RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/210 
23 December 2008  
 
(08-6231) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
GUATEMALA 
 
  
 
This report, prepared for the second Trade Policy Review of Guatemala, has 
been drawn up by the WTO Secretaria t on its own responsibility.  The 
Secretariat has, as required by the Agreement establishing the Trade Policy 
Review Mechanism (Annex 3 to the Ma rrakesh Agreement Establishing the 
World Trade Organization), sought clarification from Guatemala on its trade 
policies and practices. 
 
Any technical questions arising from this report may be addressed to:  
Mr Angelo Silvy tel.:  (022) 739 52 49 and to Mr Raymundo Valdés  
tel.:  (022) 739 53 46. 
 
Document WT/TPR/G/210 contains the policy statement submitted by 
Guatemala. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Guatemala. Guatemala WT/TPR/S/210 
 Page iii 
 
 
CONTENTS 
 
 
  Page 
SUMMARY OBSERVATIONS vii 
 (1) E CONOMIC ENVIRONMENT  vii 
 (2) T RADE POLICY AND INVESTMENT FRAMEWORK  viii 
 (3) M ARKET ACCESS FOR GOODS  viii 
 (4) M EASURES AFFECTING EXPORTS  ix 
 (5) O THER MEASURES AFFECTING TRADE  ix 
 (6) S ECTORAL POLICIES  x 
I. ECONOMIC ENVIRONMENT 1  
 (1)  OVERVIEW  1 
 (2)  MACROECONOMIC DEVELOPMENTS  1  
 (i)  Structure, growth and employment 1  
 (ii)  Fiscal policy 3  
 (iii)  Monetary and exchange policy 6  
 (iv)  Balance of payments 10  
 (3)  TRADE AND INVESTMENT FLOWS  11  
 (i)  Developments in merchandise trade 11  
 (ii)  Composition of merchandise trade 11  
 (iii)  Direction of merchandise trade 12  
 (iv)  Trade in services 12  
 (v)  Foreign investment 12  
 (4)  OUTLOOK  13 
II. TRADE AND INVESTMENT REGIME 14 
(1) O VERVIEW   14 
(2) T RADE POLICY AND INVESTMENT FRAMEWORK  14 
 (i) General legal and institutional framework 14 
 (ii) Trade policy objectives, formulation and implementation 16 
(3) F OREIGN INVESTMENT REGIME  17 
(4) I NTERNATIONAL RELATIONS  19 
 (i) World Trade Organization 19  (ii) Preferentia l agreements 20 
(5) A
ID FOR TRADE AND TECHNICAL ASSISTANCE  23 
III. TRADE POLICIES, BY MEASURE 25 
(1) O VERVIEW   25 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  26 
 (i) Procedures, documentation and registration 26 
 (ii) Customs valuation 29 
 (iii) Rules of origin 30  (iv) Tariffs 31 
 (v) Other charges affecting imports 37 WT/TPR/S/210 Trade Policy Review 
Page iv 
 
 
    Page 
 
 (vi) Prohibitions, restrictions and import licensing 39 
 (vii) Anti-dumping, countervailing or safeguard measures 40  (viii) Standards and technical regulations 42 
 (ix) Sanitary and phytosanitary measures 46 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  52 
 (i) Procedures, documentation and registration 52 
 (ii) Export taxes and duties 53 
 (iii) Export prohibitions and rest rictions and licensing regimes 53 
 (iv) Subsidies and other export concessions 54 
 (v) Export financing, insurance and guarantees 58 
 (4) O THER MEASURES AFFECTING PRODUCTION AND TRADE  59 
 (i) Creation and taxation of companies 59 
 (ii) Price controls and competition policy 61 
 (iii) Incentives 63  (iv) State-owned enterprises and privatization 64 
 (v) Government procurement 64 
 (vi) Intellectual property protection 68 
IV. TRADE POLICIES, BY SECTOR 73 
 (1) O
VERVIEW  73 
 (2) A GRICULTURE  74 
 (i) General characteristics 74 
 (ii) Legal and institutional framework 76  (iii) Policies in the agricultural sector 77 
 (3) M
ANUFACTURING  79 
 (4) H YDROCARBONS AND MINING  80 
 (i) Overview 80 
 (ii) Petroleum and refined products 80 
 (iii) Mining 82 
 (5) E LECTRICITY  83 
 (6) S ERVICES  86 
 (i) Multilateral and preferential commitments 86  (ii) Telecommunications 87 
 (iii) Financial services 90 
 (iv) Transport 97  (v) Professional services 101 
 
REFERENCES  105 
 
APPENDIX TABLES 109 Guatemala WT/TPR/S/210 
 Page v 
 
 
TABLES 
 
Page 
 I. ECONOMIC ENVIRONMENT 
 
I.1 Basic economic indicators, 2001-2008 2 I.2 Public finance, 2001-2008 4 
I.3 Sources of government revenue, 2001-2007 5 
I.4 Monetary and financial indicators, 2001-2008 9 I.5 Balance of payments, 2001-2007 10 
I.6 Trade in services, 2001-2007 12 
 II. TRADE AND INVESTMENT REGIME 
 
II.1 Trade-related capacity-building projects in Guatem ala, 2002-2007 24 
 
III. TRADE POLICES, BY MEASURE 
 
III.1 Customs procedur es and clearance 27 
III.2 Structure of MFN tariffs, 2008 32 III.3 Summary of the MFN tariff, 2008 33 
III.4 Foreign trade-related tax revenue, 2002-2007 34 
III.5 Summary of preferential tariffs, 2008 36 III.6 Taxes on Guatemalan and imported beverages 39 
III.7 Imports for which a prior permit is required and the relevant legal basis, 2008 40 
III.8 Sanitary and phytosanitary measures adopted, 2002-2008 49 III.9 Central American regulations on sanitary and phytosanitary measures 51 
III.10 Number of firms benefiting from export incentive programmes by sector, 2006a 55 
III.11 Authorized users and users established in free zones, 2007 57 III.12 Exports under the maquila and free zone regimes, 2002-2007 58 
III.13 Principal company taxes 61 
III.14 Intellectual property agr eements ratified by Guatemala 69 
III.15 Summary of IPR protection in Guatemala, 2008 70 
 
IV. TRADE POLICES, BY SECTOR  
IV.1 Financing provided by FONAGRO, 2002-2007 79 
IV.2 Generation of electricity, 2006 83 
IV.3 Telephone lines in Guatemala, 2001-2006 88 
IV.4 Composition of the financial system as of 31 December 2007 91 
 WT/TPR/S/210 Trade Policy Review 
Page vi 
 
 
APPENDIX TABLES 
 
Page 
  
I. ECONOMIC ENVIRONMENT 
 AI.1 Merchandise exports (f.o.b.) by product, 2003-2007 111 
AI.2 Merchandise imports (c.i.f.) by product, 2003-2007 113 
AI.3 Merchandise exports (f.o.b.) by trading partner, 2003-2007 114 AI.4 Merchandise imports (c.i.f.) by trading partner, 2003-2007 115 
 
II. TRADE AND INVESTMENT REGIME  
AII.1 Notifications to the WTO, January 2002 to July 2008 116 
AII.2 Description of prefer ential trade agreements involving Guatemala, 2008 118 
 
IV. TRADE POLICIES, BY SECTOR 
 
AIV.1 Tariff quotas activated in the WTO and DR-CAFTA framework, 2002-2007 120 
AIV.2 Summary of Guatemala's sector sp ecific commitments un der the GATS 123 
 Guatemala WT/TPR/S/210 
 Page vii 
 
 
SUMMARY OBSERVATIONS 
1. During the period since the previous 
Review of its trade policy in 2002, Guatemala has continued to place trade liberalization at 
the core of its development strategy.  It has 
adopted liberalization measures through concurrent multilateral, regional and unilateral 
initiatives.  The specific measures taken include streamlining customs procedures, 
further lowering of tariffs and the adoption of 
new government procurement and intellectual property rights legislation.  Partly as a result of these, trade and investment have expanded rapidly and, together with remittances from abroad, have continued to make a substantial 
contribution to the economy. 
2. Throughout the period under review, 
Guatemala has maintained macroeconomic stability and growth, even though it is forecast that a slow-down in growth will be seen to 
have occurred in 2008.  Economic expansion 
needs to be sustained and increased in order to achieve the improvements in living standards Guatemala seeks and this in turn means keeping up the ongoing efforts designed to achieve greater efficiency in the domestic 
market, including stronger competition 
policies, as well as the regulatory framework, in sectors such as telecommunications, financial services and maritime transport.  Guatemala’s efficiency and fiscal situation 
could also be improved by making better use 
of economic policies that do not have a distorting effect and do not favour some groups to the detriment of others. 
(1) E
CONOMIC ENVIRONMENT  
3. Guatemala is the largest economy in 
Central America, accounting for one quarter of the GDP of the Central American Common Market (CACM).  In 2007, its per capita GDP was US$2,532.  The real GDP expanded at a rate of 3.4 per cent between 2001 and 2006, 
rising to 5.7 per cent in 2007.  Nevertheless, it 
is expected that the final data for 2008 will show a slowdown in growth, mainly owing to diminished growth in the United States, Guatemala’s main trading partner and the source of the bulk of remittances from abroad.  
In this connection, despite positive economic trends in recent years, Guatemala is facing short-term risks caused by diminished growth 
in the United States;  in the long term, 
Guatemala still faces major challenges in achieving sustainable growth in income and poverty reduction. 
4. As far as inflation is concerned, 
Guatemala has an inflation-targeting scheme 
which constitutes the anchor of its monetary policy.  Over the period 2005-2006, inflation fell but rebounded in 2007 owing to internal and external factors and exceeded the upper limit of the inflation target band (4 to 7 per 
cent in 2008).  The rise in inflation was partly 
attributable to rising prices for petroleum and food.  Guatemala has a fl exible exchange rate 
policy, even though there is limited intervention by the Central Bank in the foreign 
exchange market.  To some extent, these 
interventions have undermined the effectiveness of monetary policy.  To address this, in mid-2008 interventions were limited further to focus on interest rate variations in order to achieve the inflation targets. 
5. In Guatemala, the Central Government 
maintains a primary surplus, but a small overall public sector deficit.  Since 2005, the overall deficit has come close to meeting the goal of 1 per cent of GDP.  Reducing the 
deficit has been hampered by inflexibilities 
linked to earmarking requirements in the Constitution and a low level of taxation. 
6. Guatemala has traditionally had a 
deficit in the balance-of-payments current 
account, mainly owing to a large deficit in the 
balance of trade in goods and a negative deficit in the investment income balance.  In 2007, the deficit in the balance-of-payments current account was just over 5 per cent of the GDP.  Between 2002 and 2007, exports by the 
maquila  (in-bond processing) industry, 
equivalent to about one third of total exports 
of goods, grew by some 40 per cent, whereas other exports rose by two thirds.  The main exports (by the maquila industry and other 
sectors) are, in decreasing order of importance, WT/TPR/S/210 Trade Policy Review 
Page viii 
 
 
 clothing, coffee, sugar and bananas.  Total 
imports increased by 70 per cent, manufactures being the major import.  The United States remains Guatemala’s leading 
trading partner, followed by Central America 
and the European Union.  Trade in goods and services accounts for around 50 per cent of Guatemala’s GDP. 
(2) T
RADE POLICY AND INVESTMENT 
FRAMEWORK  
7. Trade liberalization plays an important 
role in Guatemala’s trade policy and in its development strategy, which aim at enhancing competitiveness on global markets.  Guatemala has pursued its trade objectives in 
parallel at the bilateral, regional and 
multilateral levels and gives equal importance to all three levels.  The Government seeks to improve the terms of access for Guatemala’s exports to foreign markets while also 
promoting greater legal certainty and 
economic stability. 
8. Guatemala became a Member of the 
WTO on 1 July 1995.  It takes an active part in the Doha Development Round and hopes to obtain tangible benefits from this initiative, 
particularly in relation to improved access to 
foreign markets for its services and agricultural products, as well as trade facilitation.  During the period under review, Guatemala submitted several notifications to 
the WTO, even though there are delays in 
some, for example on domestic support for agriculture, customs valuation and technical barriers to trade.  Guatemala was a complainant in two cases before the WTO 
Dispute Settlement Body during the period 
under review and reserved its rights as a third party in six cases.  It has not been a defendant during this period. 
9. In recent years, regional integration has 
been especially important.  The CACM 
provides the framework for Guatemala’s trade 
policy.  The Free Trade Agreement between the Dominican Republic, Central America and the United States (DR-CAFTA) came into force for Guatemala in July 2006.  
Implementation of this Agreement has required Guatemala to adopt and implement large-scale reforms of its trade regime.  
DR-CAFTA is of particular importance for 
Guatemala as three quarters of its trade in goods is with parties to the Agreement.  In addition, Guatemala has free-trade agreements with the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu;  Cuba;  
the Dominican Republic;  Mexico;  and Venezuela.  By October 2008, Guatemala had also signed free-trade agreements with Chile, Colombia and Panama, and was negotiating an association agreement with the European 
Union and free-trade agreements with the 
CARICOM and Canada. 
10. Guatemala’s foreign investment regime 
allows foreign nationals to invest in most sectors of the economy.  In general, foreign 
investors receive national treatment.  The 
exceptions include those imposed by laws governing specific areas, for example:  insurance and some regulated professional services.  Guatemala has signed several international agreements on the promotion and 
protection of investment. 
(3) M
ARKET ACCESS FOR GOODS  
11. Guatemala’s trade regime is essentially 
an open one and market access improved during the period under review.  The average 
rate of MFN duty applied fell from 7.0 per 
cent in 2001 to 5.9 per cent in 2008.  The average duty on agricultural products (9.9
 per 
cent) is still relatively higher than that on other products (5.3 per cent).  Guatemala bound all 
its tariffs at an average of 42.7 per cent.  In 
this respect, the predictability of Guatemala’s trade regime could be improved by lowering bound rates to close the gap between bound and applied tariffs.  Guatemala has reduced tariff protection for preferential partners under 
the free-trade agreements it has signed.  The 
average tariff applied by Guatemala under these treaties ranges from 1.0 to 3.9 per cent. Guatemala WT/TPR/S/210 
 Page ix 
 
 
12. Internal taxes on imported and 
domestic goods include a value added tax of 
12 per cent, as well as special taxes on certain products.  During the period under review, 
Guatemala eliminated th e differences that used 
to exist between taxes on domestic and imported alcoholic beverages. 
13. Guatemala makes very limited use of 
non-tariff barriers.  Import licences are not 
required even though the import of certain 
products related to health, safety or environmental protection requires a prior import permit.  During the period under review, Guatemala did not impose any anti-dumping or countervailing duties or 
safeguards. 
14. Guatemala has continued with the 
process of reforming its customs, adopting the new Central American regulations on customs procedures and valuation and taking steps to 
improve the functioning of its customs 
services.  During the period under review, Guatemala ceased to apply minimum customs values when the waiver granted by the WTO expired. 
15. Guatemala has continued to build its 
capacity to apply technical regulations and 
sanitary and phytosanitary measures.  One important step in this direction was the establishment of the National Quality System.  Nevertheless, even though Guatemala has 
notified several draft technical regulations and 
sanitary and phytosanita ry measures to the 
WTO, it would appear that there are some institutional shortcomin gs in drawing up, 
implementing and notifying such measures.  It 
is therefore important for Guatemala to build 
its capacity in this respect, which would be of benefit not only to consumers but also to producers. 
(4) M
EASURES AFFECTING EXPORTS  
16. There is a Q 0.10 tax on every 100 kg 
of coffee exported.  The export of certain 
wood logs is prohibited for environmental reasons;  this measure also benefits the local processing industry. 17. Guatemala has notified to the WTO 
three fiscal concession regimes as including export subsidies.  The se regimes concern the 
maquila industry, free zones, and the free trade 
and industrial zone.  Guatemala has 
undertaken to phase out these subsidies before the end of 2015.  It considers that the programmes notified have had a positive impact on the country, generating close to 
40 per cent of its exports of goods.  There is, 
however, no cost-benefit analysis that takes into account the fiscal burden and the distortions which these programmes may cause.  It would therefore be useful to undertake such an analysis with a view to 
developing a concrete strategy that would 
allow the costs of transition to a subsidy-free regime to be kept to a minimum. 
18. In addition to export incentives, 
Guatemala also gives incentives to micro-, 
small and medium-sized enterprises and for 
research and development. 
(5) O
THER MEASURES AFFECTING 
TRADE  
19. Even though the Constitution and 
certain sectoral laws deal with issues relating 
to competition policy, Guatemala still has no 
general law on competition policy.  Since the previous Review, efforts have been made to adopt such a law, but by mid-2008 draft legislation was still before Congress.  The 
authorities have indicated that the economy 
has monopolies, oligopolies and cartels because of its small size and the numerous regulations in effect.  Consequently, increasing the level of competition is one of the most 
important challenges for Guatemala’s 
government policy. 
20. Guatemala is neither a signatory nor an 
observer to the WTO Agreement on Government Procurement.  In 2006, it amended its relevant legi slation.  The new law 
does not discriminate against products and 
services sold to the State by foreign suppliers. 
21. During the period under review, 
Guatemala ratified four WIPO treaties and WT/TPR/S/210 Trade Policy Review 
Page x 
 
 
 adopted several amendments to its intellectual 
property legislation, some of which were required in order to implement DR-CAFTA.  Guatemalan legislation on copyright and 
industrial property rights goes beyond the 
obligations under the TRIPS Agreement.  There is, however, no specific domestic legislation on layout designs of integrated circuits or geographical indications.  Parallel 
imports are allowed in the case of patents and 
trademarks but not in relation to copyright. 
(6) S
ECTORAL POLICIES  
22. The agricultural sector makes a sizable 
contribution to employment and production in Guatemala.  The Government gives the sector 
limited assistance thr ough measures such as 
higher than average tariffs and subsidies for fertilizer and extension services.  Guatemala made commitments on tariff quotas at the WTO for 22 agricultural products, but only 
applies them for rice, wheat flour, yellow 
maize (corn) and apples.  Quotas only come into play if there are shortages on the domestic market. 
23. The manufacturing sector accounts for 
the majority of Guatemala’s exports of goods, 
with clothing being the largest export.  This 
sector and other foreign market-oriented industries mainly operate under the maquila and free zones regimes and mostly sell their goods on the United States market.  In recent 
years, these industries have become less 
dynamic as a result of increased competition on the United States clothing market when the ATC expired.  In this connection, the fiscal incentives given to the exporting 
manufacturing sector do not appear to be the 
most effective way of counterbalancing such internal competitiveness problems as the high cost of electricity and shipping. 
24. The mining and minerals sector makes 
a modest contribution to the economy, even 
though mining exports have increased.  By 
mid-2008, a new draft law was being drawn up to revise the current mining law, a reform that was deemed necessary by a special commission appointed to address it.  The 
electricity sector was reorganized and privatized in the 1990s.  There have, however, been problems in meeting domestic demand 
and the average selling price of electricity has 
risen to become one of the highest in the Americas. 
25. The services sector accounts for some 
60 per cent of GDP and generates two thirds of 
total jobs.  Guatemala made limited GATS 
commitments during the Uruguay Round, covering just five of the 12 services categories.  It did not take part in the negotiations on financial services and did not ratify the Fourth Protocol, although it adopted the majority of 
commitments on basic telecommunications 
services.  Most of Guatemala’s commitments under the GATS bound policies that were already in place at the time of the Uruguay Round negotiations and therefore do not take 
into account the autonomous liberalization that 
has occurred since then.  Consequently, Guatemala could make its legal framework more predictable by expanding its multilateral commitments and extending the commitments made in the DR-CAFTA framework to the 
multilateral level. 
26. There were serious problems in the 
banking sector during the period 2006-2007, followed by a period of stabilization in 2008.  Guatemala has reinforced the legal and 
institutional framework for the financial sector 
by enacting new laws and regulations, but it would appear that further measures are needed.  The average spread between the lending and borrowing rates of interest in 
national currency has been decreasing but still 
remains relatively high (over eight percentage points in late 2008), which in turn implies that there are still inefficiencies in the sector.  There are no restrictions on foreign participation in the banking sector.  On the 
other hand, foreign insurers must set up a 
subsidiary in Guatemala in order to offer services there and branches or agencies of foreign firms are not allowed.  Every insurance policy and premium must be 
approved by the regulatory authority.  A new Guatemala WT/TPR/S/210 
 Page xi 
 
 
insurance law was before Congress in 
mid-2008 and it will perhaps address some of these restrictions. 
27. There has been a large increase in the 
number of mobile telephones since the 
privatization of the telecommunications sector.  There are no restrictions on foreign investment in this sector.  The traditional operator still has a dominant role in fixed telephony services 
and is the second largest supplier of mobile 
telephony services.  Some aspects of the regulatory regime have been amended as a result of DR-CAFTA.  Nevertheless, the telecommunications sector would benefit from a stronger regulatory body and more 
competition in certain parts of the market. 
28. During the period under review, 
Guatemala further opened up the air transport sector.  Since 2004, companies providing domestic air transport services may be wholly 
foreign owned, even though they must have 
their principal domicile in the country.  Guatemala has 11 bilateral air transport agreements, three of which are open skies agreements. 
29. Guatemala does not have any special 
legislation on maritime transport. International maritime transport services are 
exclusively provided by foreign vessels, which are authorized to offer national cabotage services.  There are no restrictions on 
foreigners operating ports or providing 
ancillary services.  Nevertheless, in practice, all the maritime ports, except for one which is privately owned, belong to the State.  The authorities are developing a strategy to 
implement reforms designed to facilitate 
private participation and lower the cost of port services.  
30. The supply of professional services in 
Guatemala requires registration with the 
competent professional body.  Guatemalan 
citizens and foreigners with professional qualifications from foreign universities must have these revalidated by the National University of Guatemala.  Guatemalan 
citizenship is required in order to act as a 
notary.  In order to practise as architects, Guatemalan professionals must pay 1 per cent of their fees to the Architects Professional Association, while foreigners have to pay 2 per cent.