RESTRICTED  
  
WT/TPR/G/344  
10 August  2016 
(16-4258) Page: 1/7 
Trade Policy Review Body  Original: Spanish  
 
 -  TRADE POLICY REVIEW  
REPORT BY  
EL SALVADOR  
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Trade Organization), the policy statement by 
El Salvador  is attached.  
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on El Salvador . WT/TPR/G/344   El Salvador  
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  CONTENTS  
1  INTRODUCTION  ................................ ................................ ................................ ...........  3 
2  ECONOMIC ENVIRONMENT  ................................ ................................ ...........................  3 
3  OVERVIEW OF TRADE POLICY  ................................ ................................ ......................  4 
3.1  Overall aim of trade policy  ................................ ................................ .............................  4 
3.2  Investment  ................................ ................................ ................................ ..................  4 
3.3  Centra l American Common Market  ................................ ................................ ..................  4 
3.3.1   Central American Strategy for Trade Facilitation and Competitiveness with 
Emphasis on Coordinated Border Management  ................................ ................................ ....... 5 
3.4  Preferential agreements signed and ongo ing negotiations  ................................ ..................  5 
3.5  Multilateral trading system  ................................ ................................ ............................  5 
3.5.1   Routine work and negotiations  ................................ ................................ ....................  5 
3.5.2   Ratification and deposit of the Agreement on Trade Facilitation  ................................ ....... 6 
3.5.3   Withdrawal of the reservation on the application of multilateral agreements with 
China and entitlement to Most -Favoured -Nation status  ................................ ............................  6 
3.6  Progress in intellectual property rights  ................................ ................................ ............  6 
4  TRADE POLICY OUTLOOK  ................................ ................................ .............................  7 
 WT/TPR/G/344   El Salvador  
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  1  INTRODUCTION  
1.1.  Since its last Trade Policy Review, El Salvador  has continued to make substantial progress  on 
the economic fron t. To that end it has pursued  its implementation  of a strategy of integration into 
world trade  by becoming increasingly active ly involve d in multilateral, regional and bilateral trade 
negotiation processes ; and it has also carried out  policies to attract foreign direct investment  (FDI)  
by introducing reforms to legislation that incentivize and promote trade in services and investment 
in order to generate employment, boost the establishment of businesses , and further the 
development of  public -private projects.  
1.2.  This work has resulted  in increased exports, greater diversification of Salvadoran products, 
and higher inflows of  FDI. 
1.3.  El Salvador 's trade policy will continue to focus on expanding access to external markets for 
Salvadoran products and services by deepening relations with our main trading partners and 
developing closer relations with new strategic partners, of which the Central American market is 
one of the most important . Additionally, in keeping with its renewed commitment to the 
multilateral trading system, El Salvador  will continue to play an ac tive role in multilateral 
negotiations and in implementing the agreements reached thus far at the WTO.  
2  ECONOMIC ENVIRONMENT  
2.1.  Despite the challenges the country faced  during the period  under review, including  the 
international financial crisis,  the fall in c ommodities prices  and the impact of climate on crops, 
many of El Salvador 's economic indicators improved, with  growth in the gross domestic product 
(GDP), exports and investment , for example . 
2.2.  In 2015, GDP at constant prices rose by 2.5 %, the highest rate over the past decade 
(2005 -2014) . Following the global economic crisis of 2008 -2009, growth has gradually stabilized , 
peaking in 2015.  
2.3.  The performance of  the Salvadoran economy in 2015 reflected  positive growth across all 
sectors, but principally in real es tate and business services (3.7 %); manufacturing industry 
(3.4%); and transport, storage and communications (3.3 %) 
2.4.  Inflation began to decline in 2011 , falling to 1.0%, making El Salvador  the country with the 
second -lowest rate in the Central American regio n. 
2.5.  Trade in goods and services continues to be one of the main drivers of the economy . During 
the period  under review , exports grew by 6.3 % per year on average between 2009 and 2015.  
2.6.  Exports of goods grew by US$212.2  million (4.0 %) in 2015 compared to 2014 : El Salvador  
was one of the few countries in Latin America and the Caribbean whose  exports grew, and indeed  
recorded the highest growth  in the Central American region . Manufacturing industry accounted  for 
95.7% of total exports, followed by agriculture, h unting, forestry and fishing with 3.9 %. The main 
export  product s included sugar, coffee, shrimp, as well as made -up articles and other 
non-traditional products such as certain foodstuffs, beverage s and leather footwear.  
2.7.  During the review period , imports ha ve grown at an average rate of 6.3 % per year . However , 
the deficit in the balance of trade in goods fell by US$309.7  million ( -5.9%), reflecting the increase 
in trade.  
2.8.  In 2015 the balance of trade in services was in surplus by US$785.3  million, a rise of 
US$44.6  million on 2014 . The trade surplus in services arose from  the fact that exports amounted 
to US$2,329.7  million, reflecting a 4.6 % (US$103.4  million) increase on the 2014 figure, whereas 
imports totalled  US$1,544.4  million . The main export  items were  travel (US$817.1  million ), 
transport services (US$492.0  million) and manufacturing on physical inputs (US$463.9  million).  
2.9.  In 2015 the  net flow of FDI totalled US$428.7  million, an increase of US$117.5  million 
(37.8 %) on the figure for 2014 . The main count ries of origin of the investment flows were the WT/TPR/G/344   El Salvador  
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  United  States, Panama and Spain ; the main recipients of FDI in 2015 were manufacturing 
industry, financial activities, and wholesale and retail trade.  
2.10.   Confidence among private investors is reflected in the substantial new investment projects  
announced  in 2015 . The official figures show that announce d private investment 
(to December  2015) totalled  US$1,229.8  million, double the figure of US$600  million for 2014. 
The sectors securing the largest shares of th ese investments were transport and communications, 
manufacturing industry, construction, electricity  supply, commerce, restaurants  and hotels.  
3  OVERVIEW OF TRADE POLICY  
3.1  Overall  aim of trade polic y 
3.1.  El Salvador 's main trade policy objectives are to create jobs, a ttract foreign investment, 
increase expo rts, strengthen competitiveness  and promote supply linkages . The aim is to provide 
the people of El Salvador  with greater and better employment opportunities and thus  raise the 
standard of living , with a view to achi eving sustainable development.  
3.2.  As part of the Policy to Promote, Diversify and Transform  Patterns of Production (FDT P), the 
following sectors have been prioritized for short -term stimulus : chemicals and pharmaceuticals, 
plastics, footwear, food and drink, textiles and made -up articles, the creative industries and 
information technologies . In taking this action, the country is banking on  diversification of the 
production pattern to underpin  diversification of Salvadoran exports of goods and services.  
3.2  Investm ent 
3.3.  In the period  under review , El Salvador  has continued to promote investment and strengthen 
the legal framework that underpins it , including by way of the Law on Legal Stability for 
Investment, the Law on International Services, the Special Law on Publi c-Private Partnerships, the 
Law on Electronic Signature, and the Law on Property Guarantees.  
3.4.  In addition,  the Law on Free Zones and Inward Processing Warehouses  was overhauled  in 
order to bring it into line with El Salvador 's international commitments , as well as to  provide 
stability and predictability to investors.  
3.3  Central American Common Market  
3.5.  During the period covered by  this Review, together with the other countries of the 
Central  American region  El Salvador continued to deepen the Central American economic 
integration process . The most recent headway includes the incorporation of Panama into the 
Central American Economic Integration Subsystem from 6 May 2013; the signature of the 
Second  Protocol Amending the Treaty on Investment and Trade in Services b etween the Republics 
of Costa Rica, El Salvador , Guatemala, Honduras and Nicaragua (TICS) incorporating the 
provisions on electronic commerce of 27 July 2011; and the adoption by the Council of Ministers of 
Economic Integration (COMIECO) of the Central Ame rican Strategy for Trade Facilitation and 
Competitiveness with Emphasis on Coordinated Border Management of 22  October  2015.  
3.6.  In June 2015 COMIECO approved a Roadmap for the implementation of a Central American 
Customs Union that provides for specific activ ities within the three stages of the establishment 
process set out in the Framework Convention for Establishing the Central American Customs 
Union , namely : promotion of free movement of goods and trade facilitation ; regulatory 
modernization and convergence ; and institutional development.  
3.7.  In 2015, 40.9 % of Salvadoran exports were bound for other Central American countries . 
Taken together, these countries rank ed second among the des tinations of Salvadoran exports, 
while imports from Central American countries  accounted for 21.2 % of all Salvadoran imports.  WT/TPR/G/344   El Salvador  
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  3.3.1   Central American Strategy for Trade Facilitation and Competitiveness with 
Emphasis on Coordinated Border Management  
3.8.  On 27  June 2014, the Presidents of the region instructed COMIECO to adopt and implement a 
Central American Strategy for Trade Facilitation and Competitiveness that emphasized coordinated 
border management in the Central American logistics corridor.  
3.9.  Accordingly, on 22  October  2015 COMIECO approved the "Central American Strategy for 
Trade Facilitat ion and Competitiveness with Emphasis on Coordinated Border Management ". 
The strategy aims to promote coordination between public and private sector agencies (including  
in matters of  customs, sanitary and phytosanitary measures, migration, and policing)  in order  to 
improve revenue collection procedures, controls, and border security , and to further facilitate 
movement of goods and people within a framework of effective controls and efficient use of 
resources.  
3.4  Preferential agreements signed and ongoing negot iations  
3.10.   El Salvador  is open to the world and the Government is working hard to reap the benefits 
available on the various international markets in order to stimulate Salvadoran exports and thus 
develop a diversified, consolidated, competitive export sector . 
3.11.   Since the last Trade Policy Review this approach has led El Salvador  to maintain and deepen 
its trade relations with important trading pa rtners such as Mexico, with which  it completed a 
convergence process that opened the way for the entry into force of a free  trade agreement 
between the Central American region and Mexico.  
3.12.   Additionally, relations with other important partners such as the European  Union were 
bolstered  by the signature of the first "region -to-region " trade agreement . The agreement further 
strengthens the trading relationship between the se two regions , both of which are highly 
integrated . It addresses trade -related aspects as well as developing policy - and 
cooperation -related aspects . The latter two areas  of the agreement  have not yet entered  into 
force.  
3.13.   Trade  relations were also strengthened with Cuba, with which El Salvador  has a 
Partial  Scope Agreement (AAP) that has helped to identify new business opportunities . Work was 
also done to deepen the free  trade agreements with Colombia and Chine se Taipei by improving 
conditions of access for Salvadoran products to those countries ' markets.  
3.14.   All this work has boosted economic activity in our country and helped to generate a better 
business climate, promote domestic and foreign productive investment , and improve conditions of 
access to international markets for strategic products and sectors.  
3.15.   El Salvador  is in the process of negotiating AAPs with Trinidad  and Tobago, Ecuador and the 
Plurinational  State  of Bolivia, as well as a free trade agreement with the Republic  of Korea, and is 
interested in continuing discussions with Belize, Canada and Peru.  
3.16.   Altogether , El Salvador 's trade within the framework of these agreements accounts for 
approximately 94.4 % of total exports and 77.3 % of total imports . El Salvador  therefore considers 
that one of the most important aspects of its trade policy must be  to make better use  of the 
opportunities these agreements provide in terms of its exports of goods and services and its 
attractiveness to FDI. 
3.5  Multilateral trading  system  
3.5.1   Routine work and negotiations  
3.17.   El Salvador  takes an active role in the routine work of the WTO  to monitor  compliance with 
the agreements in force . Additionally, in order to promote a fairer, interdependent trading system 
that benefits people, the co untry is advocating a balanced outcome to the negotiations on 
outstanding issues under the Doha Development Agenda that takes account of  its development 
needs and specific characteristics.  WT/TPR/G/344   El Salvador  
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  3.18.   El Salvador  promotes its trading interests within the Organization by tabling various 
proposals both on its own account and as a member of groups that share its approach such as the 
Group of Small, Vulnerable Economies and the Group of 33 on agricultural matters.  
3.19.   During the review period , El Salvador  participated in the Ninth and Tenth  Ministerial 
Conferences , at which  important agreements were reached, chiefly in the areas of agriculture and 
trade facilitation . Also worthy of note is the decision in which Ministers reiterate d their 
commitment to the Work Programme on Smal l, Vulnerable  Economies . El Salvador  is strongly 
committed to implementing the agreements reached at the Ministerial Confe rences, including as  
regards  future work, and is open to initiating a dialogue on current  WTO-related issues that have a 
significant i mpact on the world in which  our entrepreneurs  operate . Nonetheless, we are of the 
view that discussions of that kind should not undermine the chief objective of concluding the 
outstanding items on our negotiating agenda, taking account of the interests and  positions of all 
Members, and in accordance with the  WTO rules.  
3.5.2   Ratification and deposit of the Agreement on Trade Facilitation  
3.20.   During the period  under review , El Salvador  has continued to make significant progress in 
customs modernization, as illustrated  by the establishment of a platform for electronic payment of 
import duties and other applicable taxes, and the SICEX computer system that enables businesses 
to obtain the documents they require for their exports in a single online procedure . It is anticip ated 
that the work under way to implement a similar computerized system for imports (SIMP) will be 
completed in March  2017.  
3.21.   These factors contributed to the positive assessment of El Salvador  in the OECD survey of 
Trade Facilitation Indicators in 2015 , which ranks the country 's performance above that of 
Latin America in areas that include information availability, cooperation, governance and 
impartiality, advance rulings, and automation of formalities.  
3.22.   Against that background, on 4  February  2016 the Legisla tive Assembly ratified the 
WTO Agreement on Trade Facilitation, making El Salvador  the third  Central American country to do 
so. Ratification marked the completion of  El Salvador 's domestic legal formalities in this matter . 
El Salvador will shortly  deposit its instrument of acceptance of that Agreement with the 
Organization.  
3.23.   With the direct involvement of the private  sector, all Government institutions are working  to 
implement the Agreement and the Central American Strategy for Trade Facilitation and 
Competi tiveness . These initiatives are expected to produce real benefits and savings for 
intra-regional trade and Central American businesses, as well as furthering the economic 
development of each country in the region.  
3.5.3   Withdrawal of the reservation on the appli cation of multilateral agreements with 
China and entitlement to  Most -Favoured -Nation status  
3.24.   On 2  July 2014, El Salvador  withdrew the reservation it had lodged with respect to the 
People 's Republic of China upon its accession to the WTO in 2001 on the appli cation of the 
Multilateral Agreements with that country . That action led to an improvement in El  Salvador's  
competitiveness in terms  of access to the Chinese market , and El Salvador  secured the same tariff 
treatment as other WTO Members . This led to an inc rease of over 600 % in exports to the People 's 
Republic of China in 2015, from an average US$5  million in 2012 -2014 to almost US$45  million 
in 2015.  
3.6  Progress in intellectual property rights  
3.25.   The country continues to make significant progress in intellectual property rights, including 
reform s to the Law on Trademarks and O ther Distinctive Signs (LMOSD) that strengthen protection 
for geographical indications by granting  them specific protection . 
3.26.   Additionally, in 2014 a National Intellectual Property Policy was drawn up that recognizes  
intellectual property  as a key element of national development ; used appropriately,  intellectual 
property rights and protection can help make better use of the Salvadoran people 's capacity to WT/TPR/G/344   El Salvador  
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  create knowledge , and can generate conditions  that improve the country 's competitive position . 
The basic principles aim at an intellectual property policy that should be instrumental, 
cross-cutting, balanced and properly articulated . 
3.27.   As regards ratification of and accession to international agr eements relating to  the 
protection of int ellectual property, on 1  October  2014 El Salvador  became the first Latin  American 
country and the second country in the world to ratify the Marrakesh Treaty to Facilitate Access to 
Published Works for Persons who ar e Blind, Visually Impaired, or O therwise Print Disabled.  
3.28.   On 25  February  2016 the country ratified the Beijing Treaty on Audiovisual Performance s, 
which protects performers in audiovisual performances, and will shortly deposit its instrument of 
ratification . 
4  TRADE POLICY OUTLOOK  
4.1.  El Salvador  will continue to seek  better access conditions to  international market s for its 
goods and services that will help to integrate the country into the international economy, while 
having regard to compliance with its interna tional commitments, and promoting best use  of the 
opportunities provided under its trade agreements whether at multilateral, regional or bilateral 
level. It will also continue to seek to attract greater FDI by fostering a more transparent, 
favourable busin ess climate that provides investors and the general public with predictability and 
certainty.  
4.2.  Accordingly, as set out in the FDT P, El Salvador  is looking to improve the business climate, 
reduce the costs of setting up a business, promote public -private par tnerships , and simplify the 
process of business registration . Additionally the Government is providing business advice services 
in matters  of internationalization, innovation and quality.  
4.3.  Opportunities have also been identified in strategic sectors such as  tourism, ren ewable 
energies and manufacturing . In renewables, El Salvador  is promoting investment with a view to 
becoming the "energy hub" of Central  America . In manufactures , not only does it seek to continue 
to promote the traditional textiles industry but also the footwear, auto -parts, electronic and 
medical components industries ; it is also looking  to export these manufactures to its trading 
partners.  
4.4.  El Salvador  will continue to prioritize reduc tions in  trade transaction costs, mainly through 
improvem ents to the administrative processes linked to trade facilitation , by fulfilling  its 
commitments under the WTO Agreement on Trade Facilitation, among others.  
4.5.  A small economy such as El Salvador  faces huge challenges in an international environment 
because its small domestic market means that it is more dependent on international trade and 
more exposed to exogenous demand and supply shocks, changes in access conditions to other 
markets such as mega -regional agreements, changes in technical regulations and pr ivate rules, 
natural disasters , and other factors.  
4.6.  We recognize the importance of external trade to the country 's economic growth, and that 
the multilateral  approach  is the regulatory cornerstone of foreign  trade. Accordingly we will 
continue to take measu res to deliver on the objectives set by the Government, including active 
involvement in the bilateral, regional and multilateral trade negotiations that are currently under 
way, in order to diversify  export destination markets and reduce the country 's vuln erability to 
changes in the world economic situation.  
4.7.  Finally, we would like to reiterate that the Government of El Salvador  has maintained and will 
continue to maintain close communication with its production sectors and civil society in general, 
and will  seek to work with them to implement Salvadoran trade policy in a fair and transparent 
manner that will enable all stakeholders to enjoy the benefits of international trade.  
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