Nicaragua WT/TPR/S/274 
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  II. TRADE AND INVESTMENT REGIME 
(1) OVERVIEW  
1. The general objective of Nicaragua's trade policy is to promote access to foreign markets and 
better integration in the international economy, by negotiating and administering international 
agreements on trade and investment.  Further aims ar e to foster a stable legal framework for attracting 
investment, both domestic and foreign, to supp ort the private sector in taking advantage of 
opportunities arising on international markets, in particular export markets, and to promote and 
facilitate investment, bot h domestic and foreign. 
2. As an active Member of the WTO, Nicaragua  attaches considerable importance to the 
Doha Development Agenda (DDA).  Its chief interest  is to improve market access for its agricultural 
products.  Nicaragua has joined with various groups  of developing countries to put forward proposals 
in the agriculture negotiations, on issues such as negotiating modalities on market access, special and 
differential treatment and the development box. 
3. In 1960, Nicaragua acceded to the General Treaty on Central American Integration, 
which creates the 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.  A number of provisions have been intr oduced to consolidate the customs union process, 
such as the adoption of a Central American Uniform Customs Code (CAUCA), and Central American regulations on rules of origin, unfair business pr actices, safeguard measures, standardization, 
and sanitary and phytosanitary measures.  CA CM members have designed and implemented a 
Central American Computerized Tariff (AIC) Syst em, which covers all of the taxes and tariff 
reductions applicable to products entering the CACM under the FTA framework.  It also encompasses 
the non-tariff measures applicable to such prod ucts, such as technical regulations, sanitary and 
phytosanitary measures, quotas and safeguards curre ntly in force under multilateral, regional and 
bilateral trade agreements.  By the end of 2011, tariffs had been harmonized for 95.7 per cent of the 
tariff lines in the Central American Tariff System. 
4. During the review period, Nicaragua endeavoured  to strengthen relations with its current 
trading partners while continuing to seek new ones.  To that end, it has signed free trade agreements 
with the United States (CAFTA-DR), Mexico, the Dominican Republic, Chinese Taipei and Panama.  
Recently, it concluded trade negotiations with Chile ;  and, in conjunction with Central America, 
it signed the Association Agreement between Ce ntral America and the European Union.  
The CAFTA-DR Agreement has proven particularly important for Nicaragua in that it has boosted 
trade with the United States, its leading trading partner.  Moreover, trade relations between the 
Bolivarian Republic of Venezuela, Cuba, Ecuador, Nicaragua, the Plurinational State of Bolivia, 
Antigua and Barbuda, Dominica, and Saint Vincen t and the Grenadines have grown deeper and 
stronger through the Bolivarian Alliance fo r the Peoples of our America (ALBA). 
5. No restrictions or conditions are imposed on fo reign investment.  Foreign investors enjoy the 
same rights under the law as Nicaraguan investors, a nd are given the same means of exercising them.  
Exceptions to this are situations relating to national security and public health, as well as the 
restrictions provided for in the country's Constitution.  The law recognizes the right of investors to freely dispose of their property, ex cept in the event of a declaration of public utility, in which case 
they are entitled to appropriate compensation.  Foreign investor s in Nicaragua enjoy the same 
investment incentives as domestic investors and ma y own 100 per cent of the shares or equity of a 
domestic firm. WT/TPR/S/274 Trade Policy Review 
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  (2) TRADE POLICY FORMULATION AND IMPLEMENTATION  
(i) Institutional and legal framework 
6. Executive power in Nicaragua is exercised by th e President of the Republic, who is elected by 
universal suffrage for a five-year term.  The Preside nt appoints a cabinet of 15 ministers, who do not 
have to be members of the National Assembly, and h as power to initiate and ve to legislation, and to 
issue regulations to laws.  The President is also responsible for negotiating, entering into, and signing 
international treaties, conventions  or agreements, and deciding on the country's economic policy.  
The most recent presidential election was held in November 2011. 
7. The legislative branch consists of the singl e-chamber National Assembly, which consists 
of 90 deputies (20 elected nationally and 70 by district), plus any presidential or vice presidential 
candidates who gain over 1.1 per cent of the national vote (three at the present time).  Deputies are 
elected by proportional representation for five-year te rms.  The National Assembly is responsible for 
drafting and approving laws and decrees, and for reforming and repealing existing ones.  
The Assembly does not have power to alter the texts of international agreements, but can only debate 
them and either approve or reject them in their en tirety.  Legislative approval gives such instruments 
legal force both in Nicaragua and elsewhere, once they have entered into force internationally, 
through the deposit or exchange of ratifications, or fulfilment of the requirements or deadlines 
provided for in the text of the treaty or international instrument in question. 
8. The judiciary comprises the Supreme Court, whic h consists of 12 members, and lower courts 
(appeal courts, district and local courts).  Th e National Assembly elects Supreme Court judges for 
seven-year terms, from a list of candidates proposed by the Government. 
9. There are 15 Regional Departments, two Autonomous Regional Councils of the 
Atlantic Coast, and 131 Municipal Councils .  These subnational authorities are elected 
for five-year terms, are administratively and fi nancially autonomous, and have power to impose 
various types of local taxes, in particular those levied on income, construction, municipal services, 
leisure activities and commercial licences. 
10. The Ministry of Development, Industry and Tr ade (MIFIC) is tasked with negotiating and 
administering international and regiona l agreements on trade and investment.1  It is also responsible 
for implementing policies on investments, both domestic and foreign, and for issues relating 
to standards, consumer protecti on and intellectual property rights.  Since the last Review, several 
MIFIC functions have been altered to include  the promotion of industrial and technological 
development and exports, while policies such as  promoting competition and the use of natural 
resources have been reassigned elsewhere.  MIFIC c oordinates the formulation and implementation of 
trade policy with the corresponding ministries (for exam ple the Ministry of Agriculture and Forestry, 
the Ministry of Finance and Public Credit, and the Ministry of the Environment and Natural Resources);  and, while the Ministry of  Foreign Relations represents Nicaragua at the 
WTO, MIFIC is responsible for international trade negotiations, including tariffs , in consultation with 
other ministries on topics within their jurisdiction. 
11. The National Commission for the Promotion of Ex ports (CNPE), chaired by the Minister of 
Development, Industry and Trade, has five representatives drawn from the business sector 
and five from the public sector.  Its role is to propose new policy measures that contribute to the 
development of export enterprises.  Trade facilitation in a broader and more general sense is handled 
                                                      
1 Further information on MIFIC can be found online at:  http://www.mific.gob.ni. Nicaragua WT/TPR/S/274 
 Page 15 
 
 
  by the Interinstitutional Committee on Trade Facilitati on (CIFCO), which consists of representatives 
from the Directorate-General of Customs, the Ministry of Deve lopment, Industry and Trade, 
the Directorate-General of Revenue, the Ministry of  Transport, the National Ports Enterprise (ENAP), 
the International Airports Management Co mpany (EAAI), the Higher Council for Private 
Enterprise (COSEP), the Nicaraguan Chamber of I ndustry (CADIN), the Chamber of Customs and 
Warehouse Agents of Nicaragua (CADAEN), th e Nicaraguan Chamber of Commerce (CACONIC), 
and the Nicaraguan Micro, Small and Medium-S ized Enterprise Council (CONIMIPYME), among 
others.  In all, 14 public and private institutions fo rm part of CIFCO and according to the authorities it 
has wide-ranging and active private-sector particip ation.  CIFCO has eight technical subcommissions, 
meeting on a monthly basis to deal with procedures re lating to medicines, free zones, and other issues.  
In the context of this Review, the authorities st ressed the importance of CIFCO as a vehicle of 
cooperation between the public and private sectors. 
12. The Presidential Delegation for Investment Promotion and Foreign Trade Facilitation 
(PRONicaragua), created by Decree No. 12/2011, is responsible for trade facilitation issues.  
The 2011 Decree restructured the previous PRONicaragua agency that had been responsible for 
investment promotion since 2002, to expand its func tions and create a foreign trade facilitation office 
as part of a new Presidential Delegation for Inv estment Promotion and Foreign Trade Facilitation 
(see below). 
13. The Constitution of the Republic of Nicaragua  is the country's main law, and takes 
precedence over all other legislation.  Article 182 states that the Constitution represents the country's 
fundamental charter;  and any law, treaty, order or  provision that contravenes or alters its provisions 
shall be null and void. 
14. The provisions of international agreements form  part of the country's law, once they have 
been ratified and published in the Official Journal.  Provisions that  require enabling regulations follow 
domestic legislative procedures and become nationa l law, any alteration be ing made through legal 
amendments to the instruments in question.  The provisions of WTO Agreements that are transposed 
into Nicaragua's domestic law take effect once the established legislative procedures have been 
completed;  and they enjoy the same protection a nd legal remedies as other national laws.  A similar 
legal regime applies to CACM decisions and regula tions, although in certain circumstances approval 
by the domestic legislature is not required and a ministerial decision suffices. 
(ii) Trade policy formulation and objectives 
15. The general objective of Nicaragua's trade policy, as specified by MIFIC, is to promote access 
to foreign markets and better integration in the international economy, by negotiating and 
administering international trade and investment agreements.2  This is also expected to promote a 
stable legal framework for attrac ting investment, both domestic and foreign.  Further aims are to 
support the private sector in taking advantage of  opportunities arising on international markets, 
particularly export markets, and to promote and facilitate investment, both national and foreign.  
The implementation of trade policy also aims to prom ote efficiency and defend consumer rights in all 
domestic goods and services markets. 
16. The sectoral objective of trade policy is to promote the productivity, efficiency, 
and competitiveness of production chains and inter-sectoral conglomerates, industry, and other non-agricultural sectors, based on development, technology transfer, and management training 
                                                      
2 Online information from MIFIC.  Viewed at:  http://www.mific.gob.ni/Q UIENESSOMOS /tabid/94/ 
language/en-US /Default.aspx. WT/TPR/S/274 Trade Policy Review 
Page 16 
  
  targeting small and medium-sized firms.  The au thorities consider these to be strategic activities 
within Nicaragua's economic growth and developmen t process.  The aims in the services sector are to 
expand supply, increase competition and reduce consumer prices. 
17. The National Human Development Plan (PNDH) and its revision following the international 
financial crisis (Update d National Human Development Plan - 2009-2011) have econom ic growth and 
poverty reduction as their main objectives.  These goals will be achieved by redefining the State's role 
in the economy, confining its intervention mainly to  situations of market failure, acting in closer 
coordination with the private sector, guaranteeing private investment, and promoting dialogue with 
the international community to obtain trade and fina ncial support.  In August 2012, the plan was being 
updated for the period 2012-2016. 
18. As part of its trade facilitation work, MIFIC is currently implementing 
the four-year Foreign Trade Management Stre ngthening and Exploitation Program (PACE-BID), 
financed with a US$10 million loan from the In ter-American Development Bank (IDB).  The 
objective of this programme is to help take a dvantage of the trade and investment opportunities 
arising from trade agreements curre ntly in force or under negotiation in Nicaragua, by strengthening 
foreign trade management and promotion cap acities, attracting investment, and upgrading 
management of the quality and health-safety status of export products.  As part of the programme, 
700 small and medium-sized enterprises (SMEs) and 60 business groups with export potential are receiving support to create or increase their export capacity and diversify their export basket.  The programme also aims to strengthen negotiating sk ills in trade negotiations, thereby encouraging 
foreign direct investment and improving access for Nicaraguan products to different markets.  This 
will be achieved by developing a national investment attraction policy, to speed up the growth of 
foreign and domestic investment flows and promote job creation a nd technology transfer.  Another 
element of the programme involves improving the export quality system, which includes components 
such as implementation of a bovine export traceability system.  An additional aim is to strengthen MIFIC's capacity to apply and effectively administ er the trade agreements signed by Nicaragua, and 
to respond to the regulatory and institutional ch allenges posed by trade treaties or agreements 
currently in force, both bilateral and multilateral.   This would include developing a methodology to 
evaluate the impact of liberalization, evaluate th e use of trade defence instruments, and implement 
mechanisms to prevent the emergence of trade disputes.
3 
(3) INTERNATIONAL TRADE RELATIONS  
(i) World Trade Organization (WTO) 
19. Nicaragua became a contracting party to the General Agreement on Tariffs and 
Trade (GATT) on 28 May 1950.  Subsequently it participated fully in the Uruguay Round, ratifying the Marrakesh Agreement on 27 July 1995, and became a WTO Member on 3 September 1995. 
20. Nicaragua participated in the extended negotia tions on financial ser vices but not in those 
on telecommunications.  It is not a signatory to the Plurilateral Agreement on Government 
Procurement.  Nicaragua is a member of th e following DDA negotiating groups:  (i) Small and 
vulnerable economies - agriculture;  (ii) Small and vulnerable economies - non-agricultural market 
access (NAMA);  (iii) Small and vulnerable economies - rules;  (iv) Tropical products;  (v) G-33;  and 
                                                      
3 Online information from MIFIC.  Viewed at:  http://www.mific.gob.ni/LinkClick.aspx?fileticket= 
EJH948vpIFQ%3d&tabid=81&language=es-NI. Nicaragua WT/TPR/S/274 
 Page 17 
 
 
  (vi) Joint proposal - intellectual property.4  Nicaragua also participates actively in the negotiations on 
trade facilitation. 
21. Nicaragua's most recent notifications to the WTO are shown in Table II.1.5 
Table II.1 
Main notifications made by Nicaragua to the WTO, as at 31 August 2012 
Legal basis, instrument 
or provision Topic WTO document and 
publication datea Periodicity 
Agreement on Implementation of 
Article VI of the GATT 1994 
(Article 16.4) Anti-dumping measures G/ADP/N/209/Add.1/Rev.1, 
20 October 2011 Semi-annual  
Agreement on Implementation of 
Article VI of the GATT 1994 (Article 18.5) Laws and regulations G/ADP/N/1/NIC/2 
23 January 2008 Once only, subsequent 
amendments 
Agreement on Implementation of Article VI of the GATT 1994 (Article 16.4) Authorities and internal procedures 
for initiating and conducting investigations G/ADP/N/14/Add.33, 
17 April 2012  
Agreement on Implementation of 
Article VII of the GATT 1994 (Article 20.1) Implementation/ 
non-implementation of the Agreement on Customs Valuation  WT/LET/29, 
23 August 1995 Once only 
Agreement on Preshipment 
Inspection (Article 5) Laws and regulations G/PSI/N/1/Add.4, 
9 October 1996  Once only, subsequent 
amendments  
Agreement on Rules of Origin 
(Article 5.1) Regulations on rules of origin G/RO/N/10, 
16 August 1996 Once only 
Agreement on Rules of Origin 
(Annex II(4)) Preferential rules of origin G/RO/N/10, 
16 August 1996 Once only, subsequent 
amendments 
Agreement on Subsidies and Countervailing Measures (Article 25.1 to 25.6) Subsidies G/SCM/N/3/NIC, 
24 July 1995; G/SCM/N/3/Add.1, 
27 February 1996 Yearly 
Agreement on Subsidies and 
Countervailing Measures 
(Article 32.6) Laws and regulations  G/SCM/N/1/NIC/2, 
23 January 2008 Once only, subsequent 
amendments 
Agreement on Subsidies and Countervailing Measures 
(Article 25.11) Countervailing duty actions G/SCM/N/4/Add.1, 
14 July 1995 Semi-annual 
Agreement on Subsidies and 
Countervailing Measures (Article 25.12) Authorities and internal procedures 
for initiating and conducting investigations G/SCM/N/18/Add.32, 
14 October 2011  
Agreement on Safeguards 
(Article 12.6) Laws and regulations G/SG/N/1/NIC/2, 
23 January 2008 Once only, subsequent 
amendments 
Agreement on Import Licensing 
Procedures 
(Article 1.4(a)) Publication of rules and information 
relating to procedures for submitting 
applications G/LIC/N/1/NIC/1, 
5 August 1996 Ad hoc 
Agreement on Import Licensing 
Procedures 
(Article 8.2(b)) Amendments to laws and regulations 
and implementation thereof G/LIC/N/1/NIC/1, 
5 August 1996 Ad hoc 
Agreement on Import Licensing 
Procedures 
(Article 7.3) Replies to the questionnaire on import 
licensing procedures G/LIC/N/3/NIC/4, 
13 August 2012 Ad hoc 
Agreement on Technical Barriers 
to Trade 
(Article 10.6) Notification of measures G/TBT/N/NIC/62, 
27 June 2005 
G/TBT/N/NIC/124, 17 August 2012  
Agreement on Technical Barriers 
to Trade (Article 10.1 and 10.3). National enquiry points G/TBT/ENQ/38/Rev.1, 
8 July 2011 Once only, subsequent 
amendments 
Agreement on Agriculture (Article 18.2) Imports subject to tariff quotas 
(MA:2) G/AG/N/NIC/30, 
10 May 2012 Yearly 
                                                      
4 Online information from the WTO.  Viewed at:  http://www.wto.org/englis h/thewto_e/countries_e/ 
nicaragua_e.htm. 
5 WTO document G/L/223/Rev. 13, of 28 February 2006,  reports the most recent status of notifications 
by Nicaragua. WT/TPR/S/274 Trade Policy Review 
Page 18 
  
  Legal basis, instrument 
or provision Topic WTO document and 
publication datea Periodicity 
Agreement on Agriculture 
(Articles 5.7 and 18.2) Special safeguard provisions (MA:5) G/AG/N/NIC/31, 
10 May 2012 Yearly 
Agreement on Agriculture 
(Article 18.2) Domestic support G/AG/N/NIC/28, 
10 May 2012 Yearly 
Agreement on Agriculture 
(Articles 10 and 18.2) Export subsidies (Table ES:1) G/AG/N/NIC/29, 
10 May 2012 Yearly 
Agreement on the Application 
of Sanitary and Phytosanitary Measures 
(Annex B (7)) Sanitary/phytosanitary re gulations G/SPS/N/NIC/31, 
14 March 2006 G/SPS/N/NIC/72, 
30 August 2012  
Agreement on the Application 
of Sanitary and Phytosanitary 
Measures 
(Annex B) National enquiry points G/SPS/ENQ/26, 
11 March 20111 Once only, subsequent 
amendments 
Agreement on the Application 
of Sanitary and Phytosanitary 
Measures (Annex B) Enquiry point and notification 
authority G/SPS/GEN/27/Rev.22, 
20 February 2012  
Agreement on Trade-Related 
Investment Measures (Article 6.2) Publications in which TRIMs may be 
found G/TRIMS/N/2/Rev.9, 
28 September 2001  
Agreement on Trade-Related 
Aspects of Intellectual Property Rights (Article 69) Contact points IP/N/3/Rev.11, 
4 February 2010 Once only, subsequent 
amendments 
Agreement on Trade-Related Aspects of Intellectual Property Rights  Responses to questions on 
enforcement IP/N/6/NIC/1, 
30 May 2001  
Agreement on Trade-Related 
Aspects of Intellectual Property Rights 
(Article 63.2) Laws and regulations IP/N/1/NIC/2, 
25 June 2008 IP/N/1/NIC/C/2/Add.1, 
3 July 2008 
IP/N/1/NIC/3, 25 June 2008 
IP/N/1/NIC/C/6/Add.1, 
2 July 2008 IP/N/1/NIC/I/2/Add.1, 
3 July 2008 
IP/N/1/NIC/I/2/Add.2, 2 July 2008 
IP/NIC/I/3/Add.1, 
2 July 2008 IP/N/1/NIC/16, 
1 July 2008 
IP/N/1/NIC/16/Add.1, 1 July 2008 
IP/N/1/NIC/17, 
1 July 2008 Once only, subsequent 
amendments 
GATT 1994 (Article XXVIII) Certification of modifications 
and rectification to the schedule 
of concessions WT/LET/460, 
29 March 2004  
a Date of latest notification in the case of periodic notification. 
Source: WTO documents. 
22. Nicaragua attaches the utmost importance to the DDA, and is chiefly interested in improving 
market access for its agricultural products.  It has also shown interest in the critical issues of 
food security, conditions of life in rural areas and rural development,  and trade facilitation.6  It has 
also joined with various other developing country groups to put forward proposals in the agriculture 
negotiations, on issues such as negotiating modalities on market access7, special and differential 
                                                      
6 G-33 press statement, 11 October 2005. 
7 WTO document WT/MIN(03)/W/10, of 5 September 2003. Nicaragua WT/TPR/S/274 
 Page 19 
 
 
  treatment and the "development box"8, and market access in the agriculture sector for small and 
vulnerable economies.9 
23. Other DDA issues of special interest to Nicaragua are the trade concerns of small and 
vulnerable economies, and services.  In June  2005, it submitted its initial offer on services, 
which includes gradual liberalization in subsectors of interest to it, such as telecommunications, 
financial services, and tourism, together with sp ecific stipulations in its horizontal commitments.  
It has also asked the developed countries for openness with respect to mode 4 (movement of 
natural persons) in services.  Nicaragua also put forw ard a joint proposal with Egypt, Honduras, India, 
the Plurinational State of Bolivia and Sri Lanka for the amendment of Article 27.2 and 27.4 of the 
Agreement on Subsidies and Countervailing Measures in relation to develo ping countries covered 
under Annex VII.10 
24. Since its last Review, Nicaragua has not been a claimant or respondent in any case brought 
under the WTO dispute settlement mechanism11, but it has participated as a third party 
in three cases.12 
(ii) Preferential agreements 
25. Nicaragua has signed free trade agreements with Mexico, the Dominican Republic, the 
United States (CAFTA-DR), Chinese Taipei and Panama;  and it is a member of the CACM.  Recently, it completed trade negotiations with Chile, and, in conjunction with Central America, it 
signed the Association Agreement between Centra l America and the European Union, as well as a 
Free Trade Agreement between Central America and Mexico, to replace the bilateral treaties that 
existed between the Central Am erican countries and Mexico. 
26. Nicaragua has preferential access through the Generalized System of Preferences (GSP) to the 
markets of Canada, the European Union, Norw ay, Japan, Russia and Switzerland;  and it has 
partial-scope agreements in force with the Bolivarian Republic of Venezuela and Colombia. 
(a) Central American Common Market (CACM) 
27. Nicaragua is a founding member of the Cent ral American Common Market (CACM), which 
was established in 1961 and is composed also of Co sta Rica, El Salvador, Guatemala and Honduras.  
Central American countries agreed to develop a fre e trade zone and adopt a common external tariff 
through the General Treaty on Central American Econ omic Integration (1960).  This treaty establishes 
a free trade regime for all products originating in th eir respective territories, with the only restrictions 
contained in Annex A (such as coffee, whether or not roasted, and sugar cane).  
The Tegucigalpa Protocol to the Charter of the Organization of Central American States (ODECA), 
                                                      
8 WTO document G/AG/NG/W/13, of 23 June 2000. 
9 WTO document G/AG/GEN/11, of 11 November 2005. 
10 WTO document TN/RL/GEN/177/Rev.2, of 18 March 2011. 
11 Information on cases involving Nicaragua in the WTO dispute settlement mechanism, up to 
early 2012, can be viewed online at:  http://www.wto .org/spanish/thewto_s/countries_s/nicaragua_s.htm. 
12 These are:  (i) Dispute DS357, United States - Subsidies and other domestic support for corn 
and other agricultural products.  Current status:  Panel established, but not yet composed on 17 December 2007;  
(ii) Dispute DS365, United States - Domestic support and export credit guarantees for agricultural products.  Current status:  Panel established, but not yet composed on 17 December 2007;  and 
(iii) Disputes DS415, 416, 417 and 418, Domi nican Republic - Safeguard measures on imports 
of polypropylene bags and tubular fabric.  Current status:  Panel report circulated on 31 January 2012. WT/TPR/S/274 Trade Policy Review 
Page 20 
  
  signed in 1991 and in force since July 1992, ame nded the regional legal framework by creating the 
Central American Integration System (SICA) as the institutional framework for Central American 
regional integration.  Panama and Belize were admitted as States Members of SICA in 1991 and 
December 2000 respectively, and the Dominica n Republic joined as an Associate State 
in December 2003. 
28. The Guatemala Protocol to the General Treaty on Central American Economic Integration, 
which was signed in 1993 and entered into fo rce on 17 August 1995, defines the objectives and 
principles of economic union and measures to achieve  it, and creates the Central American Economic 
Integration Subsystem.  In March 2002, its me mbers approved a plan of action to speed up the 
customs union process, and the General Framewor k for Negotiation of the Customs Union was 
approved in June 2004.  The Fram ework Agreement for the Establis hment of the Central American 
Customs Union was signed on 12 December 2007, and was ratified by Nicaragua through Executive 
Decision No. 809, published in Official Journal No. 138, Volume 380, of 23 July 2008, and Presidential Decree No. 26-2011.  The agreem ent envisages three stages in the customs union 
process:  institutional strengthening, tr ade facilitation and regulatory convergence. 
29. SIECA has an institutional structure consisting of the Council of Ministers of Economic 
Integration (COMIECO);  the Inter-Sectoral Co uncil of Ministers of Economic Integration;  
the Sectoral Council of Ministers of Economic In tegration;  the Executive Committee of Economic 
Integration (CEIE);  and the Secretariat for Ce ntral American Economic Integration (SIECA).  
The Central American Bank for Economic Inte gration (CABEI) acts as a support agency.
13  
The CACM has several regional regulations, includi ng the Central American Uniform Customs Code, 
as well as Central American regulations on rules of origin, unfair business practices, safeguard measures, standardization, and sanitary and phyt osanitary measures.  Articles 22 and 23 of the 
Convention on the Central American Tariff and Cu stoms Regime and Article 38 of the Guatemala 
Protocol grant COMIECO jurisdiction to a lter the Central American Import Tariff. 
30. Since 2003, the CACM has had a trade dispute settlement mechanism
14, which is used for all 
disputes between members arising from the implemen tation or interpretation of economic integration 
instruments exclusively relating to their intraregional trade relations. 
31. The Central American Import Tariff (ACI) c ontains 6,389 headings, excluding vehicles.  
By late 2011, tariffs had been harmonized for 95.7 per cent of the tariff lines in the Central American 
Tariff System.  The remaining 4.3 per cent, for which harmonization is pending, mainly involve 
agricultural products classified as sensitive by each  of the economies of the region, along with 
medicines, metals, and petroleum.  In the San Jose Declaration of 16 December 2006 it was decided 
to identify provisional mechanisms to manage unharmonized tariffs in the common customs area, 
a task that is still ongoing within COMIECO.   Resolution No. 180-2006 incorporated 
the fourth amendment of the Harmonized Commodity Description and Coding System.  
The fifth amendment was approved in 2011, and en tered into force on 1 January 2012, through 
Resolution No. 263-2011 COMIECO LX.  The CACM members have prepared and implemented a 
Computerized Central American Tariff (AIC) system , which contains all taxes and tariff reductions 
applicable to products entering the CACM under th e FTA framework.  The sy stem also includes the 
non-tariff measures applicable to such products, such as technical regulations and sanitary and 
phytosanitary measures. 
                                                      
13 Founded in 1960 by Costa Rica, El Salva dor, Guatemala, Honduras and Nicaragua, with 
headquarters in Tegucigalp a, CABEI aims to promote the economic a nd social development of Central America 
by lending at moderate interest rates mainly to finance infrastructure projects within the region. 
14 Resolution No. 111-2003. Nicaragua WT/TPR/S/274 
 Page 21 
 
 
  32. The Central American countries have also a dopted a number of provisions in the customs 
sphere to facilitate their mutual trade, including in itiatives to facilitate goods transit within the region 
and reduce customs controls.  In 2004, an agreem ent was also reached to minimize physical 
inspection of merchandise originating in Central American countries, using a single-digit selection 
mechanism and applying risk management contro ls.  Nicaragua (along with El Salvador and 
Costa Rica) has thus implemented a risk assessment and evaluation system in all of its customs offices, which has made it possible to f acilitate trade and perform a posteriori controls, 
without delaying the entry of the goods.  Electroni c data transmission has also been facilitated in 
intraregional transactions through online us e of the Central American Single Customs 
Form (FAUCA). 
33. Steps have also been taken to standardize customs procedures, by adopting the 
Central American Uniform Customs Code, along w ith its reforms (CAUCA  IV) and regulations 
(RECAUCA).  CAUCA IV establishes the basic custom s legislation of the region's countries, and is 
applicable throughout the customs territory to all persons, merchandise a nd means of transport 
crossing the customs boundaries of the signatory countr ies.  The regulations develop the provisions of 
CAUCA IV (Chapter III(2)(i).  In addition, the revi sed version of the Regulations on the International 
Customs Transit Regime is in force (Resolution No. 65-2001), which harmonizes and aims to simplify 
procedures used in international customs overla nd transit operations involving goods, provided the 
transit operation starts in a State party to the CACM or in Panama.  The Central American Regulations on the Valuation of Goods for Cust oms Purposes, in force since 2004, develop the 
provisions of the Agreement on Implementation of  Article VII of the GATT 1994, and provisions 
arising from regional laws (Chapter III(2)(ii). 
34. Progress has also been made in harmonizing san itary and phytosanitary measures, and in 
cooperation between agencies responsible for en suring their implementation in each country.  
COMIECO has drawn up a list of products that are exempt from the requirement to present sanitary or phytosanitary certificates of import or export, because they are not considered to pose risks of this 
type.
15 
35. The list of products excluded from regional free tr ade was shortened during the review period.  
Under Resolution No. 05-2006 of 18 June 2006, the CEIE liberalized a number of products, including 
alcoholic beverages, ethyl alcohol and petroleu m products.  In the case of Nicaragua, petroleum 
products were liberalized in trade with Honduras, a nd ethyl alcohol in its trade with Costa Rica.  
By late 2011, Nicaragua maintained exceptions to  regional free trade only for unroasted coffee and 
sugar cane.16 
36. Nicaragua's trade with other Central American c ountries intensified during the first part of the 
review period (2006-2009), but declined in 2010 mainly owing to a reduction in its trade with 
Honduras.  Nicaragua's exports to the rest of the CACM amounted to US$415 million in 2011, 
representing 22.5 per cent of its total exports. 
                                                      
15 SIECA (2011). 
16 In the case of unroasted coff ee (HS 0901.1) trade is  subject to most-favoured-nation (MFN) 
import duties;  cane sugar, whether or not refined (HS 1701.11.00, 1701.91.00, and 1701.99.00), is subject to 
import control, with tariff  free quotas.  Out-of-quota imports pay MFN duties. WT/TPR/S/274 Trade Policy Review 
Page 22 
  
  (b) Free trade agreement between the Dominican Republic, Central America and the 
United States (CAFTA-DR). 
37. In January 2003, Nicaragua and its four CACM partners embarked on formal negotiations for 
a free trade agreement with the United States, whic h were completed on 17 December that year.  
The CAFTA-DR was signed on 5 August 2004 and ratified in Nicaragua on 10 October 2005.  
The agreement entered into force for Nicaragua on 1 April 2006. 
38. Although the vast majority of the mutual obligations assumed by the parties under the 
CAFTA-DR are similar, some oblig ations, such as tariff quotas, are applied bilaterally between the 
United States and each Central American country or the Dominican Republic.  Most industrial 
products and consumer goods became tariff-free when the CAFTA-DR entered into force.  Under this 
agreement, Nicaragua obtained immediate duty-free access for 95 per cent of its agricultural and industrial goods, including fresh fruit and vege tables, fish and seafood, tuna, processed foods, 
canned fruits and vegetables, forestry products, furn iture and wood, craft items, leather products, and 
others.  Tariffs on other products will be eliminated over a period of five to ten years, while 
agricultural products enjoy tariff reduction periods of 15 to 20 years.
17  In the case of 
about 40 agricultural products, tariff quotas were se t for the transition peri ods, since the time-frame 
for tariff reduction on these products is generally l onger.  Nicaragua's sensitive products are rice, 
yellow maize, white maize, sorghum, beef, onion s, red beans, chicken and powdered milk.  
Nicaragua excluded white maize from the agre ement;  and it set special access quotas for the 
following sensitive products:  sugar, peanuts and butter, meat and dairy products (sour cream, 
yoghurt, cheeses, ice creams, and others). 
39. The authorities consider that the main benefits of the CAFTA-DR include preferential 
treatment for clothing exports to the United States  and Mexico under cumulation of origin rules, 
which enables the local textiles and clothing indu stry to use non-originating raw materials and 
still enjoy tariff preferences.  This benefit,  which came into force in 2006 and lasts 
until 31 December 2014, allows the Nicaraguan tex tiles and clothing industry to export synthetic, 
cotton or woollen garments duty free to the United St ates, irrespective of the origin of the cloth or 
yarn used.  Nicaragua can also use up to 1 million m2 equivalent of woollen fabric from any country 
in the world to make menswear woollen suits in its territory and export them duty free to the United 
States.  The National Free Zones Commission (CN ZF) assigns tariff preference levels (TPLs) to 
qualified firms through a formula based on the value of  the product to be exported, the tariff it would 
pay, and the number of jobs created by its productio n.  The authorities believe that allocating TPLs 
through this formula ensures a fair and transparent process.18  The CAFTA-DR includes flexible 
provisions for duty-free export of footwear from Nica ragua to the United States, and also allows raw 
materials from any part of the world to be used, provided that the footwear complies with specific 
characteristics. 
40. The authorities consider that the CAFTA-DR has been highly beneficial for Nicaragua, 
since its trade relations with the United States, its main trading partner, have  deepened, and a larger 
number of goods now enjoy preferential tariffs upon entr y into the United States market.  It has also 
generated an increase in global trade;  for exampl e, exports from Nicaragua to the United States, 
excluding the output of free zones, increased by 18 per cent by volume in 2010 compared to the previous year, and grew by 34.3 per cent in va lue terms to US$606.7 million.  The main products 
exported by Nicaragua to the United States in 2010 from outside the free zones were coffee, beef and 
                                                      
17 The base rates for the tariff reduction were the MFN tariffs of the Central American Import Tariff, in 
force on 1 September 2003. 
18 MIFIC (2011). Nicaragua WT/TPR/S/274 
 Page 23 
 
 
  cane sugar.  Imports from the United States totalle d US$954.6 million at the end of 2010, up by 
36 per cent on the previous year's figure. 
(c) FTA between Nicaragua and Mexico 
41. The FTA between Nicaragua and Mexico, which ente red into force in July 1998, covers trade 
in goods and services, as well as investment and inte llectual property issues.  The agreement included 
immediate trade liberalization by Mexico of 73 pe r cent of products in its tariff universe, and an 
additional 14 per cent by 1 July 2002, with tariffs  on the remaining 13 per cent to be progressively 
reduced over periods of five, ten, and 15 years.  Nicaragua obtained a longer transition period for 
more goods.  Nicaragua renounced certain rights on its bilateral trade with Mexico, such as the ban or 
restriction on exports of shrimp and lobster in the larval or reproductive stage, and wood products 
from the cedar species and mahogany logs.  Nicaragua's schedule also included the right to prohibit or 
restrict imports of merchandise classified under h eadings 6309 and 6310 (worn clothing and other 
worn textile articles) of the Central American Ta riff System (SAC) along with certain used goods and 
some types of fuels. 
42. In 2009 the Central American countries also  embarked on a process to merge their 
existing trade agreements with Mexico, which culminated on 22 November 2011 with the signing 
of the Free Trade Agreement between the United Mexican States and the Republics of Costa Rica, 
El Salvador, Guatemala, Honduras and Nicaragua. This FTA replaces the bilateral FTA between Nicaragua and Mexico, a nd entered into force for El Salvador, Mexico and Nicaragua 
on 1 September 2012. 
43. In early 2012, an estimated 99 per cent of tr ade between the two countries was covered by 
the FTA.
19  Exports to Mexico totalled US$51.6 milli on in 2010, consisting mainly of peanuts 
and sugar, while imports  totalled US$337 million. 
(d) FTA with Panama 
44. The Free Trade Agreement between Central America and Panama was signed 
on 6 March 2002, with the regulatory part ente ring into force on 21 November 2009 and tariff 
reduction starting on 1 January 2010.  The agreement with Panama was negotiated jointly between the 
five Central American countries but considered indi vidually;  es decir they apply the FTA rules and 
procedures bilaterally with Panama.  The FTA aims to create a free trade zone within 15 years, through a gradual and reciprocal tariff reduction programme with diffe rent periods (immediate, five, 
ten and 15 years), albeit with a number of exceptions .  The negotiations between Central America and 
Panama were conducted under the principle of reciprocity and concluded in 2001.
20 
45. The bilateral Nicaragua-Panama Protocol was signed in January 2009, as an annex to the 
Central America-Panama FTA, replacing th e partial-scope agreement signed in 1973.21  
                                                      
19 MIFIC (2011). 
20 Prior to the FTA, trade relations between Central America and Panama had been developed through 
FTAs and preferential trade agreements  signed by Panama with each of th e countries of the region, including 
tariff preferences for a group of products negotiated on a b ilateral basis.  Negotiation of the regulatory part of 
the FTA was concluded on 16 May 2001, while negotiation of the annexes continued on a bilateral basis. 
21 Free and Preferential Trade Agreement betwee n the Republics of Costa Rica and Panama, 
of 26 July 1973, in force since 18 January 1974.  This agreement ceased to have effect when the 
Central America-Panama FTA was ratified.  Nonethele ss, it was provided that products benefiting from WT/TPR/S/274 Trade Policy Review 
Page 24 
  
  Decree No. 62-2009, published in the Official J ournal of 21 August 2009, ratified the FTA and the 
Bilateral Protocol. 
46. The tariff reduction programme entered into for ce between the two countries in January 2010.  
Nicaragua grants immediate tariff exemption fo r originating goods included in category A of 
Annex 3.04.  Customs duties on originating merchand ise included in category B will be eliminated in 
five equal annual stages starting in 2010;  those in category C will be eliminated in ten equal 
annual stages, and those in category D in 15 equal stages.  Goods included in the EXCL (excluded) 
categories will continue to pay the most-favoured-nation (MFN) tariff.22 
47. In addition, preferential tariff quotas will be applied for certain agricultural products.  
Thus, Nicaragua now has the following duty-free export quotas:  (i) 1,500 tonnes of beef, with annual 
growth of 7 per cent, over a ten-year tariff reduction period23;  (ii) 30 tonnes of instant coffee, 
with annual growth of five tonnes, up to a limit of 70 tonnes24;  (iii) 15 tonnes of boneless pork25;  
(iv) 200 tonnes of onions and shallots with annual growth of 4 per cent and a tariff reduction period 
of 15 years26;  (v) 450 tonnes per year of tomato sauce, without growth, under tariff reduction 
category A27;  and (vi) 50 tonnes per year of ketc hup, without growth, under tariff reduction 
category A.28 
48. The Bilateral Protocol also has schedules of concessions in services. 
49. Nicaragua's exports to Panama amounted to just US$11 million in 2010, mainly beef;  
raw peanuts, rum;  bakery and pastry products;  mineral solvents;  hides and skins;  infant 
preparations;  and prawns and shrimps. 
                                                                                                                                                                     
preferential access under the Free and Preferential Trade Agreement w ould keep the preference until the 
condition for the entry into force of the tariff reductio n programme in the Bilateral Protocol was fulfilled. 
22 The full text of the FTA and the Protocol, together with the schedules of concessions, can be viewed 
at:  http://www.mific.gob.ni/ACU ERDOSCOMERCIALESVIGENTES/TLCCA Panamá/tabid/428/language/en-
US/Default.aspx. 
23 This quota is applicable to the following tariff subheadings:  0201.10.00.00, 0201.20.00.11, 
0201.20.00.19, 0201.20.00.91, 0201 .20.00.99, 0201.30.00.11, 0201.30.00. 19, 0201.30.00.91, 0201.30.00.99, 
0202.10.00.00, 0202.20.00.11, 0202 .20.00.19, 0202.20.00.91, 0202.20.00. 99, 0202.30.00.11, 0202.30.00.19, 
0202.30.00.91, 0202.30.00.99 of Nicaragua, and 0201.10.00, 0201.20.00, 0201.30.00, 0202.10.00, 0202.20.00, 
0202.30.00 of Panama.  Out-of-quota imports will be subject to tari ff reduction category C. 
24 This quota is applicable to the following tariff subheadings:  2101.11.00.10, 2101.12.00.00 of 
Nicaragua, and 2101.11.10, 2101.12.20 of Panama.  Out- of-quota imports will be subject to the MFN tariff. 
25 This quota is applicable to the following tariff subheadings:  0203.19.00.10, 0203.19.00.90, 
0203.29.00.10, 0203.29.00.90 of Nicaragua, and 0203.19.10, 0203.19.20, 0203.19.90, 0203.29.10, 0203.29.20, 
0203.29.90 of Panama.  Imports exceeding the year's tariff quota volume will be subject to the MFN tariff. 
26 This quota is applicable to the following tari ff subheadings:  0703.10.11, 0703.10.12, 0703.10.13, 
0703.10.19, 0703.10.20 of Nicaragua, and 0703.10.00 of Panama.  Imports exceeding the year's tariff quota 
volume will be subject to tariff reduction category D. 
27 This quota is applicable to the following ta riff subheadings:  2103.20.00 of Nicaragua, and 
2103.20.91, 2103.20.99 of Panama, and is subject to the application of specific rules of origin. 
28 This quota is applicable to the following ta riff subheadings:  2103.20.00 of Nicaragua, and 
2103.20.10 of Panama, and is subject to the application of specific rules of origin. Nicaragua WT/TPR/S/274 
 Page 25 
 
 
  (e) FTA between Costa Rica, El Salvador, Gu atemala, Honduras and Nicaragua, and the 
Dominican Republic 
50. The regulatory part of the FTA between these Central American countries and the 
Dominican Republic was signed in 1998;  and the complementary protocols containing the annexes 
were signed as follows:  Costa Rica in 1998, El Salvador and Guatemala in 1998, and Honduras and 
Nicaragua in 2000.  Nicaragua's ratification of th e agreement had been held up because of concerns 
over the provisions on agriculture.  Nonetheless, most  of these were renegotiated in the Protocol of 
Accession of Nicaragua to the Central Amer ica-Dominican Republic FTA, which was signed 
on 13 March 2000, thereby enabling the FTA to enter into force on 3 September 2002.  Apart from 
establishing closer relations between Nicaragua and the Dominican Republic, this Bilateral Protocol 
facilitated negotiation of the FTA between the Dominican Republic, Cent ral America and the 
United States (CAFTA-DR). 
(f) FTA with Chinese Taipei 
51. The Economic Complementarity Agreement between the Republics of Costa Rica, 
El Salvador, Guatemala, Honduras, Nicaragua an d Chinese Taipei was signed by the respective 
Ministers of the Economy and/or Foreign Trade in 1997.  This agreement contains provisions guiding 
trading relations in the medium term.  Article 1 requires members to develop a wide-ranging and 
consistent plan of action which, as implementation proceeds, will serve as a basis for jointly deciding 
when conditions exist for the start of negotiatio ns to move gradually and progressively towards 
signing an FTA. 
52. In 2004, Nicaragua inaugurated the first of four FTA negotiating rounds with Chinese Taipei, 
which were completed in June 200 6 and defined general proposals on the scope and coverage of the 
future agreement.  The FTA with  Chinese Taipei entered into force on 1 January 2008 and extends 
duty-free status to 87 per cent of bilateral trade,  leaving a number of exclusions mainly among 
agricultural products.  Chinese Taipei granted Ni caragua immediate duty-free access for 78.18 per 
cent of its exports (68.81 per cent of trade with im mediate duty-free access plus 9.37 per cent with an 
immediate zero tariff through the quota mechanism).29  All other products w ill have tariff reduction 
periods ranging from five to 15 years. 
53. As a result of the FTA, Nicaragua has imme diate duty-free access to the Chinese Taipei 
market for products such as beef and bovine offal, fish and crustaceans, chee ses, beans, yucca, nuts, 
fruits (watermelons, mangoes, melons, etc.), coffee (beans and instant), cereal flours, cocoa, edible 
oils, rum, salt, bentonite, ceramic products, in secticides, paints, plastic products, wood and wood 
products, paperboard and products thereof,  textiles and clothing, and furniture. 
                                                      
29 Chinese Taipei granted Nicaragua tariff-f ree quotas for the importation of three key 
Nicaraguan products:  peanuts, raw sugar and refined sugar.  In the case of peanuts (groundnuts of tariff 
subheadings 1202.10.00, 1202.20.00, 1508.10.00, 1508.90. 00, 2008.11.11, 2008.11.12, 2008.11.91, 2008.11.92) 
a quota of 250 tonnes was imposed (based on ground-nuts in shell).  For raw sugar (1701.11.00, 1701.91.10) a quota of 5,000 tonnes was imposed fo r the second year after the entry into  force of the agreement, subject to 
an annual variation determined by the average growth of total sugar imports into Chinese Taipei over the past 
four consecutive calendar years.  For refined sugar (1 701.91.20, 1701.99.10, 1701.99 .20, 1701.99.90) a quota 
of 25,000 tonnes was imposed for the first year following the entry into force of the agreement, subject to 
annual variation determined by the average growth of total sugar imports into Chinese Taipei in the past 
four consecutive calendar years. WT/TPR/S/274 Trade Policy Review 
Page 26 
  
  54. In addition to covering trade in goods, th e agreement contains provisions aimed at 
overcoming trade barriers, as well as clauses on investment, services and related issues, competition policy and intellectual property. 
55. Sales of Nicaraguan products to the Chinese Taip ei market recorded sustained growth during 
the review period and seem to have been boosted by  the FTA preferences, having increased from just 
US$4 million in 2005 to US$29.2 million in 2010.  Th e main products exported are:  iron or steel 
scrap, beef, shrimp, sugar, molasses, and bovine  offal.  Imports from Chinese Taipei totalled 
US$16.8 million in 2010, consisting mainly of aer ials, medicines, vehicle parts and accessories, 
new tyres, cellphones, motor parts, computers and computer parts, transformers, and smart cards. 
(g) FTA between Costa Rica, El Salvador, Gu atemala, Honduras and Nicaragua, and Chile 
56. The FTA between Central America an d Chile was signed on 18 October 1999
30, and can be 
thought of as a trade treaty that is "legally separ able" for each Central American trading partner.  
The first part of the agreement contains comm on rules governing relations between Chile and each 
Central American country on administrative, trade, goods, services and investment issues.  
The second part consists of bilateral protocols be tween Chile and each Central American country on 
issues such as tariff reduction programmes, specific rules of origin, cross-border trade in services, and 
customs valuation.  The FTA between Costa Rica a nd Chile entered into force in February 2002, 
while the agreement between El Salv ador and Chile took effect in June 2002.  The FTA has not yet 
been ratified by Nicaragua. 
57. Nicaragua's access schedule applies an immediate tariff exemption for originating category A 
products.  Customs duties on originating products in  category B will be eliminated in five equal 
annual stages starting in the year in which the agr eement enters into force;  tariffs on products in 
category C will be eliminated in ten equal annual st ages, and those in category D in 15 equal stages.  
Goods in the EXCL categories will continue to pay the MFN tariff.31 
(iii) Other preferential trade agreements 
58. Nicaragua has also concluded agreements with countries participating in the Latin American 
Integration Association (LAIA), including th e partial-scope agreements signed with the 
Bolivarian Republic of Venezuela and Colombia.  Nicaragua also participates in the LAIA 
Framework Agreement between MERCOSUR and CACM concluded in 1998, which aims to 
foster trade, investment, and technology tran sfer but does not include tariff preferences. 
59. Nicaragua signed a partial-scope agreement with the Bolivarian Republic of Venezuela 
on 15 August 1986, which was amended in September 1992.  Under this agreement, Venezuela grants 
Nicaragua preferences on 312 tariff lines, including bovine  livestock, beef cuts and offal, bone meal, 
crustacean shells and carapaces, black beans, cashew nuts and tuna fish, among others. 
60. Nicaragua also signed a partial-scope agreemen t with Colombia, under which the latter grants 
tariff preferences of between 12 and 100 per cent on 25 tariff lines including fresh garlic, 
ginger, sorghum, peanuts, tomato concentrate, light tobacco, silicaceous sands, kaolin, chlorine, 
                                                      
30 This is not an agreement between Chile and Central America as such;  instead Chile has a separate 
trade agreement with each of the fi ve Central American countries. 
31 Further details on the concessions and other asp ects of the agreement can be viewed online at:  
http://www.mific.gob.ni/LinkClick.aspx?fileticke t=Gf8T-_ASuN8%3d&tabid=782&language=en-US. Nicaragua WT/TPR/S/274 
 Page 27 
 
 
  hydrochloric acid, organic curing products, cal cium carbonate, mahogany and cedar, and electric 
accumulators. 
61. Nicaragua is a member of the Bolivarian Alliance for the Peoples of Our America (ALBA), 
along with Antigua and Barbuda, the Bolivarian Re public of Venezuela, Cuba, Dominica, Ecuador, 
the Plurinational State of Bolivia and Saint Vincent an d the Grenadines.  This is an integration project 
based on complementarities and cooperation, the members of which are promoting the negotiation 
and signing of the People's Trade Agreement (ALBA-TCP). 
62. In May 2010, Nicaragua and the other CACM  members completed negotiations for the 
Association Agreement with the European Union, which aims to improve political dialogue between 
the two regions, intensify cooperation in various fiel ds and facilitate trade and investment flows.  
The agreement covers the following topics:  trade in goods, trade in services and the establishment of 
businesses, government procurement, intellectual property, competition, trade and sustainable 
development, dispute settleme nt, and institutional issues. 
63. On 14 April 2009, the Nicaraguan Governme nt applied for admission to LAIA, which 
comprises Argentina, the Bolivarian Republic of Ve nezuela, Brazil, Chile, Colombia, Cuba, Ecuador, 
Mexico, Paraguay, Peru, the Plurinational State of Bo livia and Uruguay.  It is currently waiting for the 
LAIA Council of Ministers to decide on its application.  The authorities consider that admission represents a very attractive opportunity to boost Nicaraguan exports under preferential conditions, 
since Nicaragua was classi fied in the preliminary phase as a country with a relatively lower level of 
economic development, which allows  it to negotiate under non-recipr ocal conditions with the other 
member countries, which are not relatively less developed economies. 
64. El Salvador, Guatemala, Honduras and Nicaragua  are negotiating free trade agreements with 
Canada and the Caribbean Community (CARICOM),  with Panama also participating in the 
latter negotiations.  Although the Central American countries signed a Memorandum of 
Understanding on Trade and Investment with Canada  on 19 March 1998, the negotiations as such are 
currently suspended. 
65. Nicaragua benefits from several schemes under the GSP, including those of Canada, the 
European Union, Japan, Norway, Russia and Switzerland. 
66. Nicaragua is a member of the Internationa l Coffee Agreement, the International Sugar 
Agreement and the International Cocoa Agreement. 
(4) I
NVESTMENT FRAMEWORK  
67. The Constitution of the Republic of Nicaragua requires the State to protect, foster, and 
promote economic investments with social re sponsibility to guarantee economic and social 
democracy.  The legal framework governing foreign investments in Nicaragua is defined in Law 
No. 344 of 24 May 2000 (the Foreign Investment Promotion Law), which is administered by MIFIC 
and guarantees national treatment for foreign inv estments.  The Constitution also establishes equal 
rights and obligations for foreign and national investments, guarantees private property rights 
and prohibits confiscation.  Law No. 344 allows fr ee currency convertibility;  transfers abroad in 
relation to the capital invested;  remittance of any pr ofit, dividend or gain generated in the country;  
and payments arising from compensation in respect of  expropriation.  Foreign investors may also take 
out insurance under international conventions. WT/TPR/S/274 Trade Policy Review 
Page 28 
  
  68. Foreign investment may enter Nicaragua without  any requirement to sign an investment 
contract;  no restrictions or conditions are imposed  on foreign capital entering the country;  and there 
are no restrictions on foreigners owning property in Nicaragua.  The law recognizes the right of 
investors to freely dispose of their property and, in the event of declaration of public utility, to receive 
appropriate compensation. 
69. Foreign investors enjoy the same investment  incentives in Nicaragua as national investors32, 
and they may own up to 100 per cent of the shares or equity of a national enterprise.  National 
legislation recognizes the right to establish, acquire  and freely dispose of practically any type of 
enterprise and asset, except activities reserved for the State (for example electric power transmission, 
the water supply and sewage system, and airport ser vices), or those that are subject to specific 
restrictions such as border zones and certain tran sport services (Chapter IV(5)(iv).  The amount of 
investment is not subject to limits or ceilings.  The law allows for accelerated depreciation of assets, and free access for the foreign investor to bank loan s.  Foreign investors receive national treatment 
under import and export policies. 
70. Although not a requirement, foreign persons inv esting more than US$30,000 can register in 
the Foreign Investment Statistical Register on a vol untary basis, for which they have to complete a 
form entitled "Notification for Registration of Foreign Investments". 
71. MIFIC is tasked with enforcing the Foreign I nvestment Promotion Law.  Acting through the 
Investment Promotion Policies Department, it prop oses policies and strategies that coordinate and 
stimulate investments in the country.  The departme nt's functions include facilitating and simplifying 
procedures, helping to improve the legal frame work, monitoring foreign investment flows, 
and administering the foreign investment law and its regulations.  The department also participates in 
negotiations for bilateral and mu ltilateral investment agreements. 
72. Promoting foreign trade and investment  is the responsibility of PRONicaragua, 
a public-private institution set up in 2002 and attach ed to the Office of the President of the Republic, 
which acts as Nicaragua's investment promotion agency.
33  Its aim is to cooperate with the public and 
private sectors in setting up a national promotion system to make Nicaragua a highly attractive 
destination for direct investments by international firms.  Its mission is to generate economic growth 
and create jobs in Nicaragua by attracting high-qu ality foreign direct investment;  and it provides 
services free to qualified investors wishing to exploit investment opportunities in the country. 
73. The services provided by PRONicaragua to qualified investors include the following:  
supplying information on investment opportunities in  Nicaragua;  arranging vi sits to locations of 
interest for investors;  logistical support for the investor throughout the investment process;  
assistance in identifying suppliers, finding local companies and setting up joint ventures;  and assistance in identifying real estate property fo r their project.  More recently, PRONicaragua has 
started to offer post-establishment services to id entify and help solve the main problems facing 
already established investors, by facilitating pro cedures, reducing procedural delays, improving the 
legal framework and acting as a facilitator of comm unication with the main national institutions.  
With similar aims, the Investor-Government Netw ork (RIG) is being redesigned with support from 
the Swiss Development and Cooperation Agency (C OSUDE).  PRONicaragua has used this network 
as a vehicle to establish an online communication channe l between investors in the sectors of tourism, 
                                                      
32 MIFIC (2011). 
33 Further information on PRONicaragua can be found on its Internet portal at:  
http://www.pronicaragua.org/index.php?option=com_c ontent&view=article&id=25 %3Aabout-pronicaragua& 
catid=5%3Apronicaragua& Itemid=141&lang=es. Nicaragua WT/TPR/S/274 
 Page 29 
 
 
  energy and infrastructure, agribusiness, business out sourcing, textiles and garment-making and light 
manufacturing, and the key government institutions  linked to the development these industries.  
The aim is to use the RIG to speed up the G overnment's response to investors' requests. 
74. Decree No. 12-2011 of 16 March 2011, published in Official Journal No. 70 of 12 April 2011, 
created the Presidential Delegation for Invest ment Promotion and Foreign Trade Facilitation 
(PRONicaragua), with the aim of strengthening and articulating public service activities related to the 
promotion, sustainability, and growth of private i nvestment and foreign trade.  The Decree expanded 
the functions of the existing PRONicaragua institu tion, reforming Decree No. 75-2002, and creating 
the Special Investment Promotion Commission, with  export promotion and trade facilitation included 
in its mandate.  The Foreign Trade Facilitation Office was created inside PRONicaragua.  Decree 
No. 12-2011 provides that PRONicaragua has legal st atus and its own capital, and is chaired by a 
Presidential Delegate appointed by the President of  the Republic with ministerial rank.  It also 
provides that, to fulfil its functions, the Presidentia l delegation would have an advisory council acting 
as a consultation and coordination body, consisting of 13 members drawn from the public sector and 
six from the private sector.34 
75. To facilitate investment and trade procedures in the future, the "E-Regulations Nicaragua" 
project is being implemented through the PRONicara gua Advisory Council, with technical assistance 
from the United Nations Conference on Trade and Development (UNCTAD) and financing from the 
Grand Duchy of Luxembourg.  This project, al so known as the Investment and Foreign Trade 
Procedures Information System, consists of an onlin e database where users of this public service, both 
domestic and foreign, can find information on foreig n investment and trade procedures.  In late 2011, 
the database contained information on the following:  formalizing business including MSMEs, purchase of real estate;  migration services;  intellectual property;  exports;  police services;  social security;  tourism incentives;  and occupationa l safety.  Efforts were being made to expand the 
system to include new procedures such as product health registration, tax exemptions, government procurement, sanitary and phytosanitary permits, e nvironmental permits and th e payment of taxes.  
The authorities hope that E-Regulations Nicaragua will help improve the business climate. 
76. Since the last Review, steps have been ta ken to streamline investor procedures by 
implementing the one-stop investment facility ( Ventanillas Únicas de Inversiones  - VUI) for the 
public to simplify business start-up proce dures, which began operations in 2003.
35  The VUIs receive 
support from several of the public institutions invol ved in setting up businesses, such as registration as 
a business in the Managua Public Mercantile Register, registration as taxpayers in the 
Directorate-General of Revenue (DGI) and the Muni cipality of Managua (ALMA), and registration of 
the foreign investment in MIFIC.  There is al so a one-stop facility for the construction sector 
(Ventanilla Única de la Construcción  - VUC), which aims to simplify project approval and permits 
for the construction process.  The Centre for Ex port Formalities (CETREX) is a government office 
that aims to simplify, centralize and streamline export procedures according to the requirements and 
                                                      
34 The Ministries of Finance and Public Credit (M HCP), Development, Indust ry and Trade (MIFIC), 
the Environment and Natural Resources  (MARENA), Transport and Infrastructure (MTI), Health (MINSA), 
the Directorate-General of Revenue, the Directorate-General of Customs (DGA), the Directorate-General of 
Agricultural Protection and Health, the Nicaraguan Tour ism Institute (INTUR), PRONicaragua, the Presidential 
Delegation's Foreign Trade Facilitation Office, the Commission for the Promotion of Exports (CNPE), 
the National Free Zones Commission (CNZF), the Nicaraguan Council of Micro, Small and Medium-Sized 
Enterprises (CONIMIPYME), the Higher Council for Priv ate Enterprise (COSEP), the Nicaraguan Chamber of 
Commerce (CACONIC), the Nicaraguan Chamber of Industry  (CADIN), the Union of Agricultural Producers of 
Nicaragua (UPANIC) and the Chamber of Customs Agents (CADAEN). 
35 Further information on VUIs can be found online at:  www.mific.gob.ni/vui/index.htm. WT/TPR/S/274 Trade Policy Review 
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  regulations of the destination country (http://www. cetrex.gob.ni).  A March 2009 presidential decree 
created the one-stop free-zone services facility ( Ventanilla Única de Servicios de Zonas Francas  - 
VUSZF) to simplify and facilitate procedures for the in stallation, operation, and external and internal 
trade of firms with free-zone status.  Lastly, the Public Service Centre of the Nicaraguan Tourism 
Institute (CAP-INTUR) streamlines tourism project pr ocedures, such as the registration of firms in the 
National Tourism Register, and application of citi zens living abroad to the Resident Pensioner or 
Rentier Regime, among others.36 
77. It is also intended to facilitate procedures still further through new laws that take account of 
technological progress.  For example, the Electroni c Signature Law (Law No. 729 of 30 August 2010) 
will grant and recognize the effectiveness and lega l status of electronic signatures for digital 
certificates and all information provided in electronic form, irrespective of its material base.  The law 
authorizes government institutions to notify electronically private individuals or legal entities involved in a judicial or administrative process, using the e-mail address designated for that purpose 
by the persons or entities in question and with th eir consent.  Law No. 239, the General Law on 
Public Records, of 17 December 2009, streamlines the registration of property rights.  There is no 
obligation to register investments, wh ich remains voluntary for the time being. 
78. The Ministry of Finance and Public Credit (M HCP) regulates tax and fiscal policy, while tax 
administration and collection is the responsibility of the DGI.  The main national taxes are:  income tax (IR);  value added tax (VAT);  selective consum ption tax (ISC);  and stamp duty (ITF).  There are 
also municipal taxes on income (IMI) and taxes on real estate (IBI). 
79. Income tax (IR) is levied on net income orig inating in Nicaragua for an individual or 
corporation, whether or not resident in Nicaragua.  Income or profits resulting from the exportation of 
products that are manufactured, processed, or purch ased in the country are considered to be of 
Nicaraguan origin.  While corporate income tax is charged at a flat 30 per cent, individuals face 
progressive rates, rising from 0 to 30 per cent.  All corporations and indi viduals with a monthly 
average balance of US$150,000 or more, who enga ge in income-taxable activities, must pay a 
definitive annual minimum amount of 1 per cent of their monthly average assets during the 
fiscal year.  In the case of financial entities opera ting in Nicaragua, the minimum definitive payment 
is 0.6 per cent on the average monthly balance of to tal deposits recorded as liabilities in their balance 
sheet for the previous fiscal year. 
80. Foreign investment enjoys tax concessions gran ted for special regimes such as the free zones 
and those covered by the Law on Temporary Admissi on.  There are also tax concessions for specific 
sectors with export potential, such as textiles and clot hing, and tourism.  In general, investors are not 
required to fulfil performance criteria, such as achie ving predefined export levels or incorporating a 
minimum local content percentage. 
81. The current regulations governing free zones are contained the Law on Export 
Processing Zones, Decree No. 46-91 of 22 Novemb er 1991, and in Decree No. 50-2005, Regulation 
implementing the Decree on Export Processing Zones.   Free zones are divided into the following 
categories:  Free Zone Operators ( Zonas Francas Operadoras ), whose main function is to build and 
manage industrial parks where user enterpri ses will set up business;  and Free Zone Users 
                                                      
36 The Resident Pensioners or Rentiers Law (Decree No. 628), aimed at pensioners or retirees with 
stable permanent incomes earned abroad of at least US$400, plus US$100 for each family dependent, grants the following incentives:  exemption from import duties on a once-only basis for US$10,000, in respect of personal 
property;  exemption from income tax on earnings abroad;  exemption from import duties in respect of a vehicle 
for personal or general use.  Further informati on can be obtained online at:  www.intur.gob.ni. Nicaragua WT/TPR/S/274 
 Page 31 
 
 
  (Zonas Francas Usuarias  - ZOFA), which consist of firms that  set up within an industrial park to 
undertake an activity involving the production of g oods or the provision of services for other free 
zones.  There is also a third type of free zone, known as administered free zones ( Zonas Francas 
Administradas ), where user firms that are not located  in an industrial park have a special 
authorization.  Both domestic and foreign firms can set up in free zones, to produce goods and to 
supply services.  Free zone users must produce for export or for other free zone firms.  Investors in free zones benefit from a number of tax incentiv es, the scope and duration of which depend on 
whether they are free zone operators, ZOFAs or user firms.  In general, ZOFAs and user firms enjoy 
the same benefits. 
82. The benefits of free zones include the following:  (i) exemption from income tax on earnings 
generated by operations in the z one during the first 15 years for industrial parks or free zone 
operators, and for the first ten years for ZOFAs and u ser firms;  this percentage drops to 60 per cent 
from the 11
th year onwards;  and (ii) exemption from import duties.  For free zone operators, 
this exemption is restricted to machinery, equipmen t, tools, spare parts, and other implements needed 
to operate the zone.  In the case of ZOFAs, it includes raw materials, materials, equipment, 
machinery, canteens, health services, child car e units, and goods to meet employee needs;  
(iii) exemption from the payment of taxes charg eable on enterprise establishment, transformation, 
merger and restructuring, and also from stamp duty;  (iv) exemption from the payment of taxes on the transfer of properties attached to the zone;  (v) exemption from indirect taxes on sales or selective consumption taxes;  (vi) exemption from municipa l taxes;  and (vii) exemption from taxes on the 
export of products manufacture d in the zone (Table II.2). 
83. As of December 2011, a total of 161 busin esses were operating with free-zone status 
in Nicaragua.  These firms genera ted 99,681 jobs (compared to 80,000 in 2006), nearly 70 per cent of 
which were in the textiles and clothing sector, fo llowed by agribusiness (17 per cent) automobile 
chassis (9 per cent), and call centres (4 per cent).  Exports of goods and services from the free zones 
totalled US$2,028 million in 2011, up by 28.7 per cent on the 2010 figure and more than double the 
level in 2006 (US$895 million);  while value adde d reached a level of US$600.5 million in 2011.  
A total of US$434.4 million were invested in  Nicaraguan free zones between 2007 and 2011. 
Table II.2 
Historical trends in the main indica tors of the free zone regime, 2006-2011 
Description Unit 2006 2007 2008 2009 2010 2011 
Industrial parks (unit) 27 32 37 49 49 47 
User firms (unit) 99 120 129 138 147 161 
Direct jobs (thousand) 80.5 88.7 73.2 71.4 84.8 99.6 
Indirect jobs (thousand) 241.5 266.1 219.6 214.4 254.7 299.1 
Total jobs (thousand) 322 354.8 292.8 285.8 339.6 398.7 
Population benefite d (thousand) 1,610 1,774 1,467 1,429 1,698 1,993 
Industrial area (thousand m²) 850 1,000 1,024 1,418 1,398 1,507 
Exports (US$ million) 895 1,243 1,248 1,233 1,574 2,028 
Value added (US$ million) 250 368 441.7 365.4 465.9 600.5 
 
Source : National Free Zones Commission. 
 
84. The temporary admission procedure, governed by the Law on Temporary Admission for 
Inward Processing and Export Facilitation (Law No. 382 of 16 April 2001), allows both the entry of WT/TPR/S/274 Trade Policy Review 
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  goods into Nicaraguan customs territory 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 benefit from this regime, firms must apply to the CNPE for a suspension of taxes or duties.  
They may also request a tax refund within 90 days from completing the re-exportation.  To be eligible 
for the benefits under this regime, fi rms must directly or indirectly 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, wh ich is determined for a five-year period.  Thereafter, if the export 
rate exceeds the initial calculations, a new exemption- eligible percentage is calculated.  While duties 
and taxes paid in excess are reimbursed, if the be neficiary fails to meet the export targets for 
the first five-year period, the amounts due must be paid.  User firms in export processing zones are 
not eligible for the temporary admission procedure. 
85. The following goods are eligible for the temporar y admission procedure:  (i) intermediate 
products and raw materials such as consumables, byproducts, packaging, wrapping and any type of 
merchandise used in the final products for export;   and samples, models and templates required for 
production and staff training.  These items may remain  in national territory for up to six months, and 
the Directorate-General of Customs (DGA) may exte nd the period for a further six months following 
approval by the CNPE;  (ii) capital goods used direc tly in production may stay in national territory for 
a non-renewable five-year period37;  and (iii) material and equipment that are essential parts in 
production facilities. 
86. When merchandise enters the country u nder the temporary admission procedure, 
the beneficiary must post a guarantee with the DGA.  This guarantee is a fiduciary contract in which 
the company undertakes to pay all taxes and corre sponding tariffs if the goods are not re-exported 
within the established time-frame.  The guarantee is returned after the re-exportation has taken place.  
In the case of sales of fi nished or unfinished products in the do mestic market, the beneficiary must 
pay the corresponding tariffs and taxes on merchandise admitted on a temporary basis. 
87. The Fiscal Equity Law (Law No. 453 of 5 May 2003) established a seven-year tax credit 
of 1.5 per cent of the f.o.b. value of exports in order to encourage exporters of goods of Nicaraguan 
origin and to support the producers or manufacturers of such goods.  This benefit is recorded as a 
credit against the exporter's annual income-tax assessm ent.  This does not apply to exports from firms 
covered by free zone regimes, scrap merchants a nd mining and quarrying firms, as well as re-exports 
that have not undergone inward processing. 
88. There are also various sectoral laws that provide incentives for investors.  The Law on 
Incentives for the Tourism Industry (Law No. 306 of 21 June 1999) grants tax exemptions and credits 
to natural or legal persons investing directly in  the development of tourism activities amounting to 
between US$50,000 and US$500,000, depending on the tour ist activity in question.  The benefits are 
usually granted for ten years, renewable for a furt her ten, and include income-tax exemptions of 
between 80 and 90 per cent, depending on the type  of activity;  exemption from the real estate 
tax (IBI);  total exemption from tariffs and VAT on the purchase of construction goods, fixed 
accessories for building, furniture, equipment, boats  and vehicles;  VAT exemption applicable to 
design/engineering and construction services. 
89. Law No. 452 on Forestry Incentives grants ta x concessions for forestry plantations for a 
ten-year period, including exemption from the paymen t of income tax and real estate taxes in the case 
                                                      
37 When importing capital goods, taxes and tariffs have to be paid on the proportion of total annual 
sales revenue obtained from sales in the domestic market for the five years after the product enters the country.  
Vehicles used outside production units are not included in the exemptions. Nicaragua WT/TPR/S/274 
 Page 33 
 
 
  of forestry plantations and areas under forestry management;  exemption from tariffs for second- and 
third-level processing firms that import machinery, equipment and accessories;  and a 50 per cent reduction in municipal taxes on land sales and on prof it taxes.  Government procurement contracts 
have to prioritize products made of wood bearing a certificate from the National Forestry Institute 
(INAFOR), and a preference margin of up to 5 pe r cent may be granted with respect to the 
highest price. 
90. Law No. 272 on the Electricity Industry provides a three-year exemption from all import 
duties on machinery, equipment, materials, and inputs intended exclusively for the generation, transmission, distribution and marketing of electricity for public use.  In add ition, the fuels used to 
generate electric power are exempted indefinitely  from any duty.  The Law on the Promotion of 
Renewable Electricity Generation (Law No. 532 of  27 May 2005) provides that new projects and 
expansion projects undertaken by private, public, or mixed ownership entities, will benefit from the 
following incentives:  (i) exemption from the pa yment of import duties and VAT on machinery, 
equipment, materials and inputs;  (ii) exemption from the payment of income tax for up to seven years after the project has started commercial operati ons;  (iii) exemption from current municipal 
taxes on real estate property, sales, and registrati ons during the project construction period, for a 
ten-year period (75 per cent exemption in the first three years, 50 per cent in the next five years, 
and 25 per cent in the last two years);  (iv) exemption from municipal duties for ten years after the start of commercial operations;  (v) exemption from stamp duty for ten years.  Law No. 443 on the Exploration and Exploitation of Geothermal Resources, revised by Law No. 656 (Law on the 
Revision and Amendment of Law No. 443), provides that the incentives may be extended for a 
ten-year period from the date on which the plant c oncerned starts operations, for projects involving 
geothermal exploration or exploitation. 
91. Nicaragua has signed bilateral investment agre ements with Argentina, Belgium-Luxembourg, 
Chile, Chinese Taipei, the Czech Republic, Denmark,  Ecuador, El Salvador, Finland, France, 
Germany, the Netherlands, Italy, the Republic of  Korea, Russia, Spain, Sweden, Switzerland, 
the United Kingdom and the United States. 
92. Nicaragua has been a member of the Interna tional Centre for Settlement of Investment 
Disputes (ICSID) since 1995;  and, since 2003, it  has been a party to the New York Convention 
of 10 June 1958 and the Inter-American Convention on International Commercial Arbitration.  It is 
also a party to international investment agreem ents with the World Bank's Multilateral Investment 
Guarantee Agency (MIGA), signed in 1990, and w ith the Overseas Private Investment Corporation 
(OPIC, 2004).  Nicaragua participates in the Un ited Nations Commission on International Trade Law 
(UNCITRAL);  and it also has dispute settlement  mechanisms under its free trade agreements.