WORLD  TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/S/274 
30 October 2012 
 
 (12-5841) 
Trade Policy Review Body  
  
 
   
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
NICARAGUA 
 
 
  
This report, prepared for the third Trad e Policy Review of Nicaragua, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from Nicaragua on its trade policies and practices.  Any technical questions arising from this report may be addressed to 
Mr Angelo Silvy (022 739 5249) or Mr Rosen Marinov (022 739 6391). 
 Document WT/TPR/G/274 contains the policy statement submitted by Nicaragua.  
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Nicaragua. Nicaragua WT/TPR/S/274 
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  CONTENTS 
 
  Page 
 
SUMMARY vii 
I. ECONOMIC ENVIRONMENT 1 
 (1) I NTRODUCTION  1  
 (2) O VERVIEW AND STRUCTURE OF THE ECONOMY  1 
 (3) M ACROECONOMIC TRENDS  4 
 (4) T RADE AND INVESTMENT TRENDS  7 
  (i) Goods and services trade 7 
  (ii) Foreign direct investment 11 
 (5) O UTLOOK  12 
II. TRADE AND INVESTMENT REGIME 13 
 (1) O VERVIEW  13 
 (2) T RADE POLICY FORMULATION AND IMPLEMENTATION  14 
  (i) Institutional and legal framework 14 
  (ii) Trade policy formulation and objectives 15 
 (3) I NTERNATIONAL TRADE RELATIONS  16 
  (i) World Trade Organization (WTO) 16 
  (ii) Preferentia l agreements 19 
  (iii) Other preferentia l trade agreements 26 
 (4) I NVESTMENT FRAMEWORK  27 
III. TRADE POLICIES AND PRACTICES BY MEASURE 34 
 (1) O VERVIEW  34 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  35 
  (i) Customs procedures, registration and documentation 35 
  (ii) Customs valuation 38 
  (iii) Rules of origin 38 
  (iv) Tariffs 39   (v) Other charges affecting imports 47 
  (vi) Import prohibitions, restrictions and licensing 49 
  (vii) Contingency measures 50   (viii) Standards and technical regulations 51 
  (ix) Sanitary and phytosanitary measures 55 
  (x) Other measures 56 WT/TPR/S/274 Trade Policy Review 
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    Page 
 
 (3) M EASURES DIRECTLY AFFECTING EXPORTS  56 
  (i) Procedures, documentation and registration 56 
  (ii) Export taxes, levies and other charges 57   (iii) Goods in transit 57 
  (iv) Export prohibitions, restrictions and licensing regimes 58 
  (v) Subsidies and tariff and tax concessions 58   (vi) Export promotion, financing, insurance and guarantees 59 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  59 
  (i) Incentives 59 
  (ii) Price controls and competition policy 60 
  (iii) State participation in the economy and State-owned enterprises 63   (iv) Government procurement 64 
  (v) Protection of intellectual property 67 
IV. TRADE POLICIES BY SECTOR 70 
 (1) O
VERVIEW  70 
 (2) A GRICULTURE AND RELATED ACTIVITIES  71 
  (i) Main features 71 
  (ii) Policy developments 73 
  (iii) Fisheries 77 
  (iv) Forestry 79 
 (3) E LECTRICITY  80 
 (4) M ANUFACTURING SECTOR  84 
 (5) S ERVICES  85 
  (i) Main features 85 
  (ii) Financial services 86 
  (iii) Telecommunications 95   (iv) Maritime transport and ports 100 
  (v) Air transport and airports 102 
REFERENCES 107 
APPENDIX TABLES 109 Nicaragua WT/TPR/S/274 
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  CHARTS 
  Page 
I. ECONOMIC ENVIRONMENT  
I.1 Trade in free zone goods, 2006-2011 8 
I.2 Trade in goods by product, 2006 and 2011 9 
I.3 Trade in goods by trading partner, 2006 and 2011 10 
III. TRADE POLICIES AND PRACTICES BY MEASURE  III.1 Distribution of MFN tariff rates by frequency, 2012 41 
III.2 Distribution of MFN tariffs by ISIC sector, 2012 42 
III.3 Number of tariff lines per ISC rate, 2012 49 
TABLES 
I. ECONOMIC ENVIRONMENT  
I.1 Basic economic indicators, 2005-2011 1 
I.2 Balance of payments, 2005-2011 6 
I.3 Balance of foreign direct investment by recipient economic sector, 2005-2011 11 
I.4 Balance of foreign direct investment by country of origin, 2005-2011 11  
II. TRADE AND INVESTMENT REGIME  
II.1 Main notifications made by Nicaragua to the WTO, as at 31 August 2012 17 
II.2 Historical trends in the main indicators of the free zone regime, 2006-2011 31 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
III.1 Structure of the bank guarantees required from customs brokers, 2012 36 
III.2 Trend in customs declarations and breakdown by channel, 2008-2012 37 
III.3 Overview of preferential rules of origin, 2012 39 III.4 Revenue structure, 2007-2012 39 
III.5 MFN tariff structure, 2005 and 2012 40 
III.6 Summary analysis of the MFN tariff, 2012 42 III.7 Trend in Nicaragua's preferential trade, 2006-2011 45 
III.8 Summary analysis of preferential tariffs, 2012 46 
III.9 Procedure for the prepar ation and approval of Technical Regulations (NTON) 53 
III.10 Definitions of anti-competitive behaviour and corresponding sanctions 60 
III.11 Enforcement of the Law on the Promotion of Competition, 2009-2012 62 
III.12 State participation in the economy, 2006 and 2012 63 III.13 Outline of IPR protection, 2012 67 
IV. TRADE POLICIES BY SECTOR  
IV.1 Agriculture:  area, production and yields, 2005-2011 72 
IV.2 F.o.b. exports of goods by principal product, 2006-2011 73 
IV.3 Agricultural support programmes notified to the WTO, 2005-2010 75 
IV.4 Value-added in the manufacturing industry, 2006-2010 84 
IV.5 Services and central government, 2010 85 
IV.6 Principal telecommunications sector indicators, 2006-2011 96 IV.7 Water-borne cargo transport 2005-2011 101 WT/TPR/S/274 Trade Policy Review 
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  APPENDIX TABLES 
  Page 
AI.1 Structure of exports, 2006-2011 111 
AI.2 Structure of imports, 2006-2011 112 AI.3 Origin of exports, 2006-2011 113 
AI.4 Origin of imports, 2006-2011 114 
AI.5 Trade in services, 2005-2011 115 
 
 
 Nicaragua WT/TPR/S/274 
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  SUMMARY 
 (1) I
NTRODUCTION  
1. Nicaragua has a relatively open trade and investment regime, with an average MFN tariff 
of 6.2 per cent and limited use of non-tariff measures.  It participates actively in the Central American 
regional integration process, and its trade policy is largely determined by its involvement in that 
process and by its adherence to other international agreements, in particular CAFTA-DR.  Nicaragua's 
trade and investment policy is designed to foster  its integration in the world economy, using the 
country's comparative advantage in products such as coffee and sugar, but at the same time also 
promoting the development of a more solid and chiefly export-oriented industrial base, through 
schemes such as the free zones. 
2. Nicaragua's prudent macroeconomic management has largely enabled it to offset the impact 
of negative external shocks during the period un der review.  The Nicaraguan economy was able to 
weather the international financial crisis relativel y well, maintaining positive GDP growth rates with 
the exception of 2009.  As a result, the poverty rate  has been reduced, although it continues to be 
significant, as is the disparity between urban and rura l areas.  Nicaragua is also facing the challenge of 
reducing its dependence on remittances from wo rkers abroad, which accounted for more 
than 12 per cent of its GDP in 2011 and finan ced a considerable portion of consumption. 
(2) ECONOMIC ENVIRONMENT  
3. Since the last Trade Policy Review of Ni caragua in 2006, the economy has successfully 
overcome a series of adverse shocks, including the damage caused by hurricane Felix, the increase in 
food and oil prices, and the international financia l crisis.  Although the crisis caused real GDP to 
contract by 1.5 per cent in 2009, the economy has recovered since then, growing by 4.5 per cent in 2010 and 4.7 per cent in 2011 and bringing th e average growth rate for the period 2006-2011 
to 4 per cent.  This solid growth was underp inned by strong domestic demand and exports, 
particularly of agricultural products.  In sp ite of these positive results, the Nicaraguan economy 
remains vulnerable to external shocks, largely owing to the dependence of its electricity and 
transport subsectors on oil imports and to the magni tude of its public debt, which in 2011 represented 
71.8 per cent of GDP. 
4. The economic growth of the past few years has le d to an improvement in the social indicators, 
and in particular, a decrease in th e poverty and illiteracy rates.  However, the poverty rate still 
exceeds 40 per cent, and there remain a number of cha llenges to be met if the disparity between urban 
and rural areas is to be reduced.  More jobs also  need to be created to reduce the dependency on 
remittances from workers abroad, which accounted for more than 12 per cent of GDP in 2011 and 
financed a considerable portion of consumption.   Although high, these remittances have not sufficed 
to fund the considerable deficit in the balan ce of trade in goods and services, so that the 
balance-of-payments current account posted defic its ranging from 16 to 23.7 per cent of GDP during 
the period 2006-2011.  This has happened in spite of  the fact that goods exports grew faster than 
imports during that period. 
5. Nicaragua maintains the free convertibility of its national currency, the córdoba, under a 
crawling peg system.  During the review period,  the Central Bank of Nicaragua respected its 
pre-announced target of a 5 per cent annual d ecline.  The Nicaraguan economy remains highly 
dollarized:  US dollar assets accounted for 71.6 per cen t of total assets in 2011, while 71 per cent of 
the banking system's liabilities were expressed in dolla rs, as well as 91 per cent of the loans.  Like WT/TPR/S/274 Trade Policy Review 
Page viii 
  
  other countries, Nicaragua has temporarily reduced its import tariffs and VA T rates for a range of 
commodities in order to relieve inflationary pr essures.  As measured by the consumer price 
index (CPI), inflation was estimated at 8 per cent in 2011, and is expected to reach 9.7 per cent 
in 2012 before gradually reced ing to 7 per cent in 2016. 
6. During the review period, Nicaragua embarked on a tax reform aimed at broadening the tax 
base and strengthening tax administration.  The result was an increase in tax revenue in absolute terms 
and as a percentage of GDP. 
(3) TRADE AND INVESTMENT POLICY FRAMEWORK  
7. Nicaragua has a relatively open trade and investme nt regime.  The main objective of its trade 
policy is to promote access to foreign markets and b ecome more fully integrated in the international 
economy by negotiating and administering internati onal agreements on trade and investment.  The 
authorities feel that the signature of internationa l trade and investment agreements enhances legal 
stability and helps to create a reliable legal frame work to attract investment, both domestic and 
foreign.  The private sector also plays a role in policy formulation, and receives support so that it can 
take advantage of international market oppor tunities, in particular export markets. 
8. In the WTO, Nicaragua attaches considerable importance to the successful conclusion of the 
Doha Development Agenda.  Its main interest is to ensure that the negotiations lead to better market 
access for its agricultural products.  Thus, Nicaragua has joined with different groups of developing 
countries to put forward proposals in the agricu lture negotiations, on issues such as negotiating 
modalities on market access, special and diffe rential treatment, and the development box. 
9. Nicaragua participates actively in the Central American regional integration process, and its 
trade policy is largely determined by its involveme nt in that process and by its adherence to other 
international agreements, in particular CAFTA-DR.   The adoption of trade measures is contingent 
upon the commitments acquired under those integration agreements. 
10. In 1960, Nicaragua signed the General Treaty on Central American Ec onomic Integration, 
which creates a basic framework for economic in tegration and establishes the Central American 
Common Market (CACM), of which Costa Rica, El Salvador, Guatemala and Honduras are also 
members.  By the end of 2011, the harmonization of tariffs between CACM members had progressed 
considerably, and covered approxima tely 95.7 per cent of all tariff lines (under the Central American 
Tariff System).  Members of the CACM also adopted a number of provisions on customs procedures to facilitate intraregional trade.  They intr oduced a Central American tariff tool known as Arancel 
Informatizado Centroamericano (AIC), which covers all of the ta xes and tariff reductions under the 
free trade agreements applicable to products entering the CACM, as well as the non-tariff measures to 
which those products are subject, such as technical regulations, sanitary and phytosanitary measures, 
quotas and safeguards in force. 
11. Nicaragua has free trade agreements (FTAs) with the United States (CAFTA-DR), Mexico, 
the Dominican Republic, Panama and Chinese Taipei.  It has also concluded the negotiation of an 
FTA with Chile, and together with its Central Am erican partners, it has signed the Association 
Agreement between Central America and the Europ ean Union.  CAFTA-DR has been particularly 
important to Nicaragua in that it has boosted trade w ith the United States, its main trading partner.  
During the period under review, Nicaragua sought to strengthen relations with its current trading 
partners while continuing to look for new trading pa rtners, as demonstrated by its agreements with Nicaragua WT/TPR/S/274 
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  Chile and the European Union.  At the same time, Nicaragua's trade relations with the other members 
of the Bolivarian Alliance for the Peoples of our America (ALBA) have grown deeper and stronger. 
12. Nicaragua pursues a policy of openness to foreign investment.  To that end, it has 
strengthened the institutions responsible for the promotion of investment, and has included trade 
facilitation in the mandate of the Nicaraguan i nvestment promotion agency PRONicaragua, which 
operates under the Office of the President.  Foreign i nvestment is not subjected to any restrictions or 
conditions.  As a rule, foreign investors enjoy th e same rights under the law as Nicaraguan investors, 
and are given the same means to exercise them, with the exception of cases relating to national 
security and public health, and subject to the limi tations laid down in the Constitution.  The law 
recognizes the right of investors to freely dispose of their property, except in the event of declaration 
of public utility, and to receive appropriate comp ensation.  Foreign investors may own 100 per cent of 
the shares or the capital of a domestic company. 
13. Foreign investment is eligible for the tax c oncessions granted under special regimes such as 
the free zones, as well as those granted under the Law on Temporary Admission.  It is also eligible for 
tax concessions for specific sectors with export potential, such as textiles and clothing and tourism.  
As a rule, investors are not required to fulfil any specific performance criteria, such as the exportation 
of specific quantities or minimum local content. 
14. Domestic and foreign companies producing goods or supplying services may establish 
themselves in the free zones.  Users of free zones must produce for export or for other enterprises in 
the free zones.  Investors in the free zones bene fit from a number of tax incentives, such as tax 
exemptions on income generated by operations within the zone for a period of 10 to 15 years, and a 
tax reduction following that period.  They are also  exempted from import taxes on raw materials and 
capital goods.  Finally, companies in the free zones ar e also exempted from other internal taxes and 
export taxes on goods processed in the zone.  As  of December 2011, 161 companies were operating 
with free-zone status in Nicaragua, generating close to 100,000 jobs and exporting more than 
two billion US dollars' worth of goods and services. 
15. The temporary admission procedure allows both th e entry of goods into the customs territory 
of Nicaragua and the local purchase of goods or raw materials free from any duty or tax, provided the goods are re-exported after undergoing processing, repair or  alteration.  To be eligible for the benefits 
under this regime, companies must directly or indir ectly export at least 25 per cent of their production, 
for a value of at least US$50,000 per year.  The benefits are calculated on the basis of the expected 
percentage of exports, which is dete rmined for a period of five years.  Free-zone users are not eligible 
for the temporary admission procedure. 
16. Nicaragua has concluded bilate ral investment agreements with Germany, Argentina, 
Belgium-Luxembourg, the Czech Republic, Chile, the Republic of Korea, Denmark, Ecuador, Spain, 
the United States, Finland, France, Holland, Italy, the United Kingdom, El Salvador, Sweden, 
Switzerland, Chinese Taipei, and Russia.  Nicaragua is a member of the International Centre for 
Settlement of Investment Disputes (ICSID). 
(4) T
RADE POLICIES BY MEASURE  
17. Nicaragua's customs procedures are based on the Central American Uniform Customs Code 
(CAUCA IV) and its implementing regulations (R ECAUCA IV).  During the period under review, 
Nicaragua made considerable progress in the trade facilitation area, for example, by computerizing 
most custom procedures.  Nicaragua has also im plemented a risk assessment system based on fixed WT/TPR/S/274 Trade Policy Review 
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  rules as well as probabilistic and random models to reduce the number of inspections.  However, 
according to the private sector, this is an area wh ere further improvements are needed to streamline 
formalities and reduce clearance time.  Nicaragua n law requires a licensed customs broker for the 
clearance of imports in most cases. 
18. Nicaragua's 2012 applied tariff covers 7,359 lines.  All of the rates are ad valorem .  
46.4 per cent of tariff lines are duty free.  The average MFN tariff in 2012 was 6.2 per cent.  The applied tariff on agricultural products (WTO de finition), which averaged 11.2 per cent, was 
considerably higher than the applied tariff on non-ag ricultural products (5.2 per cent).  The average 
tariff on lines with greater-than-zero rates rose fro m 10.9 per cent in 2005 to 11.6 per cent in 2012.  
Nicaragua does not apply seasonal or variable ta riffs.  Tariff quotas are maintained both at the 
bilateral and the multilateral level.  Nicaragua's tariff is bound in the WTO at 13 rates, which range 
from 0 to 200 per cent.  The applied tariffs are all lower than or equal to the bound tariffs. 
19. Imports are also subject to an Import Service Fee (TSIM) and a fee for the electronic 
transmission of the customs declaration.  Nicaragua  applies a value added tax (VAT) of 15 per cent on 
the supply of goods and services, including their importation;  exports are subject to a 0 per cent 
VAT.  Nicaragua also has a Selective Consumption Tax (ISC) that applies to a number of goods, both 
domestic and imported.  Goods subject to ISC re present about 14 per cent of the tariff universe.  
There are 22 different ISC ad valorem  rates, ranging from 2 to 100 per cent, and specific rates for 
cigarettes and petroleum products. 
20. During the review period, Nicaragua did not apply any contingency measures.  In 
January 2008, Nicaragua notified the WTO of the Central American Regula tions on Unfair Business 
Practices, which entered into force in May 2007.  Nicaragua has also notified the WTO of its new 
legislation on safeguard measures. 
21. In general, the preparation of technical sta ndards, both voluntary standards and technical 
regulations, is centralized and entrusted to vari ous technical committees chaired by the representative 
of the competent authority.  Nicaragua has a list of technical regulations that can be viewed online.  
In June 2012, there were 249 techni cal regulations in force.  Of these, 96 were in the food sector, 
while 25 related to the environment, 23 to agricultu re and health protection, and 20 to hydrocarbons, 
the rest covering various areas such as pestic ides, pharmaceutical products and transport. 
22. Where sanitary and phytosanitary measures are concerned, Nicaragua does not allow imports 
of food, plants, animals or their products unless accompanied by a sanitary/phytosanitary import 
permit or a free sale certificate (for food).  Since the last review, Nicaragua has updated the legal 
framework relating to sanitary and phytosanitary me asures with the adoption of a law establishing 
registration and a permit system for activities invol ving the transit, import, production and export of 
living organisms modified by means of molecular biotechnology;  the corresponding regulations are 
still in the process of being approved. 
23. In 2012, Nicaragua notified the WTO that it had not granted any subsidy within the meaning 
of the Agreement on Subsidies and Countervailing M easures, nor had it granted any export subsidies 
within the meaning of the Agreement on Agriculture .  As previously mentioned, Nicaragua grants 
various customs duty and tax reductions and exem ptions under the free zone regime and the 
temporary admission for inward processing and expo rt facilitation procedure.  The Bank for the 
Promotion of Production (PRODUZCAMOS), establis hed in November 2007, provides financial 
services and technical assistance with a view to  contributing to the development of domestic 
production, particularly of exportables. Nicaragua WT/TPR/S/274 
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  24. In general, prices are freely determined by th e interplay of supply and demand.  However, 
Nicaragua regulates the prices of pharmaceutical pr oducts for human consumption, airport services 
and the services provided by the National Port Authority, as well as the tariffs for electricity (transmission and public consum ption), bottled LPG, sanitary sewerage services and drinking water 
for public consumption. 
25. As part of the process of modernization of its  legal framework for the purpose of establishing 
a stable investment regime, Nicaragua adopt ed a Law on the Promotion of Competition and 
its regulations.  Both entered into force in June  2007 and govern anti-compe titive agreements, abuse 
of dominant position and concentrati ons (mergers and acqui sitions).  The Law prohibits any concerted 
agreement or practice between economic operators  for the purpose of restricting competition, 
including by denying access to an economic operator or driving it out  of the market.  The National 
Institute for the Promotion of Competition (PROCOMPETENCIA) and a public-law technical 
administrative court, which has been operating since May 2009, were set up to apply the new 
legal framework. 
26. Nicaragua is not a member of the WTO's Plurilateral Agreement on Government 
Procurement.  Since its last review, Nicaragua  has introduced new government procurement 
legislation with the adoption of a Law on Public Sector Administrative Procurement and its regulations, which entered into force in Febr uary 2011, together with a Law on Municipal 
Procurement, which entered into force in 2007.  The public sector procurement legislation does not 
contain any provisions granting more favourable tr eatment to domestic suppliers of goods, services 
and public works;  however, the municipal procur ement regime provides for a preferential margin 
of 10 per cent for municipal labour. 
27. The legal framework in the area of intellectua l property rights has not changed substantially 
during the review period.  The changes introduced include the adoption in 2011 of the Law on Ancestral Traditional Medicine, which defines trad itional knowledge and bio-piracy and establishes 
the requirements for collective intellectual property ri ght patents.  Moreover, since its last review, 
Nicaragua has acceded to the Lisbon Agreement, th e Budapest Treaty and the Trademark Law Treaty. 
(5) T
RADE POLICY BY SECTOR  
28. Agriculture (including livestock farming, forest ry and fishing) accounts for almost 19 per cent 
of Nicaraguan GDP and employs a third of the labour  force.  Moreover, the agriculture sector is 
vitally important for generating foreign exchange , since it is the source of three quarters of 
merchandise exports.  The sector has grown in impor tance during the review period thanks to the 
strong performance of exports.  The principal crops, in value terms, are coffee (café oro) 
and sugarcane.  The average MFN tariff protec tion in the agricultural sector (Major Division 
of ISIC, Rev.2) was 8.3 per cent in 2011, as compared  with an average tariff of 6.2 per cent.  There 
are tariff peaks for some products, such as chic ken thighs (164 per cent), milled rice and 
milk (60 per cent). 
29. Nicaragua has notified the WTO that it did not  grant any export subsidies for agricultural 
products during the review period.  It has also info rmed Members that the domestic support offered to 
agricultural producers falls within the green box.  The support provided during the review period was 
concentrated in the areas of food security an d training and technologi cal development and was 
equivalent to 2 per cent of the annua l value of agricultural production. WT/TPR/S/274 Trade Policy Review 
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  30. The electricity sector has been open to private,  including foreign, investment since 1997 when 
the electrical system ceased to be exclusively State-ow ned.  As a result, power generation is largely in 
the hands of the private sector, which generated 78. 5 per cent of electricity in 2011.  However, the 
State maintains a monopoly on the transmission of elect ricity.  Nicaragua is endeavouring to promote 
the generation and use of renewable energy and to this end is granting a series of tax incentives, for 
periods of up to 15 years.  Nicaragua has a wholesale electricity market which functions basically as a contracts market to meet the energy purchasing commitments of the distributors or as a secondary market for balancing out energy shortfalls an d surpluses.  Nicaragua participates in the 
Central American Regional Electricity Market, established in 1998 under the Framework Agreement 
on the Central American Electricity Market, in wh ich Costa Rica, El Salvador, Guatemala, Honduras 
and Panama also participate.  One of the main problems facing the sector is the losses at distribution 
level, which in 2011 exceeded 20 per cent of net electricity generation. 
31. During the review period, the manufacturing sector's share of GDP increased, reaching almost 
20 per cent of total GDP in 2010.  In part, this reflects the effects of the implementation of the CAFTA-DR and the resulting increase in exports.  Mo re than 50 per cent of the sector consists of 
industries devoted to the production of food an d beverages and three quarters of manufacturing 
exports are meat, milk and sugar-based processed ag ricultural products.  The MFN tariffs applied to 
manufactured products average 6.1 per cent, with rates ranging from 0 to 170 per cent.  Tariff 
protection is above the average for clothing,  textiles and leather, rubber and footwear. 
32. Services are the most important sector in terms of their contributions to GDP (58.4 per cent 
in 2010) and employment (55.8 per cent in 2010).  During the review period, most service activities 
strengthened and the rules and regul ations were modernized.  The financial sector came through the 
global crisis of 2008-2009 without serious difficulty, partly due to tighter financial supervision based 
on Basel II.  In December 2011, the capitalization of  the financial system, with a capital adequacy 
ratio of 14.7 per cent, comfortably exceeded the minimum requirement of 10 per cent.  Moreover, 
through the Deposit Guarantee Fund (FOGADE), depos its were guaranteed for up to US$10,000 per 
depositor.  Foreign banks can  operate in the country by  setting up a branch or as shareholders in banks 
established or to be established in Nicaragua.  Foreign banks and credit institutions can also open 
representative offices in Nicaragua. 
33. Since 1996, the insurance market has been ope n to competition, including the establishment 
of foreign companies, which can participate in  insurance, reinsurance and capital investment 
activities.  Branches of foreign insurance companies established in Nicaragua are not required to have 
a board of directors resident in the country.  Duri ng the review period, the insurance legislation was 
amended as a result of the approva l of the General Law for Insuran ce, Reinsurance and Bonds (2010).  
This updated the legal, superv isory and prudential framework and also established new capital 
requirements, which have to be updated at interv als of not more than two years or whenever a 
company finds itself at risk. 
34. In the area of telecommunications, rapid expa nsion continued to be recorded during the 
review period, with respect to both coverage and the type and number of services provided.  Owing 
partly to the smallness of the market, the level of competition is still relatively limited.  Thus, 
since 2006, there have been two fixed telephony operators with 20-year concessions.  These same 
two companies provide cellular telephone services w ith 20-year licences which expire in the same 
years as the concessions for the basic service. 
35. Nicaragua reserves inland and cabotage traffic for national-flag vessels operated by 
Nicaraguan ship-owners, although under the nati onal legislation if there is no Nicaraguan or Nicaragua WT/TPR/S/274 
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  Central American vessel available to perform the service, foreign vessels may be authorized to 
provide it.  The Law allows foreign investment in some segments of maritime transport such as ship 
registration and the establishment of shipbuilding and shipping companies.  The National Port 
Authority (EPN), a decentralized entity under the Mini stry of Transport and Infrastructure, is the body 
responsible for administering the six main ports.  The EPN is authorized to conclude concession 
contracts with terms of up to 25 years for the provision of various port services. 
36. In 2006, Nicaragua enacted a new civil avia tion law under which it created a new entity 
responsible for civil aviation matters and air tran sport in general, namely, the Nicaraguan Civil 
Aviation Institute (INAC).  Nicaragua's general a pproach to civil aviation is to apply open skies 
policies based on bilateral reciprocal concessions.  In  principle, cabotage services for passengers and 
freight can only be provided by Nicaraguan natural or legal persons.  Exceptionally, however, INAC 
can authorize foreign companies to provide such services where it  is in the public interest.