small and medium enterprises.WT/TPR/M/94/Add.1
Page 24
Services:  Providing  owner-operators of micro, small and medium enterprises involved in
industrial, agro-industrial, service, craft, trade, se rvice and tourist activities with financial assistance,
training, technical assistance, technology transfer and support for marketing and membership of trade
associations.
Project components are channelled through entities offering financial and non-financial
services, such as non-governmental organizatio ns, associations, foundations, cooperatives, non-
commercial partnerships, trade associations, production and other legally constituted groups which, in
conjunction with the National Programme, develop plans and projects for the micro, small and
medium enterprise sector.
2. "Institutional Development and Support Policies for the Micro, Small and Medium
Enterprise" - an IDB/MINECO (Inter-American Development Bank/Ministry of the
Economy) Project
Overall objective:  To contribute towards the organization of Guatemala's micro, small and
medium enterprise (MSME) sector by means of coordination and consensus  between the public and
private sectors.
Specific objectives:  To identify needs which have not been met or which have been
excessively covered by support programmes for the different types of MSMEs; to conduct a
stocktaking of institutional and legal obstacles which hinder sector development; to establish a policyoutline for the MSME sector with the backing of Guatemala's main players in this field;  to propose a
viable institutional structure for implementing the proposed policies and projects and to encourage the
executor to implement the legal, administra tive and procedural amendments involved.
3. Core MSME Sector Risk Project
This initiative of the Vice-Ministry for MSME Development has been legally constituted as a
corporation known as the "Credit Reference Corporation" and is represented by the Private
Development Organization (PDO) sector, cooperatives and the banking system.
Objectives:   To co-ordinate and monitor the implementation and execution of the Core
National Credit Reference Project for the MSME sect or in order to create a database compiling and
centralising information on the loan portfolios of public and private institutions and developmentorganizations which support the MSME sector by wa y of funding.  This database will function using
an information system (software) able to centralise and consult client credit information.
Services:  Furnishing institutions affiliated to the Microcredit Rating Agency with credit
information on credit users with a view to reduc ing the risks and uncertainty involved in granting
funding to the MSME sector. Preventing users without the necessary solvency to fulfil theirobligations from receiving credit from several institutions. Helping to reduce the percentage of
payment arrears and bad debts in the loan portfolio s of institutions affiliated to the rating agency.
Furnishing the information required to perform more comprehensive credit analyses, including details
of applicants' creditworthiness and any current obligations affecting their solvency.
4. INFOM-MINECO (Institute for Municipal Development-Ministry of the Economy)
Management and Business Centres
Objectives:   To develop 11 management and business information centres for MSMEs in
INFOM (Institute for Municipal Development) regional head offices and provide institutional support
for their operation.WT/TPR/M/94/Add.1
Page 25
Services:  Catering for the needs of MSMEs at the INFOM head offices in El Petén, Baja
Verapaz, Quetzaltenango, Mazatenango, Jutiapa and Zacapa.
5. UNIDO-MINECO (Industrial Development Board-Ministry of the Economy) Micro,
Small and Medium Enterprise Support Centres
Objectives:   To develop MSME support centres in the provinces of El Petén and
Quetzaltenango and provide them with institutiona l support by contracting international experts to
furnish technical assistance.
Petén Project:  Support activities  for local organizations and technical assistance and
business training events are held in conjunction with the technical training institute INTECAP;
seminars on free-trade agreements for the business sector and workshops on food processing and
support for electronic commerce are also organized.  A moveable sawmill has been brought back into
service for wood processing and the necessary training provided. The MSME support centre also
makes documentation and audio-visual material available for technical consultation.
Quetzaltenango Project:  Training events on investment project formulation are held in
conjunction with the INTECAP technical training institute.
6. TELGUA-MINECO (Guatemalan Telecommunications Company-Ministry of the
Economy) Pilot Internet Project
Objective:   To establish information centres which make Internet services available to
businesspeople.
Services:   The Vice-Ministry for MSME Development, the NGO network and Telgua
(Guatemalan Telecommunications Company) have set up  a pilot project with centres in the following
NGOs: Asociación Fe y Alegría, Quetzaltenango; Génesis Empresarial, Zone 7, Guatemala City, and
Old Guatemala; National Coordinating Committee fo r Guatemalan Micro-Entrepreneurs (Conmiguat),
Chimaltenango; and the SME Federation (Fepyme), Guatemala City.
7. "Introduction to the Internet" Video Project
Objectives:   To produce a video giving a user-friendly introduction to the Internet and
enabling businesspeople to discover the world of possibilities it opens up in terms of marketing and to
popularise the use of technology and the Internet.
Services:  Creation of a tool available to all Guatemalan businesspeople.
8. Technological Project on Tourist Inns (Paradores)
Objectives:   With a view to disseminating tourist information and with the backing of the
Guatemalan Tourism Institute (INGUAT), computer equipment will be installed in a number of petrol
stations across the country where, in addition to furnishing information on the beauty spots and placesof interest in Guatemala, it will serve as a platform for its handicrafts trade in an endeavour to develop
the domestic market and promote integration into the international market.
9. Local Technical Support Programmes for Production Projects
Objectives:   To encourage groups of producers to join trade associations and form production
lines enabling micro, small and medium enterprises to engage actively in Guatemalan exports.WT/TPR/M/94/Add.1
Page 26
Services:   Providing organized groups with technical and administrative assistance with a
view to their associative and institutional strength ening. This programme currently covers production
projects from Estanzuela, Pastores, Quetzaltenango, Rabinal and Chinautla.
(iii) State-trading companies, state-owned enterprises and privatization, Paragraph 132
59. USA:  The Secretariat's Report notes that  “The Government of Guatemala embarked on
an extensive state modernization process in 1996 which included the divestiture, concession, sale
and privatization of state-owned enterprises”.  Does the Government of Guatemala plan to
privatize the few remaining completely state-owned enterprises?
Answer:   The government is currently auctioni ng its remaining shares in electricity
distribution companies. It is also assessing whether to grant concessions on the two international
airports and some stretches of highway and is gradually transferring the rural telephony service to
private operators.
(v) Intellectual property rights
60. EU (paragraph 154):  It is encouraging to  see that Guatemala is tackling the major
problem of copyright piracy.  We would be grateful to receive English language copies of its new
legislation when available.
Answer:   We should like to thank the European Communities for their interest in studying
Guatemalan legislation.  As soon as this material is translated, copies will be forwarded to WTOMembers.
Please explain how Guatemala protects European GIs and how it has implemented the
provisions of Articles 22 and 23 of the TRIPS Agreement.
Answer:   Guatemalan legislation provides for a general protection regime based, for the most
part, on Articles 22 and 23 of the TRIPS Agreement. It is therefore this general regime, describedhereunder, which protects European geographical indications in Guatemala.
Article 78 of the Industrial Property Law (Decree 57-2000) states that a geographical
indication may not be used in trade in connection wi th a good or service if it is false or misleading
with regard to the geographical origin or qualities of that good or service or if its use might mislead
the public with regard to the origin, source, characteristics or qualities of the good or service inquestion.  Similarly, Article 79 of the Law states that no geographical indication may be used in the
advertising or trade documentation pertaining to the sale, display or supply of such goods or services
when such use could lead to error or confusion as to the geographical origin or qualities of such goods
or services.  Article 80 of the Law allows traders to show their name and address on the goods they
sell, even if these originate in a foreign country, provided that this information is accompanied by aclear indication, in sufficiently legible lettering, of the name and address of the manufacturer of the
good and the country or place of origin to preclude any error as to the goods’ true place of origin.
The Industrial Property Law is therefore in compliance with Articles 22.1 and 22.2(a) of the TRIPS
Agreement.
With regard to unfair competition, and in full conformity with Article 10 bis of the Paris
Convention and Article 22.2(b) of the TRIPS Agreem ent, Article 172 of the Industrial Property Law
considers all acts performed as part of any commercial or industrial activity which are contrary tohonest commercial usage and practice to be unfair competition.  By way of an example, Article 173(b)
and (c) of the Law considers as acts of unfair competition "the use, promotion or dissemination of
false or inaccurate indications or facts capable of denigrating or discrediting other products, goods,WT/TPR/M/94/Add.1
Page 27
services, companies or establishments or which could mislead the public with regard to the origin,
nature, manufacturing methods, suitability for the pu rpose, use or consumption, quantity or any other
characteristics of national or foreign goods or services" and the "improper use or omission of true
indications, when these are likely to mislead the public as to the origin, nature, manufacturing
methods, suitability for the purpose, use or consumption, quantity or any other characteristics of
national or foreign goods or services".
Article 173(e) of the Industrial Property Law also considers the use of a distinctive sign the
registration of which is prohibited as an act of unfair competition because, inter alia , it could prove
false or misleading with respect to the geographical or cultural origin of that good or service, or
because it contains or consists of a national or foreign geographical indication, use of which might
lead to confusion or mistaken association as to the origin, source, qualities or any other characteristics
of the good or service in question.
It should be pointed out that the use in trade of a geographical indication which is false or
likely to mislead the public with regard to the origin of a good or service or the identity of the good
and the manufacturer or trader which distributes it is classed as an offence under the Penal Code,
subject to payment of civil liabilities, a prison sentence of from one to four years and a fine of
between 1,000 and 500,000 quetzals (approximately US$125 and US$62,000).
Article 22.3 of the TRIPS Agreement states that the registration of a trademark which contains
or consists of a geographical indication, if its use is of such a nature as to mislead the public as to the
true place of origin, shall be refused or invalidated ex officio if the country's legislation so permits or
at the request of an interested party.  This provision has been implemented in Guatemalan legislation
in Articles 16, 20(j) and (k), and 67 of the Industrial Property Law. Article 16 does not permit
registerable trademarks to contain or consist of a national or foreign geographical indication when it isinsufficiently arbitrary and distinctive with regard to the goods or services to which it applies and
when its use is likely to create confusion as regards the origin, source, qualities or characteristics of
the goods or services.  Article 20 of the Law states, inter alia , that any sign which could prove false or
misleading with regard to the geographical or cultural  origin of a good or service or which contains or
consists of a geographical indication which is not in accordance with Article 16 of this Law isunacceptable for registration as a trademark. Article 67 of the Law establishes the procedure for
declaring the absolute nullity of trademark registrations obtained in breach of Article 20 of the
Industrial Property Law. This is the responsibility of the Prosecutor General, when State interests are
at stake, or any person involved in the case, and does not lapse.
Pursuant to Article 23 of the TRIPS Agreement, Members shall provide the legal means for
interested parties to prevent use of a geographical indication identifying wines for wines not
originating in the place indicated by the geographical indication in question.  This shall be applicable
even when they are not misleading to the public, when there is no instance of unfair competition and
when, nevertheless, the true origin of the goods is indicated or the geographical indication is
accompanied by expressions such as "kind", "type", "style", "imitation" or the like.  These provisions
shall also apply for geographical indications identifying spirits when used for such products. The
corresponding protection shall also be accorded in respect of trademark registration.
The above-mentioned statutory provisions are applicable irrespective of the nature of the good
to which the geographical indication in question refers.  It should be pointed out that the TRIPS
Agreement, including Article 23, forms part of Guatemalan legislation.
As a corollary to this answer, it should be mentioned that, pursuant to the Industrial Property
Law, geographical indications are not excluded from registration in the Industrial Property Registry ascollective or certification trademarks, not necessarily as part of the protection regime provided for in
this Law, but rather owing to the recognition that  the general rule that geographical indications mayWT/TPR/M/94/Add.1
Page 28
not constitute trademarks when they mislead the public as to the true origin of the goods in question
does not apply to this type of trademark.
61. SWITZERLAND:  Could Guatemala explai n how it has implemented its obligation
under Article 39.3 of the TRIPS Agreement to protect against disclosure or unfair commercial
use of data required to be submitted as a condition of approving the marketing of
pharmaceutical or of agricultural chemical products which utilise new chemical entities?
Answer:   The Industrial Property Law (Decree 57-2000) includes provisions on undisclosed
test or other data, submission of which is required by the competent administrative authority as a
condition of approving the marketing of pharmaceutical or of agricultural chemical products which
utilise new chemical entities.  In such circumstances, Article 177 of the Law provides for the
protection of such data against unfair commercial use and against disclosure, provided that the persons
submitting the data do so under an express guarantee of confidentiality. In accordance with
Article 39.3 of the TRIPS Agreement, the law provides for exceptions to this rule on disclosure whenthe authority deems that this is necessary to protect the public or when reasonable steps have been
taken to ensure that the data are protected against unfair commercial use.
Article 177 of the Law also provides for a period of exclusivity with regard to such data or
information for the person who submitted them a nd during which no-one may, without the written
authorization of the right holder, "have access to the data or information or cite them in support of a
request for product approval, even if this does not involve their disclosure".
It is important to note that Ministerial Decision No. 00631 of 27 April 2001 approved the
"Regulations on the registration of natural or legal persons interested in conducting activities related to
agricultural inputs and the registration, renewal, import, return and export thereof". These regulate the
implementation of Article 177 of the Industrial Property Law with regard to agricultural chemicalproducts by the competent authorities of the Mi nistry of Agriculture, Livestock and Food.
As far as pharmaceutical products are concerned, although the amendments to the regulations
applicable to the sanitary registry for such products have not yet been made, a proposed general
regulation in the form of a preliminary draft regulation to the Law on Industrial Property does exist
and is expected to be approved and enter into force before the end of the first half of this year.
Trade facilitation
62. EU:  We welcome the constructive and active participation of Guatemala in the WTO
work on trade facilitation which we see as a cru cial area for the future negotiations and a key to
helping exports and attracting inward investment.  Against that background, we would welcome
further information on any measures taken recently by Guatemala to reduce and simplify itsimport and export procedures and to intro duce modern customs and trade administration
procedures, such as pre-arrival processing of consignments, risk assessment procedures and
submission of data by electronic means.
Answer:   Amongst other important measures geared towards successfully promoting trade
facilitation, Guatemala has implemented the Un iform Central American Customs Code (CAUCA)
with which it hopes to make customs procedures more efficient and transparent and to modernize
customs processes and activities.
The CAUCA has permitted the incorporation of new technology which has led to an
improvement in the service of foreign trade in the country.  The electronic declaration is one such
example and has led to customs procedures being expedited and customs control stepped up, thereby
minimising the risk of error.WT/TPR/M/94/Add.1
Page 29
Implementation of the electronic declaration has enabled customs agents to prepare and
transmit the information required for their work from their offices, thereby avoiding unnecessary
waste of time and resources both for them and for the importer and government (with regard to
customs duty collection).
Moreover, the system is very reliable since data are encrypted and checked on-line.  The
system boasts a modern access control mechanism with a personalised data access key, electronicoperations manual, electronic signatures and data encryption by way of public and private passwords.
63. EU:  What measures has Guatemala taken, or does it plan to take, to encourage
simplification of import and export procedures with its neighbours at the regional level?
Answer:   One of the greatest strides forward at regional level and forming part of the Central
American economic integration process has been the customs union, a joint venture undertaken by
Guatemala and El Salvador in 1999.  The Customs Union process has involved creating a common
customs territory between both countries. Comm on customs offices have been set up between
Guatemala and El Salvador at the border stations of Pedro de Alvarado and La Hachadura, San
Cristóbal, Valle Nuevo and Las Chinamas, at El Salvador's peripheral customs posts at Puerto
Quetzal, Puerto Barrios, Puerto Santo Tomás de Castilla and Tecún Umán and at Guatemala's
peripheral customs post in El Amatillo, El Salvador. Honduras will begin to implement the Customs
Union process in January with the peripheral customs post of Tecún Umán.
64. EU:  What measures does Guatemala have in place to consult the trading community -
including importers and exporters, shippers, freight forwarders and agents and SMEs - on
customs and trade facilitation rules and procedures and ways of improving them?
Answer:   With a view to finalising and improving the various foreign trade procedures and
operations, institutions involved with foreign trad e have, in conjunction with the Superintendency of
Tax Administration (SAT), created a forum throug h the Guatemalan International Freight Advisory
Council (CUTRIGUA), which is attended by representatives of the Chamber of Industry, Chamber of
Commerce, Association of Exporters of Non-Trad itional Products, National Transport Co-ordinator
and customs agents.  The aim of the forum is to pu t forward technical solutions to concrete customs-
related problems with a view to cutting costs and making Guatemala's foreign trade more competitive.
65. EU:  What are Guatemala's principal needs in  respect of technical assistance in the field
of trade facilitation/simplification of customs and import and export procedures?
Answer:   Generally speaking, the areas requiring technical assistance are as follows:
Streamlining of foreign trade by way of t echnology which facilitates the loading and
unloading of goods arriving at Guatemalan customs;
Methodology and state-of-the-art equipment for measuring fluids, gases and goods in bulk;
Use of technology facilitating the physical inspection of the containers used to import a range
of goods into national territory;
Procedures which help to determine the nature and classification of goods for tariff purposes
and goods valuation procedures.WT/TPR/M/94/Add.1
Page 30
IV. TRADE POLICIES BY SECTOR
(2) AGRICULTURE
(i) Main features and policy objectives, Paragraph 14
66. USA:  The Secretariat's Report notes that “T ariffs on agricultural products traditionally
destined for domestic consumption, such as yell ow corn, rice and beans, are still significantly
higher than the average tariff for the sector”.  Is the Government of Guatemala planning to
reduce these tariffs?
Answer:   The Guatemalan government is not envisaging any further reductions in its current
tariffs for corn, rice and beans, given that these products have considerable socio-economic
importance for the rural population.  In spite of the fact that the Report by the Secretariat states that
tariffs on these products are significantly higher than the average tariffs on agricultural products, they
are not prohibitive with regard to imports, with in-quota tariffs ranging from 0 to 14.6 per cent for
corn and rice and 20 per cent for beans.  Out-of-quota tariffs do not exceed 35 per cent for theseproducts and it should be noted that both the in-quota and out-of-quota tariffs applied are considerably
lower than the commitment made with the WTO.
(ii) Key subsectors
(e) Non-traditional agricultural products, Paragraphs 39 and 40
67. USA:  The Secretariat's Report notes that  “Since the early 1990s, the production of non-
traditional agricultural goods has developed into an important branch of Guatemala’s
economy” and that “Non-traditional agricultural pr oducts are eligible for the incentives granted
under the Maquila and Free-Trade Zone Laws”.  What else has the Government of Guatemala
done to encourage the production of non-traditional agricultural goods?
Answer:   Guatemala hopes that trade liberalisation will create opportunities to exploit its
comparative advantages. Guatemala faces the challenge of diversifying its production base by means
of projects such as the sustainable and rational exploitation of its forest potential and support for rural
development through the extension of electricity and telecommunications services.
(2) MINING AND ENERGY
(i) Mining, Paragraph 5668. USA:  The Secretariat's Report notes that  “Electricity production reached 5,947 GWh in
2000, of which 694 GWh were exported to El Salvador”.  Is the Government of Guatemala
planning to take additional steps to encour age the production of electricity for export?
Answer:  The Guatemalan government is promoting domestic and international investment in
power generation projects in an endeavour to in crease the country's power supply and guarantee
supply and satisfaction of the country's present and future demand, that is to say, domestic
consumption.  In the particular instance referred  to, energy exports to El Salvador obeyed "market
logic", with private operators deciding to take ad vantage of opportunities to export to El Salvador,
namely excess domestic supply.
The Guatemalan State is promoting the creation of the Central American Regional Electricity
Market by way of the SIEPAC (Electricity Interco nnection System for Central America) project which
entails interconnecting the high-voltage power transmission systems of Central American countriesWT/TPR/M/94/Add.1
Page 31
and configuring a suitable regulatory framework fo r the exchange of power within the region. The
interest aroused by this project in the international private sector is such that companies such as AES,
Enron and Duke Energy are investing in regional power generation projects which will enable them to
supply power to the integrated market of Guatem ala, El Salvador, Honduras, Nicaragua, Costa Rica
and Panama. Duke Energy began constructing a new power generation plant on 9 January with a
capacity of 165 MW which will be available on the wholesale market in November this year.
(4) MANUFACTURING, Paragraph 75
69. USA:  The Secretariat's Report notes that  “According to information provided by the
Association of Exporters of Non-Traditional Products, the value-added incorporated in exports
of apparel and textiles rose from US$67.6 million in 1990 to US$422 million in 2000”.  Can the
Government of Guatemala confirm these figures?
Answer:   The Law Establishing the Bank of Guatemala (Decree No. 215 of the Guatemalan
Congress) establishes that it is the responsibility of the Director of the Department of EconomicStudies of the Bank of Guatemala to prepare the country's balance of payments, including an estimate
of the value added generated by maquila enterprises.  Such an estimate can be found under the
heading "Other services" in the service balance of the balance of payments.
Estimate of value added generated by Maquila Enterprises, years 1990-2000
In millions of US dollars
Year Value added generated
1990 36.1
1991 68.4
1992 96.2
1993 105.5
1994 136.4
1995 166.5
1996 175.6
1997 212.2
1998 284.9
1999 287.7
2000p373.8
2001e404.0
p Preliminary figures.
e Estimated figures.
Source: Economic Review and Activity Report, Bank of Guatemala
(5) SERVICES
(ii) Overall commitments under the GATS and other agreements, Paragraph 85
70. USA: The Secretariat's Report notes that “The scope of Guatemala’s Schedule of
Specific Commitments under the WTO General Ag reement on Trade in Services (GATS) is
limited, including commitments in only five of the twelve categories of services. […] In most
cases, recent changes have made the applied poli cy more liberal than those commitments”.  IsWT/TPR/M/94/Add.1
Page 32
the Government planning to increase its commitments in the new round of Services
negotiations?
Answer:   Article XIX of the GATS provides for successive rounds of multilateral
negotiations geared towards achieving a higher level of progressively liberalised trade in services.
Likewise, and as instructed by the Ministers in Doha, broad-based negotiations broaching other
aspects of the WTO are also to be launched.
The question of to what extent and at what stage of the process commitments shall be made
will depend both on the above and on the individual circumstances of the country and the other
countries' offers in our sectors of interest.
(iii) Banking and insurance
71. CANADA:  Accordin g to paragraph 98 of the Secretariat Report, there are “plans for a
comprehensive reform of Guatemala’s financial sector legislation. […]  The Monetary Board
has submitted various draft laws to the President of the Republic for consideration, includingnew legislation on financial supervision”.  Please provide an update on the progress of this
reform initiative of the financial sector legislation.
Answer:   The Programme to Strengthen the National Financial System, approved by the
Monetary Board by way of Resolution JM-235-2000 of 1 June 2000, established the objective of
proposing an adaptable and flexible legal framework which provides legal certainty and contributes tothe efficiency, transparency and competitiveness of financial activities in order to stabilise the national
financial system.
In this context, by way of Resolution JM-137-2001 of 12 March 2001, the Monetary Board
approved the draft Law on Banks and Financial Groups which covers issues such as the regulation of
financial groups, consolidated supervision, flexible restructuring mechanisms and solutions forinsolvent institutions, risk management for banking institutions and transparency of information.
This project seeks to establish a legal framework providing legal certainty and promoting sound risk
management for the institutions under supervision, as well as the financial groups to which they
belong.
As part of this same process, by way of Resolution JM-138-2001 of 12 March 2001, the
Monetary Board approved the draft Law on Financial Supervision, which seeks to provide the
Superintendency of Banks with the legal basis to acquire greater operational independence, as well as
sufficient regulatory and sanctioning powers to be able to fulfil its supervisory role more effectively.
Subsequently, by way of Resolution JM-204-2001 of 8 May 2001, the Monetary Board
approved the draft Law Establishing the Bank of Guatemala, which lays down rules for theadministrative and operational structure of the Central Bank. This draft law includes provisions which
would enable the underlying objective of the Central Bank to be clearly defined, its autonomy
strengthened, the use of indirect monetary policy instruments privileged, the role of the reserve
requirement and the Bank's function as a "lender of last resort" redefined, the transparency
mechanisms and accountability of the issuing author ity reinforced and the powers and functions of the
governing and administrative bodies of the Bank of Guatemala specified. Strengthening the autonomy
of the Central Bank would help to make monetary policy more efficient and thus achieve itsunderlying objective, namely for the general price level to become and remain stable.
Furthermore, by way of Resolution JM-213-2001 of 15 May 2001, the Monetary Board
approved the draft Monetary Law, which contains regulations on the currency unit, free external
convertibility of the national currency and free movement of capital.WT/TPR/M/94/Add.1
Page 33
These four draft laws were forwarded by the Monetary Board to the Executive Power in
March and May 2001 for referral to Congress. The Currency and Finance Committee of the
Guatemalan Congress has already delivered a favourable opinion with regard to the draft laws on
reforming financial sector activities. The first and second readings of the draft laws have already taken
place before the plenary Congress. Discussions will be held prior to their third reading and passage.
(Page 77, paragraph 101)
72. JAPAN:  In Guatemala’s schedule of commitm ents in the financial sector, the limitation
to the Mode three for market access reads, “onl y financial institutions legally established in
Guatemala” which can be interpreted that, if a foreign bank wants to do business by way of itscommercial presence, such commercial presence shall be established based on Guatemala’s
laws.  On the other hand, the Report states that foreign banks may establish branches or
subsidiaries in Guatemala subject to approval by the Monetary Board. Does this mean that
foreign banks can establish their commercial presence via branch offices and subsidiary
companies once they are approved by the Mone tary Board, even thought they are not
established based on Guatemala’s laws?
Answer:   Foreign banks may only operate in Guatemala through legally established branch
offices authorised by the Monetary Board.
In accordance with current legislation, foreign banks may establish themselves as branch
offices, for which they should submit a request for authorization to the Superintendency of Banks,
which is the supervisory authority. Once the Superintendency of Banks has ensured their compliance
with the corresponding legal and regulatory requireme nts, it sends a detailed report thereon to the
Monetary Board.  The Monetary Board then studies the request and the Superintendency report and
gives or withholds its consent.
73. HONG KONG, CHINA (page 77, paragraph 101): We note that foreign banks may
establish branches or subsidiaries in Guatemala subject to approval of the authorities.
However, according to the Regulations for the Incorporation of Banks, applications from
foreign banks whose home countries do not grant reciprocal treatment to Guatemalan banks
are not considered.  We are interested in knowing whether Guatemala would consider granting
branches or subsidiaries licences on an MFN basis to encourage more foreign investment.
Answer:   A comprehensive reform of Guatemala's financial legislation is currently under
way.  This reform encompasses the draft Laws on Banks and Financial Groups and on FinancialSupervision which establish a range of provisions geared towards the integration of Guatemalan banks
in international markets.
The above-mentioned draft laws are pending approval by Congress; this requires the
enactment of the corresponding Legislative Decree which will give them effect and allow the
respective regulation establishing the requirements and procedures for branch offices of foreign banksto operate in Guatemala to be issued.
74. CANADA:  Paragra ph 103 of the Secretariat Report states that “pursuant to
Article 91(g) of the Bank Law, banks are prohibited from offering insurance services to their
clients”. Please clarify whether this measure also prohibits banks from operating separatesubsidiaries that offer insurance services.
Answer:   Pursuant to Article 91(g) of the Bank Law, banks may not offer their clients
insurance services. Insurance companies may, however, be established in Guatemala provided that
they are organized or established as corporations, in accordance with current legislation and the
special rules thereon. The sole purpose of such a company must be to operate as an insurancecompany.WT/TPR/M/94/Add.1
Page 34
75. CANADA:  As i ndicated in the Secretariat Report, paragraph 104, “the Financial Action
Task Force on Money Laundering placed Guatemala, together with five other countries on a list
of “non-cooperative countries and territories””.  The Report further states that Guatemala, in
order to improve control over money laundering, expected to enact a new law against money
laundering in October 2001.  Please indicate whether this Anti-money laundering law has been
enacted and, if not, then when is it expected to be enacted?
Answer:   The law against laundering money and other assets was approved by the
Guatemalan Congress by way of D ecree No. 67-2001 of 17 December 2001.
76. HONG-KONG, CHINA (page 78, paragraph 105):  We note that the low share of the
total assets of Guatemala’s insurance companies in the supervised financial system is partly
attributable to the pension system being in the public domain. There is still one insurance
company under state ownership. We are intere sted in knowing whether Guatemala has any
plans to consider privatising the pension system as well as the state-owned company.
Answer:  The Stand-By Agreement currently being negotiated with the International
Monetary Fund provides for studies on the modernisation of the Guatemalan pension system.
(iv) Communications services, Paragraph 109
77. USA:  The Secretariat's Report notes that “Telecommunications has been amongst the
fastest growing service activities in the Gu atemalan economy”.  In 2000 the number of mobile
telephone subscribers overtook the number of fixed connections. Does the Government of
Guatemala see this trend continuing?
Answer:   The number of mobile telephone subscribers is expected to continue to climb
sharply; a reduction in the growth rate can, however , be detected in the figures for this last year.
78. EU:  Does Guatemala have any plans to im prove the functions of the market regulatory
authorities in the telecommunication and elec tric sector concerning their supervision and
sanction powers in order to avoid obstacles to investments in those sectors and facilitate the
respect of the rules of the game?
Answer:   The National Electric Commission a nd Superintendency of Telecommunications
are both technical bodies which enjoy operational independence and are responsible for developing,
implementing and supervising the regulatory and po licy framework which defines the rules of the
game for the electricity and telecommunications sectors and the activities of the economic operatorsinvolved.0200,000400,000600,000800,0001,000,0001,200,000
1996 1997 1998 1999 2000 2001
Mobile telephones (number of lines)EstimatedWT/TPR/M/94/Add.1
Page 35
Guatemala strengthened the regulatory framework of the electricity sector in 2001 by issuing
Technical Standards for the Electricity Distribution Service, thereby providing certainty, security and
transparency for investment and market operations. These technical standards complete the regulatory
framework envisaged in the General Electricity Law (Decree No. 93-96), the Regulations to the
General Electricity Law (Governmental Decision No. 256-97) and the Regulations for the
Administrator of the Wholesale Market (Gover nmental Decision No. 299-98).  This framework is
considered adequate for promoting a satisfactory  environment for competitiveness, investment,
transparency and efficiency.  This legislation al so provided for the establishment of the National
Electric Commission with a view to facilitating the activities of the various sectors within the
electricity system and achieving maximum productivity.
(pages 79 and 80, paragraphs 112-115)
79. JAPAN: Please provide information on tel ecommunication market shares in low-income
regions between a state-owned company (Guatel) and other private companies by indicating, forexample, the amount of the share based on the num ber of lines provided by each company in the
respective regions.
Answer:
Cover by Province (Fixed Network), Year 2001 (to 30 June)
80. KOREA: As indicated in paragraph 111 (p age 79) of the Secretariat's Report, the
Superintendency of Telecommunications (SIT) is described as a “semi-autonomous”government body.  Please explain to us what “semi-autonomous” means and why the term
“autonomous” is used in place of “independent” which is the broadly used term for
telecommunications services. Additionally, please explain to us how the SIT is connected to the
Ministry of Infrastructure in terms of its st ructure and function and who has the competence to
appoint the SIT’s high-ranking officials, including the president.
Answer:
(a) The Superintendency of Telecommunications (SIT) was created pursuant to the General
Telecommunications Law as a highly technical body under the Ministry of Communications,
Infrastructure and Housing.  The SIT enjoys operational independence in the exercise of the
powers and functions assigned to it under this law. It is therefore understood to be "semi-Departamento FT&T Cable
netUnitel Comcel Telefónica Ser
comA-tel Telgua Cybernet Telnor Bell
southAmerica
telDes.
Int.BNA Guatel TTI Optel TOTAL
Alta Verapaz 49 8,232 3 8 8,292
Baja Verapaz 16 2,139 3 2,158
Chimaltenango 10,895 443 11,338
Chiquimula 2 10,893 252 11,147
EL Petén 1 6,932 25 30 2 6,990
El Progreso 4 2,807 2,811
El Quiché 8 45 5,633 6 5,692
Escuintla 100 631 22,658 8 23,397
Guatemala 315 6,578 90 2,164 15,847 2,490 462,874 2,038 80 285 1,791 600 495,152
Huehuetenango 144 196 12,597 33 12,970
Izabal 13,004 30 13,034
Jalapa 4,810 511 5,321
Jutiapa 2 7,683 439 300 8,424
Quetzaltenango 212 35,665 77 35,954
Retalhuleu 7,149 75 7,224
Sacatepequez 14,442 43 14,485
San Marcos 112 12,253 2 12,367
Santa Rosa 4,695 211 4,906
Sololá 4,266 165 4,431
Suchitepequez 482 9,569 130 10,181
Totonicapán 4,553 142 4,695
Zacapa 11,656 11,656
315 6,578 98 2,164 16,804 0 3,529 675,405 2,038 2,311 0 285 36 350 1,812 0 900 712,625WT/TPR/M/94/Add.1
Page 36
autonomous" because it is a technical body of the Ministry of Communications, Infrastructure
and Housing, but with operational independence.
(b) The Superintendent is the highest authority of the Superintendency and is appointed by the
Ministry of Communications, Infrastructure and Housing and performs his or her functions
independently and in strict compliance with the General Telecommunications Law. This law
establishes the requirements for appointment to the position of Superintendent. TheSuperintendent's powers include the right to appoint and dismiss Superintendency official and
employees.
81. KOREA: Paragraph 114 (page 80) of the Secreta riat's Report indicates that “the Fund
for the Development of Telecommunications (Fondetel) receives 70 per cent of the revenue
generated from frequency auctions”. Please let us know whether there are other means of
financing for the Fondetel other than freque ncy auctions. Please also explain whether
telecommunications operators owned by a foreigner of majority share can use the fund.
Answer:
(a) The aim of the Fund for the Development of Telecommunications (Fondetel) is to subsidise
the telephone service in low-income rural and/or urban areas.  Seventy per cent of the fund is
financed, up to a maximum of 30 million quetzals, by the proceeds of radio spectrum auctions
for an eight-year period.
Article 72 of the General Telecommunications Law establishes the following as sources of
Fund income:
• Seventy (70) per cent of the proceeds of auctions of beneficial interest in the radio
spectrum for the first eight (8) years as from  the date of entry into force of this law.
This sum may not exceed thirty (30) million quetzals per year.  The balance which is
not invested in any particular year shall be carried over for investment in thefollowing years, even at the end of the eight-year period.  The said amount shall be
readjusted biannually as from the entry into force of this law in accordance with the
increase in the Consumer Price Index, as determined by the National Institute of
Statistics (INE).  Funds raised during the year which exceed the sum of thirty
(30) million quetzals shall be transferred to the common fund and used exclusively fordebt payment or public investment;
• Financial interest on resources deposited in the fund;
• Government transfers;
• Donations from other entities.
(b) Parties interested in being granted subsid ies shall submit specific telephony projects to
Fondetel, including full technical and economic particulars and demonstrating their expected
social benefits. Fondetel receives such investment projects from both public and private
entities and decides whether or not to grant subsidies on the basis of an economic and socialassessment of the projects.  If several projects are under consideration, priority will be given
on the basis of the difference between their social and the private rates of return.  Domestic
and foreign operators interested in receiving a subsidy from Fondetel need therefore only
comply with requirements established in the legislation.
82. KOREA:  Concerning footnote 21 in paragraph 116 (page 80) of the Secretariat's
Report, please explain to us why the words “cost-oriented” and “reasonable” were deleted in
paragraph 2.2(b) of the Annex on Additional Commitments of the Schedule of Commitments in
Basic Telecommunications.WT/TPR/M/94/Add.1
Page 37
Answer:  The words “cost-oriented” and “reasonable” were deleted as a result of the
amendment to Article 37, subparagraph III, of the section on access to essential resources
(interconnection) in the General Telecommunications Law which now reads, "With regard to
international traffic, 70 per cent of the revenue generated by the application of the international
settlement rate, including the corresponding interconnection charge, shall be paid to the local
telecommunications network providing the service to the final user who receives the call, unless theparties agree upon a different mechanism".WT/TPR/M/94/Add.1
Page 38
ADDITIONAL QUESTIONS AND RESPONSES
I. Question from the Chairman of the Trade Policy Review Body
1. What steps must Guatemala take to step up its participation in the multilateral system?
What is Guatemala's institutional capacity for negotiating and administering free-trade
agreements?
Answer :  See the answer to Question No. 9 from the USA.
II. Questions from the Discussant, His Excellency the Ambassador of Paraguay Dr. Luis
María Ramírez Boettner
1. When are the draft laws on the financia l system expected to be approved and the
reforms pursued?
Answer :  The Currency and Finance Committee of the Guatemalan Congress has already
delivered a favourable opinion with regard to the draft laws on reforming financial sector activities.The first and second readings of the draft laws have already taken place in the plenary Congress.
Discussions will be held prior to their third reading and passage.
2. What measures is the Guatemalan Governme nt taking to coordinate all of the trade
agreements appropriately?
Answer :  See the answer to Question No. 9 from the USA.
3. How is the Guatemalan Government coordinating its foreign and trade policies?
Answer:   This is a very pertinent question. Our foreign trade liberalization policy is
complemented by a political liberalization policy.  As far as Guatemala is concerned, progressing
towards a free economy also involves building a democratic society which respects personal
freedoms. Fundamentally, and as stated in the initial presentation, Guatemala is set on building anopen society because it believes that economic liberalization is complemented by political, social and
personal freedoms.
Domestic policy determines foreign policy. A free economy and politically free society
require a foreign policy involving alliances with other democracies and free economies worldwide.
Guatemala is committed to developing a progressive foreign policy based on an equally progressivedomestic policy.
4. What is the current position as regards negotiations on establishing a customs union in
the Central American subregion?
Answer:
1. Tariffs:
(a) Approximately 80 per cent of all tariff headings in El Salvador's and Guatemala's
tariff universe and 23 per cent of those between El Salvador, Guatemala, Honduras
and Nicaragua have been harmonised. These tariffs were bound for Guatemala and
El Salvador as from 31 December 1999 and for the other group of four countries asWT/TPR/M/94/Add.1
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from 20 October 2000 and cannot, therefore, be altered unilaterally. Tariff headings
harmonised as from these dates will be bound on an ongoing basis.
(b) An undertaking was made that the safeguards referred to in Article 26 of the Central
American Tariff and Customs Convention may only be applied collectively.
The undertakings on uniform tariff binding and safeguards outlined in points (a) and (b) above
were extended to Nicaragua and Honduras upon their accession to the customs union by wayof an agreement signed at the meeting of the Vice-Ministers of Economy of the four countries
on 25 September 2000.
2. Customs administration:
(a) The Vice-Ministers of Economy and Public Finance instructed the Directors of
Customs to bring a model customs into operation in La Hachadura, taking advantage
of its existing infrastructure, with a view to eliminating border posts between
Guatemala and El Salvador. This process will be extended to the customs on theNicaraguan-Honduran border with the Direct ors of Customs indicating at which
border posts model customs will be set up.
With regard to the above, the following customs posts have been established:
1. Integrated Customs Posts:  El Amati llo (29 January 2001), El Poy (11 June 2001),
Las Chinamas (15 June 2001).
2. Adjacent Customs Posts:  Pedro de Alvarado-La Hachadura (4 April 2001), Anguiatú
(8 August 2001), San Cristóbal (30 June 2001).
3. Peripheral Customs Posts in El Salvador:  Puerto Quetzal (5 May 2001), Santo Tomás
de Castilla (15 May 2001), Puerto Barrios (30 May 2001), Tecún Umán (16 July),
Puerto Cortés (11 June 2001).
4. Trinational Customs Posts: El Amatillo (29 January 2001), El Guasaule
(30 August 2001).
(c) Guatemala and Honduras are working to establish a single customs post at Corinto.
(d) With regard to common customs legislation, the Directors of Customs of Guatemala
and El Salvador established a technical group which drafted common regulations forthe Uniform Central American Customs Code III (CAUCA III), including procedures
governed by domestic legislation, such as free-trade zones and offshore processing
(maquila). These regulations were approved by the Council of Ministers for
Economic Integration (COMIECO) by way of Resolution No. 71-2000 and provide
for the possible accession of Honduras and Nicaragua.
(e) The Uniform Central American Customs Code III (CAUCA III) and its Regulations
(RECAUCA) are in force in Guatemala and in abeyance in El Salvador.WT/TPR/M/94/Add.1
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3. Registers:
(a) A technical group has been created and subdivided into six sub-working groups which
are making headway in the following fields:
• Foodstuffs and beverages
• Medicaments and like products
• Agro-inputs
• Hydrocarbons
• Sanitary and phytosantiary standards
• Standardisation measures
4. Tax Harmonization:
(a) The Directors of Integration, Customs and Internal Revenue of the four countries held
a coordination meeting at which El Salvador presented a proposal on the taxinformation and inspection exchange project.
(b) The Permanent Secretariat of the General Treaty on Central American Economic
Integration (SIECA) is incorporating da ta on Honduras and Nicaragua into the
comparative tables of legislation on value-added tax and specific or selective
consumption taxes on cigarettes, soft drinks, beer and alcoholic beverages.  Thesedata will be reviewed and updated by the Director-Generals of Revenue of both
countries in order to further the tax harmonisation proposals.
(c) The final version of the tax harmonisation work programme was approved;  it
includes, in addition to the taxes already selected for harmonisation (VAT and
Selective Consumption Taxes), an analysis of income tax in the light of its effect oninvestment location.
El Salvador enacted a decree eliminating VAT exemption on a list of products, thereby
reducing the differences between it and Guatemala in this respect.  Guatemala broadened its
basis for calculating the VAT charged on imports, thereby bringing it into line with that of
El Salvador.
It was agreed that the mechanism for collecting, administering and distributing tax revenue
within the customs union would be  characterised by the following:
- Sales figures from the customs union shall be incorporated since they generate VAT;
- No VAT shall be charged on sales by a producer or trader from one country to a
producer or trader in the other;
- No tax credit shall be granted on sales by a producer or trader from one country to a
producer or trader in the other;
- The document used for business transactions between the economic agents of both
countries shall be an invoice.
- The VAT paid on purchases of inputs or raw materials by producers or traders from
one country selling to producers or traders in the other may be deducted from income
tax.WT/TPR/M/94/Add.1
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The creation of a binational entity for controlling and administering tax revenue was
proposed.
5. Investment and trade in services:
The judicial review of the Treaty on Investment and Trade in Services between El Salvador,
Guatemala, Honduras and Nicaragua, conducted with in the framework of the Customs Union process,
was completed on 26 October.
The Treaty aims to establish a legal system with clear and transparent rules of mutual benefit
to all four countries on the promotion and protection of investment and trade in services which
encourage the active participation of the various economic operators, in particular the business sector,
in efforts to improve economic relations.
6. Common foreign trade policy:
The countries' positions with regard to the international trade negotiations currently under way
at regional level are coordinated beforehand.
7. Free trade:
A framework agreement for the customs union was signed by El Salvador and Guatemala on
13 January 1999 and has been ratified by both countries.
5. What steps is Guatemala taking to diversify its production and export structure?
Answer:  We have noted this concern and believe that economic liberalization should
generate opportunities to exploit comparative advantages through trade and investment.
It is also hoped that support for rural development through the extension of, inter alia,
electricity and telecommunications services, sustainable and rational exploitation of the country's
forest potential and the development of micro, small and medium-sized enterprises as well as of
specific branches of tourism should help Guatemala to achieve greater political, social and economicdevelopment.
6. What measures are being taken by the Superintendency of Tax Administration (SAT) to
achieve the objective of increasing fiscal revenue to 12 per cent of GDP?
Answer :  See the answer to Question No. 5 from Norway.
7. Do statistics exist for the offshore processing (maquila) and free-trade zone sectors
which would allow their volume and significance to be determined and their incorporation in
figures for the country's global economy? What measures is the Guatemalan government taking
to prevent the creation of a separate and dual economy?
Answer :  See the answer to Question No. 6 from the USA.
8. What measures are being taken and facilities  granted with regard to national investors
in comparison with foreign investors and what  measures are being taken and what facilities
granted with regard to the repatriation of national investors' funds from abroad?
Answer:  The Political Constitution of the Republic of Guatemala enjoins the State to create
appropriate conditions for promoting both national and foreign capital investment.  The State ofWT/TPR/M/94/Add.1
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Guatemala encourages and promotes investment in general and hopes to achieve this by way of
judicious macroeconomic decision-making. It should be noted that, apart from the exceptions
stipulated in the Guatemalan Constitution and laws , the Foreign Investment Law provides for the same
treatment for foreign investors developing economic activities as for national investors and they both
therefore enjoy the same legal conditions. The State grants the same facilities for funds being
repatriated by national investors as it does for the capital of foreign investors.
9. What is the Guatemalan government doin g about the problem of the high birth rate
versus the economic growth rate?
Answer:  The Social Development Law, which gives prominence to women's and children's
rights and safeguards women's reproductive health, has just been approved.
10. What would be the advantage of Central America, together with Panama and Belize,
participating in trade negotiations as a block?
Answer:  Central America, Belize and Panama currently belong to the Central American
Integration System (SICA) which involves regional commitments geared towards greater integration.
Statistics show that trade has increased substantially over the last decade, climbing from
US$ 650 million in 1990 to US$ 2,400 million in 1999.
Appropriate efforts are being made to coordinate these countries’ positions.
11. What type of agreement exists or is being considered with the IMF?
Answer:  A stand-by agreement is currently being negotiated with the IMF and covers the key
elements of the government's economic programme for this year, in particular aspects related to
discipline and coordination between fiscal and monetary policies, transparency in the handling of
public accounts, the introduction of studies related to the modernisation of Guatemala's pension
system, etc.
III. SWITZERLAND
1. What is Guatemala doing to coordinate the various trade agreements to which it is
party, such as the Central American Common Market, and those currently being negotiated?
Answer :  See the answer to Question No. 9 from the USA.
IV. NORWAY
1. What is the current position as regards financial reform?
Answer :  The Currency and Finance Committee of the Guatemalan Congress has already
delivered a favourable opinion with regard to the draft laws on reforming financial sector activities.
The first and second readings of the draft laws have already taken place in the plenary Congress.
Discussions will be held prior to their third reading and passage.
2. Norway's marine insurance industry has drawn attention to the fact that importers of
goods from Guatemala and other Latin American countries are subject to double insurance
requirements. This is especially true of Norwegian imports of Guatemalan coffee.  As a general
rule, Norwegian importers are covered by int ernational insurance agreements for all imported
goods, but Guatemala’s requirements that export ed cargo be insured either by GuatemalanWT/TPR/M/94/Add.1
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companies or in the country where the shipping country is based seem to impose an additional
requirement.  Can cargo be insured for transport in boats flying the Guatemalan flag?
Answer:  This is impossible since Guatemala does not have a national merchant fleet; nor
does it grant non-national vessels the right to fly the Guatemalan flag.
3. What is being done to diversify the production base?
Answer:  We have taken note of this concern and believe that economic liberalization should
generate opportunities to exploit comparative advantages through trade and investment.
It is also hoped that support for rural development through the extension of, inter alia,
electricity and telecommunications services, sustainable and rational exploitation of the country's
forest potential and the development of micro, small and medium-sized enterprises as well as of
specific branches of tourism should help Guatemala to achieve greater political, social and economic
development.
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