WT/TPR/S/226/Rev.1 Trade Policy Review 
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IV. TRADE POLICIES, BY SECTOR 
(1) AGRICULTURE  
(i) Overview 
1. Between 2002 and 2008, real value added in th e agricultural sector in creased at an average 
annual rate of 5.3 per cent, as compared with 3.1 per cent for the economy as a whole.  The 
agricultural sector's share of GDP thus increased from 11.5 per cent in 2002 to 13.1 per cent in 2008 
(Table IV.1).  According to a recent study, th e sector's strong performance was mainly due to the 
following factors:  rising international prices for co ffee and sugar;  weather conditions favourable for 
the production of basic grains and other crops;  e xport opportunities resulting from the entry into force 
of CAFTA-DR;  and the results of El Salvador's diversification programmes.1 
Table IV.1 
Agricultural sector GDP, 2002-2008 
 2002 2003 2004 2005a 2006a 2007a 2008a 
Agriculture, 
hunting, forestry 
and fishing 
(US$ million)b  904.4  912.5  938.1  984.4  1,058.4  1,149.3  1,233.1 
As a percentage of total agricultural GDP:  
Green coffee 
(café oro)  14.6  13.7  13.1  12.7  11.8  11.9  11.2 
Cotton  0.1  0.1  0.0  0.1  0.1  0.0  0.0 
Basic grains  20.2  19.8  20.0  19.2  19.9  20.4  22.6 
Sugar cane  5.8  5.8  5.9  5.6  4.9  4.8  4.5 
Other agricultural 
products  18.8  19.1  19.0  20.8  22.1  22.4  23.0 
Livestock farming  18.4  18.0  18.1  17.9  18.0  17.8  17.8 
Poultry farming  13.9  14.5  14.9  14.9  14.3  13.9  11.6 
Forestry  5.8  5.9  5.9  5.7  5.6  5.4  5.7 
Hunting and 
fishery products  2.5  2.7  3.0  3.0  3.4  3.4  3.4 
a Preliminary data. 
b 1990 constant prices. 
Source : WTO Secretariat, on the basis of BCR da ta:  http://www.bcr.gob. sv/? cat=1000&lang=es 
 
2. The main items in terms of their contribution to value added are "other agricultural products" 
and basic grains, each of which accounts for about 23 per cent of agricultural GDP (Table IV.1).  
Other important lines are livestock farming, poultry farming, and coffee.  The agricultural sector 
employs about 18 per cent of the economically active population and about 40 per cent of the rural economically active population.
2 
3. The nominal values of agricultural sector imports  and exports both increased at a relatively 
rapid pace during the period under review (see Chapte r I(3)).  The main agricultural imports are grain, 
oils, and meat, while coffee and suga r are the main agricultural exports. 
(ii) Support policy and indicators 
4. The Ministry of Agriculture and Livestock (MAG) is responsible for implementing 
agricultural policy.3  The objectives of agricultural policy during the period under review include the 
                                                      
1 FUSADES (2007). 
2 Norton R. and Angel A. (2008). 
3 Article 41 of the Ministry's Rules of Procedure, Executive Decree No. 24 of 18 April 1989. El Salvador WT/TPR/S/226/Rev.1 
 Page 63 
 
 
development of "a dynamic and competitive sector, s upported by a highly diversified export-oriented 
agriculture … with a rural economy integrated into  the markets for factors and goods and services that 
progressively wins back the domestic market".4 
5. El Salvador's most recent notification con cerning domestic support relates to the year 2002.5  
In that notification, El Salvador stated that it "did not introduce any domestic support measures in 
respect of agricultural products" in 2002. 
6. Public expenditure on the agricultural sect or totalled US$66.3 million in 2007-2008 
(Table IV.2).6  This represents an increase of 13 per cen t relative to the budget for 2006-2007, and 
94 per cent relative to the annual av erage for the period 2001-2002 to 2005-2006.  About one third of 
the 2007-2008 budget was earmarked for the Nationa l Agricultural and Forestry Technology Centre 
(CENTA).  "Project coordination", "natural resour ces and irrigation" and "agricultural health" each 
accounted for between 10 and 20 per cent of public expenditure in 2007-2008. 
Table IV.2 
Budget implemented in the agricultural sector, 2001-2008 
(US$ thousand) 
 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 
Administration and advisory services  3,236  3,115  3,240  3,274  3,308  3,376  3,496 
Agricultural economics and agri-business  776  899  613  874  954  2,067  1,824 
Agricultural health  2,561  2,364  2,207  2,394  2,176  5,765  6,791 
Natural resources and irrigation  9,829  6,251  5,312  5,297  6,017  6,227  11,721 
Fisheries development  2,996  2,246  1,703  950  1,646  1,458  1,807 
Project coordination  9,606  8,319  8,929  9,466  7,630  17,838  13,642 
Salvadoran Agricultura l Processing Institute 
(ISTA)  3,756  2,548  3,781  3,027  2,237  3,375  4,034 
National Centre for Agricultural and 
Forestry Technology (CENTA)  8,068  5,776  4,693  5,095  8,165  16,728  21,233 
National Agricultural College (ENA)  944  1,006  1,217  1,058  1,241  1,747  1,629 
National Tenant Farmers Confederation 
(CNC)  0  0   0   0   0   0   100 
Total  41,772  35,523  31,696  31,434  33,372  58,581  66,277 
Source : Norton and Angel (2008). 
 
(iii) Policy instruments 
(a) Border measures 
7. The simple average of the MFN tariffs app lied to agriculture (WTO definition) is 
12.9 per cent, about 2.5 times higher than the average for the manufacturing sector (Chapter III(1)(iv)). 
8. Within the context of its WTO commitments, El  Salvador agreed to grant tariff quotas for 
imports of meat, milk, cheese, yellow maize, fats and oils, sugar, tobacco and tobacco products.  
El Salvador undertook to apply these quotas in th eir final form as from 2004.  It bound its in-quota 
MFN tariffs at rates of between 20 and 50 per cen t.  The out-of-quota bound tariff rates vary from 
25 to 164.4 per cent. 
9. Since its last Review in 2003, El Salvador has regularly submitted notifications concerning 
the administration of its tariff quotas.  El Salvador notified the opening of a quota for Cheddar-type 
                                                     
 
4 MAG (2005). 
5 WTO document G/AG/N/SLV/19 of 21 October 2003. 
6 Norton and Angel (2008). WT/TPR/S/226/Rev.1 Trade Policy Review 
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cheese in blocks or slabs (HS 0406.9020) during the period 2003-2007.7  El Salvador has not opened 
the other tariff quotas mentioned in its Schedule of Commitments, since it "applied a tariff at a level 
equal to or lower than the tariff level establis hed for these quotas in El Salvador's Schedule". 
10. The tariff rates applied to frozen chicken thi ghs and legs of HS s ubheadings 0207.1493 and 
0207.1494 amount to 164 per cent, as compared with bound rates of 40 per cent (in-quota) and 
164.4 per cent (out-of-quota) in El Salvador's Sche dule of Commitments.  Since its last Review, 
El Salvador has not opened a ny tariff quotas for these products. 
11. In-quota imports of Cheddar-type cheese were subject to an MFN tariff of 15 per cent 
between 2003 and 2006, and zero per cent in 2007.  El Salvador applied a 40 per cent rate to 
out-of-quota MFN imports of such cheese.  The u tilization of the tariff rate quota for Cheddar-type 
cheese amounted to 77 per cent in 2003, 76 per cent in 2004, 80 per cent in 2005, 84 per cent in 2006 
and 67 per cent in 2007. 
12. In 2007, El Salvador renego tiated its Schedule of Commitments under Article XXVIII of the 
GATT 1994 with respect to certain poultry products.  As a result of this renegotiation, the in-quota 
bound rates applied to chicken thi ghs and legs of HS subheadings  0207.1393 and 0207.1394 increased 
from 40 per cent to 164.4 per cent.8  Moreover, the bound rate applicable to other prepared or 
preserved chicken meat, offal or blood of HS subheading 1602.3200 increased from 40 per cent to 
164.4 per cent.9 
13. The tariff quotas are allocated by auction.10  The El Salvador Agricultural Commodity and 
Service Exchange (BOLPROES) has held auctions  in connection with the tariff quotas applied to 
Cheddar-type cheese.  Participation in these auctions  was restricted to processing plants that had 
purchased at least 10,000 bottles of domestic liquid milk a day during the year preceding the auction.
11  The decisions of the Ministers of the Economy, Agriculture and Livestock, and Finance 
governing the allocation of tariff quotas during 200 3 and 2004 required in-quota import volumes of 
Cheddar-type cheese to be allocated in a manner proportionate to purchases of domestic liquid milk 
during the preceding year.12  The Secretariat has no information at  its disposal concerning the method 
of allocation of the Cheddar-type cheese quotas for the period 2005-2008. 
14. Since its last Review, El Salvador has implem ented "scarcity quotas" for maize, rice, sorghum 
and pig meat.  The in-quota volumes are subject to zero  per cent tariff rates.  The Secretariat has no 
information concerning the method of allocation of  these "scarcity quotas".  Within the context of 
El Salvador's last Review, the Salvadoran author ities noted that the scarcity quotas for rice and pig 
meat were allocated in proportion to pu rchases of products of domestic origin.13  The scarcity quotas 
are provided for in marketing agreements between agricultural producers and processors (see below). 
                                                      
7 WTO documents G/AG/N/SLV/16 and G/AG/N/SLV/21-28. 
8 WTO document WT/Let/595 of 5 November 2007. 
9 WTO document WT/Let/613 of 14 March 2008. 
10 Article 12 of the Regulations on the opening and administration of quotas, Executive Decree No. 46 
of 29 October 1999. 
11 Decision No. 1155 of 16 December 2002 and Decision No. 1367 of 5 December 2003. 
12 Article 3 of Decision No. 1367 of the Ministers of the Economy, Agriculture and Livestock, and 
Finance of 5 December 2003 and Article 3 of Decision No. 1155 of the Ministers of the Economy, Agriculture 
and Livestock, and Finan ce of 16 December 2002. 
13 See, for example, El Salvador's replies to  Colombia's written questions in WTO document 
WT/TPR/M/111/Add.1 of 25 June 2003. El Salvador WT/TPR/S/226/Rev.1 
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15. El Salvador has reserved the right to apply additional tariffs to out-of-quota imports of 
products subject to tariff quotas if their import prices fall below a trigger price (price-based safeguards) or if the quantities exceed a certain threshold (volume-based safeguards), in accordance 
with the special safeguard provisions of the WT O Agreement on Agriculture.  According to the 
notifications for the period 2003-2008, El Salvador  has not applied these measures to any product.
14 
(b) Other measures 
16. The marketing conditions for various agricultura l products are subject to the provisions of 
marketing agreements negotiated between producers a nd processors.  The Ministry of Agriculture acts 
as a facilitator in these agreements.  There are mark eting agreements for white maize, paddy rice and 
sorghum. 
17. Under the marketing agreements, the producers and processors agree a guaranteed price for 
purchases of the domestic product and define a pro cess for buying the domestic production at that 
price.  The marketing agreements also provide fo r the establishment of scarcity quotas.  The Technical 
Quotas Commission, composed of representatives of the Ministries of the Economy and Agriculture 
and Livestock and the Directorate-General of Cu stoms, determines the volume of these quotas on the 
basis of the shortfall in domestic production.  The proportion of domestic grain production marketed 
under the various marketing agreements  fluctuates between 25 and 40 per cent.15 
18. A study of the rice market by the Supervisory Authority for Competition concluded that the 
participation requirements in the paddy rice mark eting agreement "have made the entry of new 
competitors more difficult [and] constitute unnecessary regulatory barriers".16  The Supervisory 
Authority recommended an evaluation of the "curre nt protection scheme of the Standing Agreement 
on the Marketing of Domestic Paddy Rice … in order to verify whether the objectives of the policy are actually being achieved, taking into account the costs it is generating in terms of competition and 
consumer welfare".  Within the context of the pr esent Review, the authorities have indicated that the 
Supervisory Authority's recommendations are being reviewed. 
19. The Salvadoran Sugar Agro-Industry Produc tion, Industrialization and Marketing Law 
authorizes the Salvadoran Sugar Agro-Industry Co uncil (CONSAA), composed of representatives of 
the Ministries of the Economy and Agriculture and Livestock and the private sector, to fix the sales 
volumes of each domestic sugar producer, both on the domestic market and on the foreign markets 
that grant preferences to sugar from El Salvador.
17  CONSAA is required to fix these volumes with 
account for "historical production".  Moreover, suga r imports are subject to authorization by the 
Ministry of the Economy.  The Secretariat has no information regarding the criteria used by the 
Ministry to issue these authorizations.  Accordi ng to a study carried out by the Inter-American 
Development Bank and the Organization for Eco nomic Cooperation and De velopment the production 
quota system for sugar "is restricting competition in  prices and leading to a call for the Competition 
Law to be applied more vigorously to this sector".18 
                                                      
14 WTO document G/AG/N/SLV/31 of 17 July 2009. 
15 Norton and Angel (2008);  and online information from the Supervisory Authority for Competition 
(SC), "SC propone al Ejecutivo mejorar normative en ar roz", press release, 12 May 2009.  Viewed at:  
http://www.ssf.gob.sv/. 
16 Online information from the Supervisory Authority for Competition, "SC propone al Ejecutivo 
mejorar normative en arroz", press release, 12 May 2009.  Viewed at:  http://www.ssf.gob.sv/. 
17 Article 19 of the Salvadoran Sugar Agro-Industry Production, Industrialization and Marketing Law, 
Legislative Decree No. 490 of 17 August 2001. 
18 IDB and OECD (2008). WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 66 
 
 
20. Formal credit for the agricultural sector to talled close to US$220 million in 2007, as 
compared with US$146 million in 2002.19  About 33 per cent was intended for poultry and cattle 
farming, 27 per cent for coffee and 18 per cent for sugar cane.  The main source of credit is the private 
banks.  About 15 per cent of credit for the ag ricultural sector comes from the Agricultural 
Development Bank (BFA), a public credit institution  that seeks "to maintain the financial facilities 
and related services necessary to contribute to agricultural development".20  In January 2009, the 
BFA's lending rates varied between 9 and 36 per cent.21  Slightly less than 4 pe r cent of the total value 
of financial sector lending is for the agricultural sector. 
21. The Multisectoral Investment Bank (BMI), a public  credit institution, administers a series of 
credit programmes for the agricultural sector.  Fo r example, there are programmes for non-traditional 
and forestry crops and for coffee.  In 2008, the BMI provided US$34.7 million in financing for the agricultural sector, of which approximately 83 per ce nt was for livestock farming, sugar cane, coffee 
and poultry farming.  The BMI administers a State trust fund, the Special Agricultural Development Trust Fund, which provides funds for, among other things, interest relief and a guarantee programme, 
and a private trust fund (Trust Fund for the Conser vation of the Coffee Forest), which provides funds 
for financing coffee-growing debt. 
22. The BMI manages a guarantee progr amme for loans granted to ag ricultural producers by the 
commercial banks (Agricultural Gu arantee Programme or PROGARA).
22  The guarantees are for 
extendable periods of one year and cost 1 per cent of the sum guaranteed.  The maximum amounts guaranteed vary between 30 and 70 per cent, depe nding on the size of the borrower.  In 2008, 
PROGARA guaranteed US$21.3 million of the US$40. 7 million in loans granted to 10,092 borrowers. 
23. The BMI also operates the Special Guarante e Programme for Intensive Agriculture and 
Agro-Industry (PROGAIN), through which it guarantees up to half the loans intended for the establishment of centres for intensive agricultura l production and the preparation and processing of 
agricultural products.
23  The guarantees are provided for extendable periods of one year and cost 
0.75 per cent of the sum guaranteed.  In  2008, PROGAIN guaranteed US$1.7 million. 
24. CENTA is the principal public agricultural and forestry research institution.  It supplies 
extension, technical assistance and training  services.  Its budget for 2007-2008 totalled 
US$21.2 million.  Within the framework of the National System of Alliances for Technological 
Innovation, the Ministry of Agriculture and Liv estock finances up to 80 per cent of the cost of 
investment in innovative agricultural and agro-industrial projects. 
25. El Salvador has notified the WTO that it did not  grant any export subsidies for agricultural 
products in 2002, the latest year to which its notification relates.24 
                                                      
19 Norton and Angel (2008). 
20 Article 1 of the Agricultural Development Bank La w, Legislative Decree No. 312 of 25 March 1973. 
21 BFA online information, "Tasas de interé s y comisiones vigentes".  Viewed at:  
http://www.bfa.gob.sv/?categoria=16. 
22 BMI online information, "PROGARA".  Viewed at:  https://www.bmi.gob.sv/portal/page? 
_pageid=38,67156&_dad=portal&_schema=PORTAL. 
23 BMI online information, "PROGAIN".  Viewed at:  https://www.bmi.gob.sv/portal/page? 
_pageid=38,57354&_dad=portal&_schema=PORTAL. 
24 WTO document G/AG/N/SLV/17 of 21 October 2003. El Salvador WT/TPR/S/226/Rev.1 
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(2) MANUFACTURING  
(i) Sector outside the free-zone regime 
26. During the period since El Salvador's last Review, real value added in the manufacturing 
sector (excluding maquila services) increased at an av erage annual rate similar to that for the economy 
as a whole.  Thus, the manufacturing sector's share of GDP has remained almost constant since 2002 
(Table IV.3). 
27. The main manufacturing branches are milling and baking, basic and processed chemicals, and 
beverages (Table IV.3).  The br anches with the highest rates of growth between 2002 and 2008 were 
rubber and plastics, milling and baking, printing, an d sugar, which recorded average annual rates of 
growth of real value added of between 4 and 5 pe r cent each.  Although processed fish products grew 
at a double-digit average annual rate, in absolute terms this sector's contribution to manufacturing 
GDP is less than 1 per cent. 
28. The nominal value of manufacturing exports an d imports (excluding free-zone exports) has 
increased significantly since El Salvador's last Revi ew (see Chapter I(3)).  Chemical products are the 
manufacturing sector's main export item, while tran sport equipment and chemical products are the 
main imports. 
Table IV.3 
Value added in the manufacturing sector (free zones excluded), 2002-2008 
 2002 2003 2004 2005 2006 2007 2008 
Total:        
 In millions of 1990 US$  1,610.6 1,642.4  1,667.8  1,713.9  1,779.9  1, 854.6  1,899.2 
 As a percentage of total GDP  20.5  20.5  20.4  20.4  20.3  20.2  20.2 
As a percentage of manufacturing GDP: 
 Meat and meat products  2.0  2.0  2.0  2.0  2.1  2.1  2.0 
 Dairy products  3.5  3.5  3.5  3.5  3.7  3.7  3.7 
 Processed fish products  0.0  0.0  0.0  0.0  0.0  0.0  0.0 
 Milling and bakery products  9.7  9.9  10.1  10.2  10.4  10.6  10.6 
 Sugar  7.7  8.0  8.4  8.5  8.2  8.3  8.3 
 Other processed food  products  7.8  7.9  7.9  7.9  7.9  7.9  7.9 
 Beverages  10.0  9.5  9.5  9.3  9.1  9.0  9.0 
 Processed tobacco  0.0  0.0  0.0  0.0  0. 0  0.0  0.0 
 Textiles and made-up textile articles 
(other than clothing)  5.7  5.5  5.6  5.8  5.7  5.7  5.7 
 Clothing  2.1  2.1  2.1  2.1  2.1  2.0  2.0 
 Leather and leather products  4.2  4.2  4.2  4.2  4.1  4.2  4.2 
 Wood and wood products  1.4  1.4  1.4  1.4  1.4  1.4  1.3 
 Paper, paperboard and products thereof  3.2  3.3  3.3  3.3  3.3  3.4  3.4 
 Products of the printing and allied 
industries  6.0  6.1  6.3  6.3  6.2  6.4  6.5 
 Basic and processed chemicals  9.7  9.8  9.8  9.7  9.7  9.7  9.7 
 Refined petroleum products  5.8  5.6  5.3  5.3  5.4  5.6  5.5 
 Rubber and plastics products  2.7  2.8  2.8  3.0  3.0  3.0  3.0 
 Processed non-metallic mineral products  5.5  5.5  4.9  4. 5  4.8  4.8  4.8 
 Basic and processed metal products  5. 1  5.2  5.4  5.6  5.4  5.4  5.4 
 Machinery, equipment and supplies  3.6  3.5  3.5  3.5  3.5  3.1  3.1 
 Transport equipment and miscellaneous 
manufactures  4.1  4.2  4.1  4.0  4.0  4.0  3.8 
Source : WTO Secretariat, based on BCR data.  Viewed at:  http://www.bcr.gob.sv/?cat=6 &name=Estadísticas&lang=es 
 
29. The objectives of industrial policy for th e period under review are to improve 
competitiveness, to promote economic diversification and to eliminate shortcomings in coordination 
and information. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 68 
 
 
30. The average MFN tariff rate applied to manufact ures (WTO definition) fell from 6.7 per cent 
in 2002 to 5.2 per cent at the beginning of 2009.  The manufacturing activities that benefit from above-average tariff protec tion levels are processed food, beve rages, and tobacco, subject to an 
average MFN tariff rate of 15.7 per cent, textil es and clothing (average MFN tariff rate of 
10 per cent), wood and wood products (9.6 per cen t) and "other manufactures" (9.2 per cent).  
Moreover, the manufacturing sector receive s support under various incentive schemes 
(Chapter III(2)(iv) and (3)(iii)). 
(ii) Free zones 
31. The free-zone regime provides assistance for e ligible enterprises through tax concessions 
(Chapter III(2)(iv)). 
32. At the end of 2008, the latest year for which information is available, there were 
270 enterprises (62 foreign enterprises) bene fiting from the Law on Free Zones and Inward 
Processing Warehouses, as compared with 246 in 2002 (T able IV.4).  Whether directly or indirectly, 
the free zones employ 9.1 per cent of the national labour force. 
33. Although still of great importance, the contribution of the free zones to the economy has 
declined since El Salvador's last Review.  The va lue added in the free zones decreased at an average 
annual rate of 0.6 per cent between 2002 and 2008.  Consequently, the free zones' share of GDP fell 
from 3.1 per cent to 2.5 per cent during the same peri od (Table IV.4).  Exports from the free zones did 
not perform particularly well, as they increased at an average annual rate of only 1.6 per cent between 
2002 and 2008, as compared with 12 per cent for the rest of manufacturing exports. 
Table IV.4 
Main free-zone indicators, 2002-2008 
 2002 2003 2004 2005 2006 2007 2008 
Number of enterprises  246  265  294  304  302  314  270 
Number of employees  84,000  88,600  85,626  80,963  80,000  82,367  n.a. 
Value added:        
 In millions of 1990 US$  246.3  256.1  248.9  231.5  226.8  226.8  238.3 
 As a percentage of GDP  3.1  3.2  3.0  2.7  2.6  2.5  2.5 
Imports        
 In US$ million 1,282.5  1,379.3  1,458.2  1,204.8  1,143.0  1,236.5  1,281.6 
 As a percentage of total merchandise 
imports  24.7  24.0  23.0  18.0  14.9  14.2  13.1 
Exports:        
 In US$ million 1,757.6  1,873.0  1,923.2  1,821.3  1,775.4  1,803.8  1,928.1 
 As a percentage of total merchandise 
imports  58.7  59.9  58.2  53.3  47.9  45.3  42.4 
Net exports  475.1  493.7  465.0  616.5  632.4  567.3  646.5 
n.a. Not available. 
Source : WTO Secretariat, on the basis of data provided by the authorities. 
 
34. Free-zone export performance, particularly between 2004 and 2006, largely reflects the 
increased international competition that resulte d from the elimination of quantitative import 
restrictions under the Agreement on Textiles and Clothing.25  However, free-zone exports have 
recovered in recent years:  between 2006 and 2008 they increased by about 9 per cent, amounting to 
almost US$1.93 billion, their highest level since El Salvador's last Review. 
                                                      
25 IMF (2008), El Salvador:  2007 Article IV Consultation , IMF Country Report No. 08/101, March, 
Washington, D.C. El Salvador WT/TPR/S/226/Rev.1 
 Page 69 
 
 
35. A study published in 2005 notes that the free-z one sector is "that which maintains the least 
economic interrelations as a source of demand" among the six most important branches of the 
manufacturing sector (milling and baking, basic and pro cessed chemicals, beverages, sugar, and other 
processed food products).26  The same study points out that, in El Salvador, "in-bond processing 
(maquila) has become concentrated in the made-up textiles sector, which, as this is a light industry 
with not much technological content, reduces the opportunities for transfer and improvements to the 
rest of the economy".  Within the context of this Review, the authorities have pointed out that the made-up textiles industry has made considerable  progress towards greater value added production 
through the "full package" concept. 
(3) ENERGY 
(i) Electricity 
36. The electricity sector accounts for 0.3 per cent of  GDP.  At the end of 2008, El Salvador's 
electrical power system had 1,439.4 MW of installed capacity.
27  About half of the installed capacity 
corresponds to thermal power plants, one third to  hydroelectric power plants, and the rest to 
geothermal installations.  In 2008, the ma ximum demand on the wholesale power system was 
924 MW;  net electricity generation totalled 5,724. 4 GWh, exports 89 GWh and imports 83 GWh.  
El Salvador's transmission system is interconnected  with those of Guatemala and Honduras.  At the 
end of 2009, the El Chaparral hydroelectric power st ation, which will have an installed capacity of 
66.1 MW, was under construction. 
37. In mid-2006, construction began on the transmis sion line of the Central American Electricity 
Interconnection System (SIEPAC).28  The 1,830 km-long transmission line, with an initial 
230 kW circuit, will connect the power grids of El Salvador, Costa Rica, Guatemala, Honduras, 
Nicaragua and Panama.  The transmission line is scheduled for completion in 2009.  Within the SIEPAC framework, El Salvador and the other partic ipants have established various institutions for 
the operation of the regional electricity market pr ovided for in the Framework Treaty for the Central 
American Electricity Market signed in 1996. 
38. In 2008, the annual average price at which electricity was sold to the end user was 
US$0.1379 per kWh.  The State subsidizes residentia l consumption up to 99 kWh per month.  This 
subsidy amounts to about US$54 million per year.  Consumption above 99 kWh per month was also 
subsidized between 2006 and 2009, at a total cost of  about US$200 million.  This subsidy, which had 
been partly financed by the State enterprise Comisión Ejecutiva Hidroeléctrica del Río Lempa , was 
abolished at the beginning of 2009. 
39. The sector consists of seven distribution compan ies, two of which bega n operating in 2007.  
Of these seven companies, five were established with  foreign capital and the other two with domestic 
private capital.  There are 13 generating companies participating in the wholesale electricity market 
and several other small-scale generators.  About on e third of installed capacity belongs to public 
enterprises and the rest to private companies.  The transmission system is operated by a single 
State-owned enterprise. 
40. In September 2007, the Supervisory Aut hority for Competition determined that 
three electricity distributors had abused their dominant position to delay the entry of a new competitor 
                                                     
 
26 Fuentes (2009). 
27 General Supervisory Authority for Electric ity and Telecommunications (SIGET, 2009). 
28 IDB online information, "Construction of SIEPAC power transmission line begins in 
Central America", 11 July 2006.  Viewed at:  http ://www.iadb.org/news/detail.cfm?language=SP&id=3182. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 70 
 
 
into the corresponding markets or make it more costly.29  The share of the electricity distribution 
market held by the three enterprises in question amounts to 80 per cent.  The Supervisory Authority 
imposed fines on all three enterprises and ordere d them to cease their an ti-competitive practices.  
Moreover, it recommended that SIGET should de velop "regulations on … the procedures, 
requirements, formalities, and response and impl ementation times to be met by any distributor, 
marketer, or large-scale user requiring interconnecti on to the distribution and transmission networks".  
The authorities have pointed out that they are in the process of drawing up these regulations. 
41. The objectives of energy policy include diversif ying energy sources, expanding coverage of 
the electrical energy services, promoting a more e fficient energy market and establishing clear and 
stable rules, and fostering electrical integration of the Central American countries.30  The National 
Energy Council, which began functioning in mid-2009, is authorized to formulate energy policy.31  Its 
members are the Technical Secret ary of the Office of the President, the Consumer Ombudsman and 
the Ministers of the Economy, Finance, Public Wo rks, and the Environment and Natural Resources.  
SIGET is responsible for supervising the sector a nd is authorized to issue regulations.  The body 
responsible for the operation of the transmission system and the wholesale electrical energy market is 
the Transactions Unit, which is composed of operators and end users. 
42. Since its last Review, El Salvador has made various amendments to the General Electricity 
Law.32  The most recent amendment, approved in 2007 , incorporated in the legislation provisions 
relating to:  determination of the charges for dist ribution and connection to the distribution networks, 
electrical energy supply contracts, prices, requirements concerning the provision of information by 
operators and transparency of information concer ning the wholesale market.  Moreover, in recent 
years SIGET has issued regulations intended to improve the operation of the wholesale market. 
43. To generate electrical energy from hydraulic a nd geothermal sources it is necessary to obtain 
a concession from SIGET.33  Companies that generate electricity from other sources and transmission, 
distribution and marketing companies do not require a concession, but they must be enrolled in the 
Register of Electricity Sector Operators maintained by SIGET.  The General Electricity Law does not 
impose any limitations with respect to the nationality of the concession-holder or the companies in the 
Operators Register. 
44. The transmission and distribution companies must permit the interconnection of their 
installations and their use for electricity transport,  unless this might entail "danger for the operation or 
safety of the system, installations or persons".34  A company may apply to SIGET if it is unable to 
reach an interconnection agreement with another company.  The Law allows one and the same 
company to engage in generation, transmission, di stribution and marketing activities, provided that it 
maintains separate accounting systems.35 
                                                      
29 Supervisory Authority for Competition, Penalty proceedings:  final decision, SC-009-O/PA/R-2007, 
11 September 2007. 
30 Government of El Salvador (2007). 
31 Article 3 of Legislative Decree No. 404 of 1 October 2007. 
32 Legislative Decree No. 843 of 25 October 1996. 
33 General Electricity Law, Article 5. 
34 Ibid., Article 27. 
35 Ibid., Article 8. El Salvador WT/TPR/S/226/Rev.1 
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45. SIGET regulates the maximum price for electrical  energy payable by the end user and the 
charges for:  the use of the transmission and distri bution networks, the operation of the transmission 
system and the wholesale market, and the connection of end users to the distribution network.36 
46. The Law on Tax Incentives for the Promoti on of Renewable Energies in Electricity 
Generation, enacted in 2007, offers a series of ta x incentives to the owners of "new investments" 
intended for the installation of power stations for generating electricity from renewable energy 
sources.37  These incentives include:  exemption from the duties on imports of machinery and inputs 
for the construction of power stations with a capac ity of up to 20 MW;  the deduction of VAT paid on 
"works forming a necessary and integral part of the process of electricity generation, including those 
carried out on buildings";  and exemption from income tax for ten years in the case of power stations 
with a capacity of less than 10 MW or five year s in the case of those with a capacity of between 
10 MW and 20 MW.  Three geothermal projects and one small hydroelectric power station have been 
approved under this Law. 
47. Moreover, the costs of research, exploration a nd the preparation of projects for generating 
electricity from renewable sources with a capacity of  more than 20 MW are deductible from income 
tax for a period of ten years (within certain limits est ablished in the legislation).  The income from the 
sale of "certified emission reductions" on certain  carbon markets is exempt from income tax. 
(ii) Other energy 
48. The total value of fuel imports is US$1.88 billion, which represents 22 per cent of total 
imports.  About one third of this amount correspond s to crude oil imports.  There are no proved oil 
reserves in El Salvador.38 
49. The hydrocarbons sector consists of five private importers of crude oil and refined products.  
El Salvador's only refinery is owned by two of these  companies.  There is also an enterprise set up by 
certain municipalities and a subsidiary of the Venezuelan State enterprise PDVSA. 
50. There is no official regulation of fuel prices, except for those of liquefied petroleum gas 
(LPG) for domestic use.  During the period 2002-2006, the average annual cost of the LPG subsidy 
totalled US$52.5 million.  According to the IMF, there is concern with respect to the poor targeting of 
the subsidy and illegal exports of LPG from El Salvador.39 
51. The Directorate of Hydrocarbons and Mining in the Ministry of the Economy is responsible 
for supervision of the hydrocarbons sector.  Acco rding to the Ministry of the Economy, the law 
governing petroleum exploration a nd exploitation activities (Hydrocarbons Law) "dates from the early 
1980s and needs to be revised to turn it into an  attractive instrument capable of promoting the 
exploration and … subsequent  exploitation of resources".40  The Legislative Assembly approved the 
Natural Gas Law in mid-2008.41  The Law regulates the storage, tr ansport, distribution and marketing 
                                                      
36 Ibid., Article 9. 
37 Article 1 of the Law on Tax Incentives for the Promotion of Renewable Energies in Electricity 
Generation, Legislative Decree No. 462 of 20 December 2007. 
38 Online information of the United States Energy  Information Administration, "World Proved 
Reserves of Oil and Natural Gas, Most Recent Estimates", 3 March 2009.  Viewed at:  http://www.eia.doe.gov/emeu/international/reserves.html. 
39 IMF (2008). 
40 Government of El Salvador (2007), Política Energética , San Salvador, May. 
41 Legislative Decree No. 630 of 20 June 2008. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 72 
 
 
of natural gas.  It does not impose any limits on the participation of private capital, including foreign 
capital, in any of these activities. 
(4) SERVICES  
(i) Multilateral and preferential commitments 
52. In 2008, the services sector accounted for 61.5 per cent of GDP, employing about two thirds 
of the total labour force.  El Salvador is a ne t importer of services.  Exports of services totalled 
US$1.041 billion in 2008, while imports amounted to US$1.625 billion. 
53. El Salvador's Schedule of Specific Commitments  annexed to the WTO General Agreement on 
Trade in Services (GATS) includes specific commitm ents in six of the 12 categories of services 
covered by the Agreement:  business services, communication services, environmental services, 
tourism services, transport services and financial services (Table AIV.1).42  Altogether, commitments 
were made in 25 of the sectors included in the Services Classification List prepared by the WTO Secretariat.  In general, El Salvador's  commitments under the GATS tend to strengthen the 
policy framework in force at the time of the Uruguay Round negotiations and hence do not take fully into account the autonomous liberalization in whic h El Salvador has been engaged since then. 
54. With regard to horizontal commitments, El Salvador's Schedule of Specific Commitments 
states, among other things, that a foreign compa ny must maintain a representative permanently in 
El Salvador, and cites limits on th e profits and payments for rights to use foreign trademarks and 
patents that can be remitted.  Moreover, unless speci al authorization has been given, every employer 
must guarantee that the firm's personnel is at least  90 per cent Salvadoran, while the wages paid to 
Salvadorans must amount to not less than 85 per cent of the total wages paid.  This requirement 
applies equally to domestic and foreign enterprises. 
55. El Salvador's Schedule of Specific Commitmen ts includes exemptions from MFN treatment 
for all sectors in favour of the member countries of the Central American Common Market (CACM).  
Moreover, in the case of financial services, El Salv ador incorporated exemptions from MFN treatment 
in favour of Honduras and Nicaragua on the basis of the Convention on facilitating the financial 
integration of the countries of the Central American Isthmus.
43 
56. El Salvador participated in the GATS negotiati ons on basic telecommunications and financial 
services and accepted the Fourth and Fifth Protoc ols to the GATS, revising its schedule of 
concessions accordingly.  The Fourth Protocol was signed on 15 April 1997 and ratified by 
Legislative Decree No. 1.031 of 29 April 1997, publishe d in Official Journal No. 92 of 22 May 1997.  
The Fifth Protocol was signed on 27 February 199 8 and ratified by Legislative Decree No. 613, 
published in Official Journal No. 343 of 26 May 1999.  El Salvador  submitted an initial offer within 
the context of the Doha Round negotiations on ser vices but, as of October 2009, had not submitted a 
revised offer. 
57. The General Treaty on Central American Econom ic Integration establishes general principles 
for non-discrimination, such as national treatment  and most-favoured-nation treatment, in both 
investment and cross-border trade in services.  The Central American Treaty on Investment and Trade in Services was signed in March 2002 and its ame nding protocol, which guarantees national treatment 
                                                     
 
42 WTO documents GATS/SC/29 of 15 April 1994, GATS/SC/29/Suppl.1 and 2 of 11 April 1997 and 
26 February 1998, respectively. 
43 WTO document GATS/EL/29 of 15 April 1994. El Salvador WT/TPR/S/226/Rev.1 
 Page 73 
 
 
for the provision of services in the Central American  region, in February 2007.  El Salvador has 
ratified this Treaty and published it in Official  Journal No. 87, Vol. 379, of 3 May 2008. 
58. El Salvador's trade agreements govern trade in services between the contracting parties.  The 
free trade agreements concluded with the Dominican  Republic and Chile within the framework of the 
CACM establish the principle of MFN treatment for trade in services between the contracting parties.  
The CAFTA-DR provisions on services are based on a negative list for liberalization.  The main 
horizontal exclusion in the agreement is for supply under mode 4.  El Salvador has also adopted exceptions for certain specific sectors, such as tel ecommunications, audiovisual services, air transport, 
construction services and accounting services, among others.  The regional agreement between 
Central America and Panama provides for free trans it for land freight transport throughout the region 
via the Inter-American Highway, with the exception of  cabotage, which is reserved for each country's 
domestic carriers. 
(ii) Financial services 
59. El Salvador's banking sector is characterized  by a strong foreign presence.  Under the Banks 
Law, the branches and offices of foreign financial in stitutions that operate in El Salvador must be 
accorded national treatment.  At least 51 per cent of  the shares of a bank or insurance company must 
be held by Salvadorans or Central Americans or  by prime foreign financial institutions.  The 
cross-border supply of banking or insurance services  is not permitted.  The Law grants preferential 
rights to creditors domiciled in El Salvador ove r the assets owned by a financial institution in 
El Salvador.  During the review period the Banks Law and the Insurance Law were revised to amend 
the regulations on banking secrecy and the fo rm and content of insurance policies. 
60. Despite the strong foreign presence in the banki ng sector, which increased during the review 
period, two thirds of the shares in insurance comp anies are in Salvadoran hands.  In addition to 
meeting the requirements for majority percentage ownership of an insurance company or bank under 
the national legislation, foreign insurance co mpanies and banks from countries outside Central 
America must be classified as first-line corporations by internationally recognized risk-rating agencies 
and recognized as such by the Supervisory Authority for the Financial System. 
(a) Structure and performance 
61. The contribution of the financial services sector (banks, insurance companies and other 
financial institutions) to total GDP was 4.4 per cent in 2008 (3.8 at constant prices).
44 
62. On 30 September 2009, the Salvadoran banking sect or consisted of 19 institutions authorized 
to take deposits:  eight private banks, all foreign- owned;  two State banks;  two branches of foreign 
banks;  five cooperative banks;  a nd two savings and loan societies.45  In addition to the entities 
authorized to take deposits, the Salvadoran financ ial sector includes other institutions authorized to 
carry out credit operations but not to take de posits.  As of 30 September 2009, there were 
eight financial conglomerates in operation. 
63. During the review period, El Salvador's three largest banks were acqui red by foreign banks.  
In 2007, Banco Agrícola was acquired by Bancolombi a, the banks Cuscatlán and Uno became part of 
                                                      
44 Central Reserve Bank of El Salvador (BCR), St atistics > Summary Tables > IV.11 Quarterly Gross 
Domestic Product (Current Prices).  Vi ewed at:  http://www.bcr.gob.sv/?x21=29. 
45 Online information from the Supervisory Authority  for the Financial System (SSF).  Viewed at:  
http://www.ssf.gob.sv/frm_infor macion/frm_informacion.htm. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 74 
 
 
Citigroup, and Banco Salvadoreño was purchased by HSBC.46  It is estimated that some 95 per cent of 
total assets is now in the hands  of foreign-owned banks. 
64. On 30 June 2009, the total assets of the banki ng system amounted to US$13.0579 billion, of 
which US$8.465 billion corresponded to loans.  Deposits amounted to US$8.811 billion.  In 
June 2009, some 64.8 per cent of assets were concentr ated in net loans, while financial investments 
and liquid assets accounted for 15.3 per cent and 14.7 per cent, respectively.47 
65. In general, in June 2009, the Salvadoran ba nking system was characterized by good solvency 
and risk indicators, but relatively high indebte dness indicators.  The Banks Law requires the banks 
always to maintain a ratio of at least 12 per cent between their regulatory capital and their total 
risk-weighted assets (capital adequacy ratio).  In  June 2009, the banking system was maintaining a 
capital adequacy ratio of 16.3 per cent and a net li quidity ratio of 39.5 per cent, both in excess of 
statutory requirements.  The latter ratio is, in part, an indicator of a sluggish domestic credit market.  
The authorities have noted that this lack of dynamism  is partly due to the fact that the banks have 
reduced or even eliminated the credit available to certain sectors considered to represent a higher risk. 
66. With respect to indebtedness, at the end of June 2009, the average indicator stood at 
12.09 per cent, as compared with the statutory limit of 7 per cent.  In June 2009, the spread was only 
4.76 per cent.  In particular, 25.2 per cent of credit was intended for the purchase of housing, 
26.1 per cent for consumption, 15.4 per cent fo r commerce, and 8.2 per cent for manufacturing 
industry.  On 30 June 2009, non- performing loans amounted to US$320.5 million or 3.7 per cent of 
the total, a figure 48.5 per cent higher than that recorded in June 2008. 
67. According to an IMF report, the Salvadoran ba nking system remains liquid and the banks are 
well capitalized;  however, non-performing loans have increased and profitability has declined.  The 
IMF also considers that though linkages between th e Salvadoran banking syst em and global financial 
markets are strong, the impact of the global financ ial crisis has thus far been contained, since 
Salvadoran banks' holdings of toxic assets appear to  be limited.  Moreover, credit growth in recent 
years has remained moderate, and the crisis does not  appear to have affected banks' external credit 
lines.48  The IMF also considers that, thanks to thei r highly liquid assets, El Salvador's banks could 
withstand large system-wide deposit withdrawals;   however, as the economy is dollarized, most 
reserves are backing bank deposits and the Centra l Bank is constrained from providing liquidity 
support to individual banks.  The authorities have poin ted out that this constraint is established in the 
Organic Law of the Central Bank itself. 
68. The authorities have taken steps to deal with th e uncertainty generated by the global financial 
crisis, including an increase in liquid asset require ments between July 2008 and June 2009.  In 
September 2008, total liquid reserve requirement s amounted to almost 28 per cent of deposits.  
Moreover, the banks had to provide the SSF with c ontingency plans for maintaining their liquidity 
levels. 
69. On 30 June 2009, the insurance industry in El  Salvador had 17 fully operational companies, 
one that had not yet begun to operate and thr ee in process of liquidation; out of the 17 fully 
operational companies, five specia lized in personal insurance and the rest handled all branches of 
insurance.  As of June 2009, the SSF had author ized 1,086 independent insurance intermediaries, 
40 foreign reinsurers, 16 foreign reinsurance brokers , and 40 mass marketers of insurance policies.49  
                                                      
46 BCR (2009c). 
47 SSF (2009). 
48 IMF (2009a). 
49 SSF (2009). El Salvador WT/TPR/S/226/Rev.1 
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In September 2008, 67.7 per cent of insurance co mpany shares were owned by Salvadorans and the 
rest by foreigners. 
70. In November 2007, the SSF decided to approve  the adjustment of the minimum capital 
requirements for the different branches of insurance.50  In June 2009, insurance market gross 
premiums totalled US$228.2 million, insurance company assets and liabilities amounted to 
US$536.5 and US$276.3 million, respectively, and the insurance system was yielding a return on 
equity of 10.1 per cent.51 
(b) Legislative framework 
General 
71. El Salvador participated in the financial servi ces negotiations and accepted the Fifth Protocol 
annexed to the GATS, incorporating it into its legi slation by means of Legislative Decree No. 653 of 
13 March 1999, published in Official Journal No. 97 of 26 May 1999.  The commitments made by 
El Salvador under the GATS include granting access to foreign financial institutions through the 
establishment of branches or participation in the ownership of domestic banks and finance houses up 
to a maximum of 75 per cent of the capital, provided that they are prime institutions and subject to 
prudential regulation and supervisi on in their countries of origin.52  In the case of foreign natural 
persons, the maximum percentage is 25 per cent.  El Salvador has not made any commitments under 
the GATS with respect to insurance services. 
72. The Salvadoran financial system is supervised  by three different bodies:  the Supervisory 
Authority for the Financial System (SSF);  the Securities Supervisory Authority;  and the Pensions 
Supervisory Authority.  The SSF is responsible fo r ensuring compliance with the legal provisions and 
issuing the relevant rules and is authorized to a pply sanctions and to intervene in financial system 
entities.53  The Securities Supervisory Authority is responsible for overseeing compliance with the 
provisions applicable to stock market entities, while  the Pensions Supervisory Authority oversees the 
pension system.  A draft Law on the Supervision a nd Regulation of the Financial Sector is being 
debated in the Legislative Assembly;  under this draft law the current three supervisory bodies would 
be consolidated in a single institution, which woul d make it possible to strengthen the supervision of 
the sector as a whole. 
Banks 
73. During the review period amendments were made  to the Banks Law, the Financial Leasing 
Law, the Law on the Reorganization and Strengthe ning of Commercial Banks and Savings and Loan 
                                                      
50 The new levels are:  for general insurance US$1,150,300;  for personal insurance US$812,900;  for 
bonding operations US$659,500;  for reinsurers and rebonders US$3,266,300;  and for other branches of 
insurance US$1,962,800.  SSF (2008). 
51 SSF (2009). 
52 WTO document GATS/SC/29/Suppl.2 of 26 February 1998. 
53 The financial sector is composed of:  commercial banks;  stock market entities (securities exchanges, 
stockbrokers, and companies specializing in the deposit an d custody of securities);  fo reign exchange dealers;  
forecasting entities;  public warehouses;  financial inte rmediaries (cooperatives, fe derations, and savings and 
loan societies);  public credit institutions;  reciprocal guarantee system entities;  and insurance and bonding companies. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 76 
 
 
Associations, and the Law on Cooperative Banks and Savings and Loan Societies.54  O n e  o f  t h e  
purposes of the amendments to the Banks Law was to introduce changes concerning banking secrecy. 
74. Under the Banks Law, all banks established in El  Salvador must be organized and operate as 
closed-end public limited companies with their capital divided into registered shares held by not less 
than ten shareholders.  The Law imposes certain requirements and limits with respect to the 
shareholders of banks established in  El Salvador, stipulating that at least 51 per cent of the shares 
must be owned by investors of the following types:  Salvadoran or Central Am erican natural persons;  
Salvadoran legal persons whose shareholders or majority members are Salvadoran or Central 
American natural persons or othe r Salvadoran legal persons;  and foreign banks and other financial 
institutions which are subject in their country of origin to prudential regul ation and supervision in 
accordance with international practice and are as prime names by internationally recognized risk-rating agencies.  For this purpose, the SSF ma intains a register of prime foreign banks and 
financial institutions.
55 
75. The minimum capital required to establish a bank in El Salvador, whether domestic or 
foreign, is US$16 million.  For a natural or a lega l person to own shares in a bank that represent more 
than 1 per cent of its capital the explicit authorization of the SSF is required. 
76. Foreign banks may operate through branches, provided the authorization of the SSF has 
first been obtained.  They may also open represen tative offices, which are permitted to place funds in 
the country in the form of loans or investments, but not to take deposits.  The branches of foreign 
banks in El Salvador may engage in the same ope rations as banks established in the country, including 
opening subsidiaries in which the bank holds at least 51 per cent of the capital.  In general, the Banks 
Law stipulates that the branches and offices of fore ign financial institutions operating in El Salvador 
shall be accorded national treatment, with respect  to both rights and privileges, the only exception 
being that, under the Law, depositors and creditors domiciled in El Salvador enjoy preferential rights 
over the assets owned by a foreign financial institution in El Salvador. 
77. To operate in El Salvador a foreign bank must meet the following requirements:  (a) comply 
with the laws of the country of origin, be s ubject to prudential regula tion and supervision in 
accordance with international practice and be cla ssified as a prime name by an internationally 
recognized risk-rating agency;  (b) be able to show that the branch has been  authorized in accordance 
with the articles of the parent company and the rul es of the regulator;  (c) maintain in the national 
territory at least one representative with broad lega l powers;  (d) maintain in the country the required 
amount of capital and reserves;  (e) show that it has been operating for at least five years and that the 
results are considered satisfactory by the supervis ory body of origin and the rating agencies;  and 
(f) accept the jurisdiction of the laws, courts and auth orities of the Republic of El Salvador.  The Law 
                                                      
54 The main legislation governing the banking sector consists of:  the Banks Law (Decree No. 697 of 
2 September 1999) and amendments thereto (Decree Laws No. 492 of 27 October 2004 and No. 636 of 
17 March 2005);  the Financial Leasing Law (Decree No. 884 of 20 June 2002) and amendments thereto;  the 
Law on the Reorganization and Strengthening of Comm ercial Banks and Savings and Loan Associations 
(Decree No. 659 of 30 November 1990) and amendments thereto;  the Organic Law of the Pensions Supervisory 
Authority (Decree No. 926 of 19 D ecember 1996);  the Law on Cooper ative Banks and Savings and Loan 
Societies (Decree No. 849 of 23 February 2000);  th e Law Establishing the Multisectoral Investment Bank 
(Decree No. 856 of 21 April 1994);  and the Organic Law of the Supervisory Authority for the Financial System 
(Decree No. 628 of 22 November 1990). 
55 In July 2008, the register contained the names of 68 banks from Austria, Brazil, Canada, Colombia, 
Finland, France, Germany, Honduras, Italy, Japan,  Mexico, Netherlands, Pa nama, Spain, Switzerland, 
United Kingdom and United States.  Online information available at:  http://www.ssf.gob.sv/frm_registros/ 
frm_registros.htm. El Salvador WT/TPR/S/226/Rev.1 
 Page 77 
 
 
does not contain any provisions concerning th e cross-border supply of banking services or 
Salvadorans contracting for these services abroad. 
78. The Banks Law (Title V) also includes provisi ons relating to financ ial conglomerates and 
establishes mechanisms for their consolidated supervision by th e SSF.  A financial conglomerate is 
defined as a group of companies characterized by th e fact that more than 50 per cent of their 
shareholders' capital is owned by a holding company.  This company must also be a member of the 
conglomerate and may have been established for the sole purpose of acting as a holding company, or may be a bank established in the country (holding ba nk) and subject to supervision by the SSF.  If the 
holding company is a bank, it may not invest in th e share capital of institutions that administer 
pension funds or insurance companies;  if it is not a bank, the holding company may hold minority 
stakes, up to 25 per cent of its base capital, in th e shares of domestic pension fund-administering 
institutions.  Apart from the holding company, a co nglomerate may include a bank and one or more 
financial sector entities. 
79. A bank established abroad may form part of a conglomerate, provided that the holding 
company owns at least 45 per cent of its shares and,  in addition, various pr udential requirements are 
met, namely:  (a) the foreign bank is subject to  consolidated supervision by the SSF and, in the 
country in which it is domiciled, is supervised in  accordance with international practice;  (b) the 
SSF has signed cooperation agreements with the supe rvisory body of the host country to facilitate 
consolidated supervision;  (c) th e foreign bank is included for purpo ses of determining the solvency of 
the conglomerate;  and (d) it is shown that the holding company controls the bank, by securing a 
majority of the votes at its general meetings of  shareholders, through join t action agreements and 
through participation in the administration of the foreign bank. 
80. Salvadoran banks more than 50 per cent of whose shares are owned by a foreign financial 
entity (banks or financial conglomerates) may only share names, assets and infrastructure or offer joint services to the public with other companies of the same conglomerate if the aforementioned 
entity establishes a subsidiary hol ding company in El Salvador.  Foreign banks and financial 
institutions that establish agencies or branches in  El Salvador and whose parent companies or 
companies of the financial conglomerate to which they belong own more than 50 per cent of other 
financial sector companies in El Salvador may ope rate in the same way as a financial conglomerate 
without having to establish a subsidiary holding company in the country. 
81. The Deposit Guarantee Institute (IGD) guarantees the public's deposits up to a maximum of 
US$8,500 in the event of a bank being wound up or going into compulsory liquidation.
56  All the 
private banks are members of the Institute;  the El  Salvador Mortgage Bank is subject to the same 
deposit insurance regime as a private bank, but in the case of the Agricultural Development Bank the 
guarantee is provided by the State.  In 2008, as a result of the amendment of the laws that govern 
them, cooperative banks and savings and loan soci eties became members of  the IGD, which now 
guarantees their transactions with the public. 
Insurance 
82. Insurance activities are regulat ed by the Law on insurance companies (Decree No. 844 of 
21 October 1996) and its amending legislation,  in particular Decree Laws No. 893 of 
21 November 1996 and No. 910 of 14 December 2005.  The purpose of the 2005 amendment was to introduce changes with respect to the fo rm and content of insurance policies. 
                                                     
 
56 The amount of the guarantees is adjusted every two years by the Executive Board of the SSF, in 
accordance with the provisions of th e Banks Law.  The last adjustme nt was made on 1 January 2008. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 78 
 
 
83. In El Salvador, insurance companies must be or ganized and operate in the form of closed-end 
public limited companies of indefinite duration with their capital divided into registered shares.  The 
Law authorizes branches of foreign insurance compan ies that were operating in El Salvador at the 
time of its enactment to continue operating, but does not permit the establishment of new branches.  
The Law does not require a minimum number of shar eholders, but it does place limits on ownership.  
Thus, no natural or legal person may, either direc tly or through an intermediary, own shares in an 
insurance company that represent more than 1 per cent of the company's capital, without the prior 
authorization of the SSF. 
84. At least 75 per cent of the shares of insuran ce companies must be held, individually or 
collectively, by the following classes of persons:  Sa lvadoran or Central American natural or legal 
persons, or Central American or other foreign insurance or reinsurance companies.  Foreign 
companies outside Central America must have prim e ratings as established by the SSF on the basis of 
the ratings awarded by internationally recognized  rating agencies.  The cross-border supply of 
insurance services is not permitted.  There are no provisions in the Law concerning insurance taken 
out abroad by Salvadorans.  Acco rding to the authorities, the natio nal legislation does not impose any 
restrictions in this respect. 
85. Insurance may be sold directly only by insura nce companies authorized for that purpose;  
intermediaries and insurance brokers may only en gage in intermediation activities.  To practice 
insurance intermediation it is ne cessary to obtain a permit from th e SSF, in which case applicants 
must, among other things, provide evidence of  their knowledge of insurance, educational 
qualifications, previous experience, and ability to meet the capital requirements.  There are no 
requirements with respect to nationality or residence. 
86. Policy terms, rates and intermediation commissi ons are determined freely in the insurance 
market in accordance with the technical principles a pplicable and in such a way as to cover the risks 
faced by the parties insured.  In determining rates,  it is not considered contrary to free competition to 
use pure risk rates calculated on the basis of common  insurance market statistics.  The Law prohibits 
agreements, practices and operations intended to prevent, restrict, distort or eliminate free competition 
or have the effect of introducing oligopolistic pr actices.  There are also disciplines that regulate 
anti-competitive practices in accord ance with the Competition Law. 
(iii) Telecommunications 
87. The legislative framework for the telecomm unications sector was modified on several 
occasions during the review period in order to cons olidate the liberalization undertaken in previous 
years.  To improve competition it was recommended that interconnection regulations be issued and 
fixed-to-mobile network call charges regulated.  Th e legislation does not establish requirements with 
respect to the origin of operators' capital a nd telecommunications services are mainly supplied by 
foreign-owned private operators.  Free-to-air and subscription radio and television broadcasting 
services are subject to certain nationality restrictions .  A specific tax is imposed on telephone calls 
from abroad. 
(a) General characteristics 
88. El Salvador participated in the Negotiati ons on Basic Telecommunications under the GATS.57  
During these negotiations, El Salvador significantly increased its commitments as compared with its 
1994 offer, binding services provided at national and international level via public and non-public 
basic telecommunications networks for all modes of  supply and with respect to both market access 
                                                      
57 WTO document GATS/SC/29/Suppl.1 of 11 April 1997. El Salvador WT/TPR/S/226/Rev.1 
 Page 79 
 
 
and national treatment.  In the case of market access through commercial presence, El Salvador noted 
in its Schedule that it is necessary to apply to th e General Supervisory Authority for Electricity and 
Telecommunications (SIGET) for a concession or licence.  El Salvador also assumed the obligations laid down in the Reference Pape r relating to the Agreement on Basic Telecommunications under the 
GATS. 
89. El Salvador's telecommunications sector ceased to  be a State monopoly in 1997.  This led to 
the privatization of the National Telecommunicati ons Administration (ANTEL), which was divided 
into two entities:  the Compañia de Telecomunicaciones de El Salvador  (CTE), dedicated mainly to 
fixed-line telephony services, and the company Internacional de Telecomunicaciones , dedicated 
mainly to mobile telephony services.  In Oct ober 2009, El Salvador ha d 11 fixed-line telephony 
operators, five mobile telephone line operators, and 11 international long-distance operators.  The 
market is dominated by foreign- owned operators.  More than 90  per cent of the fixed telephony 
market is in the hands of a single operator, CTE. 
90. The communications sector generated 3.9 pe r cent of GDP in 2008.  As far as the 
infrastructure indicators are concerned, the sector ha s progressed in recent years.  Thus, the number of 
fixed lines rose from some 650,000 in 2001, as reported in the last Review, to 1,077,000 in 2008, 
while the number of subscribers to the cellular mobile telephone system rose from 858,000 to 6.95 million over the same period, which is equivalent to a teledensity of more  than 100 per cent.  The 
quality indicators also continued to improve duri ng the review period.  Installation charges fell 
sharply between 2003 and 2008, while the rates for domes tic calls remained stable in dollars at current 
prices, although they decreased in real terms.  The rates for international long-distance calls fell on 
average. 
(b) Institutions and legislative framework 
91. The legislative framework for El Salvador's telecommunications sector was modified on 
several occasions during the review period.
58  In particular, the Law on Telecommunications (LT) and 
its Regulations were amended in or der to consolidate the liberalizati on undertaken in previous years. 
92. The Ministry of the Economy is responsible for formulating telecommunications policy, 
while SIGET, an autonomous entity attached to the Ministry of the Economy, is the institution 
responsible for applying and monitoring compliance w ith the sector's rules and regulations.  SIGET is 
also responsible for administering and overseeing the radio-frequency spectrum. 
93. Under the Law on Telecommunications, operators  interested in providing public telephony 
services must obtain an operating concession from SIG ET.  Concessions are granted if the registration 
requirements are met.  They are valid for 30 year s without limitation as to quantity or location and 
more than one concession may be granted for the same geographical area.  The legislation does not make access to the provision of a service or th e holding of a concession for a particular service 
                                                     
 
58 The legislative framework includes:  the Law on  Telecommunications (Leg islative Decree No. 142 
of 6 November 1997), its amendments (Legislative Decree No. 387 of 27 April 2001, Decree No. 518 of 16 December 2004, Executive Decree No. 911 of 12 January 2006, and Legislative Decree No. 211 of 
19 January 2007) and its Regulations (Legislative Decree No. 64 of 15 May 1998, as amended by Executive 
Decree No. 94 of 29 August 2008);  the Law Establishing  the General Supervisory Authority for Electricity and 
Telecommunications (Legislative Decree No. 808 of 12 November 1996), its amendments (Legislative 
Decree No. 175 of 4 December 1997) an d its Regulations (Executive Decree No . 56 of 13 May 1998);  and the 
Law on the National Electricity and Telephony Investment Fund (Legislative Decree No. 354 of 29 July 1998) and its amendments (Legislative Decree No. 859 of 30 May 2002). WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 80 
 
 
dependent upon the operator being Salvadoran, exce pt in the case of concessions and licences for 
free-to-air broadcasting services. 
94. The LT stipulates that, subject to appropriate payment, every commercial telecommunications 
network operator must provide access to essential resources to any operator that asks for them, 
without discrimination of any kind.59  The unbundling of the fixed-line network for the 
interconnection of commercial telecommunications netw orks is considered to be an essential resource 
under the Law on Telecommunications.  However, regul ations that specify how the unbundling is to 
be carried out have still to be a pproved and, accordingly, the unbund ling is not being implemented.  
Draft regulations that would make good th is deficiency are under consideration. 
95. The tariffs and conditions of provision of telecommunications services are negotiated freely 
between operators, except where access to essential resources is concerned, in which case the parties 
may ask SIGET to intervene.  Maximum public te lephone service tariffs are determined and approved 
by SIGET in accordance with the provisions of the LT.  Since 2003, these tariffs have been adjusted 
annually by SIGET, in accordance with a formula based on the Consumer Pr ice Index (CPI) published 
by the Ministry of the Economy. 
96. El Salvador imposes a specific tax on tele phone calls from abroad that terminate in 
El Salvador.  The legal basis is the Law on th e specific tax on telephone calls from abroad that 
terminate in El Salvador (Legislativ e Decree No. 651 of 14 July 2008). 
97. The radio-frequency spectrum is owned by the State and, in accordance with the LT, is 
classified as for free use, official use, and regulat ed use.  No concession is  needed to exploit the 
free-use spectrum, whereas to exploit part of th e regulated-use spectrum it is necessary to obtain a 
concession from SIGET.  For official use a permit is required.  These concessions are granted for a 
period of 20 years, mainly by auction.  The con cessions can be revoked if not used for two years. 
98. The LT establishes a special regime for the telecommunications activities of operators 
providing free-to-air or subscription radio and television broadcasting services.  These services 
require concessions, which are granted for a period of 20 years and are subject to certain restrictions:  
only natural persons Salvadoran by birth or Salvadoran legal persons (entities with at least 51 per cent 
of the capital in Salvadoran hands) may obtain co ncessions for providing free-to-air broadcasting 
services.  In addition, there are limitations on adve rtising:  at least 90 per cent of the production and 
recording of advertisements for use in Salvador an communications media must be carried out by 
companies established under the Salvadoran legislation. 
99. The National Electricity and Telephony Inv estment Fund (FINET) subsidizes telephone 
infrastructure and the supply of telephone services (and electrical energy) in rural and low-income 
areas, provided that they benefit the community.  FINET's resources consist of 98.5 per cent of the 
income generated by granting concessions for the use of the radio-frequency spectrum and all the 
income produced by concessions for the geothermal  and hydroelectric generation of electricity.  
Between 2003 and 2007, FINET disbur sed a total of US$4.06 million.  There were no disbursements 
in 2008. 
                                                      
59 Under the LT, essential resources are defined as in cluding:  interconnection, at all levels, for the 
purpose of terminating telecommunications or transferring telecommunications originating in the network of 
one of the parties to another network selected by the end user;  signaling;  the handover of automatic 
identification of the number of the user originating the co mmunication;  billing data;  the portability of the user's 
telephone number;  and the listing of users in the telephone directory. El Salvador WT/TPR/S/226/Rev.1 
 Page 81 
 
 
100. The LT contains provisions for safeguarding agai nst anti-competitive practices;  in particular, 
it prohibits operators from concluding any kind of agreement for the purpose of manipulating the price of their services, as well as distribution ag reements and cross subsidies.  The Law does not 
employ the concept of dominant operator.  Since 2006, the Supervisory Authority for Competition has 
investigated seven complaints of  anti-competitive practices by telecommunications companies.  In 
one case fines were imposed, four of the other co mplaints were dismissed and in two cases public 
policy recommendations were made.  The Supervis ory Authority for Competition recommended that 
interconnection regulations be issued to establish th e principles and a specific legal framework for the 
regulation and supervision of all as pects of interconnection.  According to the Supervisory Authority, 
these regulations should allow the regulator to  ensure compliance with the principles of 
non-discrimination with regard to conditions , transparency and access to information.
60  The 
Supervisory Authority for Competition also recomme nded that the rates for fixed-to-mobile network 
calls be regulated. 
(iv) Maritime transport and ports 
101. El Salvador does not have a national merchant fleet.  The law does not impose any restrictions 
on the provision of domestic cabotage services by foreign vessels.  At the end of 2009, there was a 
single general merchandise port in operation in El  Salvador.  The construction of a second port was 
completed in December 2008, but it is not expected  to start operating until mid-2010.  The two ports 
are administered by a State entity. 
(a) General characteristics 
102. El Salvador does not have a national merchant  fleet or companies that provide maritime 
transport services under a foreign flag. 
103. El Salvador's port system comprises two genera l commercial ports:  the port of Acajutla and 
the port of La Unión, the construction of which was completed in December 2008.  Both ports are 
managed by the Executive Autonomous Ports Commission (CEPA).61  Up to the end of 2009, almost 
all maritime cargo was being handled in the port of Acajutla.  The rest was being handled through a 
port specializing in industrial fishing activities, Pu erto Corsaín in Punta Gorda, managed by the 
Salvadoran Investment Corporation (CORSAIN).62  As compared with previo us years, there has been 
a slight increase in the cargo volume handled in Sa lvadoran ports:  in 2008, the port of Acajutla 
recorded 4.43 million tonnes of cargo,  almost twice the figure for 1999.63  Most of this volume 
consisted of imports. 
104. One of the most noteworthy events of the review period was the construction of the port of 
La Unión.  Construction began in January 2005  and ended in December 2008.  However, by 
October 2009 the port of La Unión had not yet en tered into operation and the authorities were not 
                                                      
60 Online information from the Supervisory Authority for Competition.  Viewed at:  
http://www.sc.gob.sv/Publications/Denuncias/sc022_07.htm. 
61 In 2001 and 2002, CEPA initiated a plan for giving the port of Acajutla out on concession, and 
identified full concession as the best possible system of private participation.  The tender documents were 
approved by Legislative Decree No. 1.014 in October 2002.  When the tender procedure was initiated, only one 
company, which did not fit the required profile, submitted a bid.  The procedure was therefore cancelled and the port continues to be administered by CEPA. 
62 CORSAIN online information.  Viewed at:  http://www.corsain.gob.sv/. 
63 CEPA online information.  Viewed at:  http://www.cepa.gob.sv/ acajutla/contenido.php? 
cont=96&id=112. WT/TPR/S/226/Rev.1 Trade Policy Review 
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expecting this to take place until mid-2010.  Th e port was built to promote the development of 
El Salvador's Zona Oriental and to turn the count ry into a regional logistics and distribution hub. 
(b) Institutions and legislative framework 
105. The Vice-Ministry of Transport within the Mini stry of Public Works, Housing and Transport 
is the body responsible for formulating maritime tr ansport policy.  This work is carried out through 
the Maritime Transport Unit.  The Maritime Port Authority (AMP), a body w ith legal personality and 
administrative, technical and financial autonomy est ablished by the General Maritime Port Law, is 
responsible for regulating the maritime port trans port subsector.  The AMP is also responsible for 
regulating port charges and supervising the gran ting and execution of concession contracts.  The 
Supervisory Authority for Competition has the task  of preventing anti-competitive practices in the 
sector. 
106. CEPA has exclusive responsibility for the port operations of the Salvadoran port facilities 
under its jurisdiction, as well as for the administra tion, handling and storage of exports and imports, 
and can function as a maritime port authority.  However, CEPA may contract out certain port services;  in practice, this includes, among other things, mooring, loading, transferring cargo from 
hold to wharf and vice-versa, and storage.  Port concessions are granted by Legislative Decree. 
107. El Salvador has not made any commitments under the GATS. 
108. Port and maritime transport activities are mainly  regulated by the General Maritime Port 
Law.
64  The Law has been amended for the purpose, among other things, of empowering the AMP to 
identify those port services that will be regulated or  deregulated in accordance with criteria for the 
existence of competition in the market, subject to the binding opinion of the Supervisory Authority for 
Competition. 
109. Foreign vessels may provide domestic cabotage services, which are treated by the General 
Maritime Port Law as another maritime activity.  Th ere are no restrictions on foreigners with respect 
to the operation of ports or the provision of anc illary port services, such as pilotage, towing, cargo 
handling and warehousing. 
110. Although El Salvador does not have its own merchant fleet, there is provision for the 
registration of vessels.  The Law establishes a Salva doran Maritime Register (REMS), an integral part 
of the AMP, in which vessels and floating structur es and transactions such as buying and selling, 
building, leasing, chartering and mortgaging must be registered.  For a vessel to be registered in the 
REMS, its owner must be domiciled in the country or, in the case of a company, have been 
established in accordance with the laws of El Salvador  or, if established abroad, have a branch office 
in El Salvador. 
111. El Salvador is a member of the Internati onal Maritime Organization and a signatory to a 
number of the conferences it administers.  In 2009, El Salvador ratified the International Convention 
for the Prevention of Pollution from Ships (MARPO L), while its accession to the International 
Convention for the Safety of Life at Sea (SOLAS) is under consideration.  The authorities have noted 
                                                      
64 The legislative framework for the ma ritime sector consists of the Ge neral Maritime Port Law, Decree 
No. 994, published in Official Journal No. 187 of 1 October 2002, which entered into force on 1 November 2002.  This Law was subsequently amended by Legislative Decree No. 528 of 26 November 2004 
and Legislative Decree No. 560 of 22 December 2 004, published in Official Journal No. 240 of 
23 December 2004, and by Legislative Decree No. 928 of  20 December 2005, publis hed in Official Journal 
No. 22 of 1 February 2006. El Salvador WT/TPR/S/226/Rev.1 
 Page 83 
 
 
that, although the SOLAS Conventio n is still in process of ratification in El Salvador, the Law on the 
Maritime Port Authority and its implementing regu lations use the ISPS Code, referred to in that 
Convention, for certifying ports. 
112. El Salvador has not concluded cargo sharing a rrangements with other countries and neither is 
it a party to the United Nations Convention on a Code of Conduct for Liner Conferences.  El Salvador 
is a member of the Central American Maritime Transport Commission (COCATRAM), a technical body that advises member governments on the formulation and adoption of policies, recommendations and decisions in the various are as of the transport sector.  According to the 
authorities, El Salvador takes into consideration the best practices, principles and guidelines arising 
out of the security standards originating in the Wo rld Customs Organization.  They have also noted 
that the Salvadoran ports are preparing to partic ipate in the Container Security Initiative (CSI). 
113. The rules for the regulation of tariffs are cont ained in the Maritime Port Law and in the 
Special Regulations for the Application of Port  Services Tariffs, under which port operators must 
submit to the AMP, for its approval, a tariff sche dule that includes the tariffs for port services, the 
methodology used to calculate them and the way in whic h they are to be adjusted  in the future.  Port 
services operators must implement a system of cost accounting per activity.
65  Port tariffs approved by 
the AMP and changes in them are registered and published in two national ne wspapers before they 
enter into force.  The minimum charge for port services is US$5.34.66 
(v) Air transport 
114. National treatment is accorded to foreign i nvestors in connection with investment in 
Salvadoran airlines and there are no limitations  on market access under the commercial presence 
mode.  El Salvador International Airport, which is administered by a public body, concentrates all 
international traffic. 
115. El Salvador has two public airports, El Salvador  International Airport and Ilopango Airport.  
El Salvador International Airport concentrates all international traffic, both passenger and freight.  
Between 2003 and 2008, passe nger traffic grew at an average annual rate of 3 per cent, less than the 
13.4 per cent recorded in the last  Review, reaching a total of 2.06  million passengers.  The trend in 
freight traffic has been less stable; imports in creased appreciably between 2003 and 2006, but 
contracted in 2007, while exports declined between 2003 and 2007 a nd increased in 2008. 
116. El Salvador International Airport is the b ase for operations, reservations, maintenance and 
administration of TACA International Airlines S.A ., a company in which Salvadorans hold a majority 
interest.  TACA maintains links with the flag carri ers of other Central American countries and is the 
most important airline based in Central America.  No other company domiciled in El Salvador offers 
commercial air services. 
117. The Executive Autonomous Ports Commission (CEPA, see section (iv) above) is the entity 
responsible for the administration and maintenance of  El Salvador International Airport.  By law, 
CEPA is in charge of airport pl anning, construction and maintenance,  but is authorized to contract 
these services out to private companies.  A number of private companies supply other services such as 
                                                      
65 The formulas for determining tariffs are specified  in the Regulations and can be viewed on the 
AMP website at:  http://www.ampelsalvador.com /images/stories/REGLAME NTO_ESPECIAL_PARA_LA_ 
APLICACION_DE_TARIFAS_DE_SERVICES_PORTUARIOS.pdf. 
66 Details of the latest tariffs for port services in the port of Acajutla can be found on the CEPA website 
at:  http://www.cepa.gob.sv/UserFiles/F ile/tarifasvigente%20Acajutlas.pdf. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 84 
 
 
aircraft ground support, airport support, cleaning and restaurant services, flight information and the 
maintenance of certain areas;  fo reign participation is permitted. 
118. Air transport policy is the joint responsibility of  the Vice-Ministry of Transport, under the 
Ministry of Public Works, Housing and Transpor t, and the Civil Aviation Authority (AAC).  The 
AAC is responsible for regulating all civil avia tion activities and for ensuring compliance with the 
national rules and regulations.67  Thus, the AAC's functions include authorizing operators' certificates, 
granting operating permits, and regulating air trans it and air navigation services.  Moreover, it must 
ensure the maintenance of competition in the air transport sector. 
119. In its GATS Schedule of Commitments, in this sector El Salvador bound aircraft repair and 
maintenance services with respect to  market access and national treatment for the cross-border supply, 
consumption abroad and commercial presence modes.   As regards commercial presence, the Schedule 
stipulates that it is necessary to apply to CEPA  for a concession or licence to provide these services, 
with the requirement that the applicant be domicile d in El Salvador.  In practice, under the Civil 
Aviation Organization Law, a permit from the AAC is required to establish aircraft repair and 
maintenance services. 
120. The Civil Aviation Organization Law (Legislativ e Decree No. 582 of 19 October 2001) and 
amendments thereto (Legislative Decree No. 528 of 26 November 2004 and Legislative Decree 
No. 927 of 20 December 2005) are the main legal in strument regulating the air transport sector in 
El Salvador.  The chief purpose of the changes intr oduced during the review period was to enable the 
AAC to regulate or deregulate air transport services in accordance with the level of competition in the 
market, subject to the binding opinion of the Supervisory Authority for Competition.  The Law 
governs everything to do with public and private ai r transport services, ancillary services, the granting 
of licences, and infrastructure. 
121. Salvadoran legislation does not impose any limita tions on foreign investment for establishing 
airlines in El Salvador.  Foreign investors receive national treatment in respect of investment in Salvadoran airlines and there are no limitations on market access through commercial presence.  
Cabotage is reserved by law for air transport companies domiciled in El Salvador. 
122. The tariffs for ancillary services in the air tran sport sector are determined freely, with the 
exception of those services which, in the view of the AAC, have monopolistic characteristics and 
might be exposed to the exploitation of a dominant pos ition.  In this case, the tariffs are regulated by 
the AAC.  In May 2009, there were no services in this situation.  The AAC sets out the tariffs for its 
services, together with any adjustments, in a Li st of Charges published in the Official Journal.
68 
123. El Salvador has signed an open skies agreement with the United States.  It has also signed 
bilateral agreements with Mexico, Spain and the United Kingdom.  The bilateral agreements contain 
withholding clauses, that is to say, majority ownership and effective control requirements. 
124. Salvadoran legislation does not impose any restri ctions on the provision of air services in the 
absence of bilateral agreements and, according to the authorities, there is none in practice. 
                                                      
67 Online information from the El Salvador Civil Aviation Authority.  Viewed at:  
http://www.aac.gob.sv/index.php?option=com_ content&task=view&id=19&Itemid=67&lang=. 
68 Official Journal 382, No. 5:  Modifications to List of Charges 9 January 2009, and Official Journal 
379, No. 104:  List of Charges 5 June 2008. El Salvador WT/TPR/S/226/Rev.1 
 Page 85 
 
 
125. Licences for landing slots are granted on the r eciprocity principle in accordance with the 
Chicago Convention.  El Salvador participates  in the Central American Corporation for Air 
Navigation Services.69 
(vi) Professional services 
126. In El Salvador there is no single law governing professional services in general.  Enrolment in 
a professional association is not compulsory in orde r to exercise a profession.  To practise as an 
attorney or a certified public accountant it is necessary to  be a Salvadoran citizen, or for the country of 
origin of a foreign professional to offer reciprocity to Salvadorans. 
(a) General characteristics 
127. El Salvador made specific commitments  relating to professional services in its 
GATS Schedule.  It has signed the Protocol to the General Treaty on Ce ntral American Economic 
Integration (Guatemala Protocol) of 29 October 1993, under which the parties agreed to harmonize 
their legislation in order to allow the free exercise of university-level professions  in any country in the 
region.  However, in October 2009 this protoc ol had not yet had any practical consequences. 
128. There is no general law governing pr ofessional services in El Salvador. 
129. Enrolment in a professional association is not compulsory to exercise a profession.  
Qualifications awarded by Salvadoran universities, or acceptance of the recruitment of professionals 
graduating abroad, authorize the exercise of a profession both academically and legally. 
130. Salvadoran and foreign professionals possessing a qualification or diploma from a foreign 
university must have it revalidated in El Salvador.  The University of El Salvador and the approved 
private universities may authorize the recruitment of  Salvadoran and forei gn professionals who have 
graduated in other countries, subject to a resolu tion of the Ministry of Higher Education.  The 
documents required for the revalid ation procedure must be authenticated by the Salvadoran 
diplomatic or consular authorities accredited to the country of origin and by the Foreign Ministry. 
(b) Legal services 
131. To practice as an attorney it is first necessary to obtain the authorization of the Supreme Court 
of Justice of El Salvador, which will be granted onl y if the applicant is a Salvadoran citizen and the 
holder of a professional qualification in law awarded by a recognized university.  Enrolment in a professional association is not compulsory.  Under the terms of international agreements, foreign 
attorneys may provide consultancy services exclusiv ely in relation to international law and the 
legislation of the jurisdiction in which the foreign attorney is qualified.  Consultancy services may not 
include appearing before the tribunals , courts or judicial authorities. 
                                                     
 
69 International Civil Aviation Organization (ICAO), Assembly, 36th Session, Economic Commission.  
Agenda Item 40:  Regulation of international air transport services, Evolution of the Liberalization of the 
Services of Air Transport in the State Members of the Latin American Civil Aviation Commission — LACAC .  
Working Paper A36-WP/282 EC/37, 21 September 2007.  Viewed at:  http://www.icao.int/icao/en/assembl/a36/ 
wp/wp282_en.pdf. WT/TPR/S/226/Rev.1 Trade Policy Review 
Page 86 
 
 
(c) Accounting services 
132. To practise as an accountant a valid academic qualification is required.  Certified public 
accountants are associated in the Salvadoran In stitute of Certified Public Accountants (ISCP).70  The 
profession is regulated by the Oversight Board for the Public Accountancy and Auditing Profession, a 
public body established by the Law Regulating the Practice of Accountancy (Legislative Decree 
No. 828 of 26 January 2000).  The Board is respons ible for proposing draft laws and regulations 
relating to the exercise of the accounting and au diting profession, regulating the application of 
international accounting and auditing standards, and authorizing applications from professionals in 
public accounting and auditing. 
133. The Board maintains a register of certified pub lic accountants and auditors.  Holders of a 
degree in public accounting awarded by one of the approved universities in El Salvador, or by a 
foreign university, provided that it has been revalidat ed, may register to practise public accounting.  
To practise public accounting it also is necessary, in the case of natural persons, to be of Salvadoran 
nationality and, in the case of legal persons, to be incorporated in El Salvador under the provisions of 
the Commercial Code.  In addition, natural a nd legal persons from countries in which, under 
international treaties, the same right is accorded  to Salvadorans may exercise the profession of 
certified public accountant in El Salvador.71 
(d) Architectural and engineering services 
134. Only architects and engineers enrolled in the National Register of Architects, Engineers, 
Designers and Builders (National Register) ma y exercise the professions of architecture or 
engineering.  To register it is necessary to be resident in El Salvador.  There are professional 
associations that represent the interests of architects and engineers in El Salvador, the main one being 
the Salvadoran Association of Engineers and Architects (ASIA).72 
135. Architecture and engineering programmes are granted Central American regional 
accreditation through the Central American Agency  for the Accreditation of Architecture and 
Engineering Programmes (ACAAI), a regional organization formed by Belize, Costa Rica, 
El Salvador, Guatemala, Honduras, Nicaragua and Panama.  The ACAAI grants accreditation to 
programmes in architecture and related subjects a nd to programmes in engineering and its various 
specializations offered by higher education institu tions operating in the individual countries or the 
region.73  With this accreditation it is possible to practice in any Central American country. 
 
                                                      
70 ISCP online information.  Viewed a t:  http://www.cpa.org.gt/estatutos.pdf; 
http://www.iscpelsalvador. com/institucional.php. 
71 Online information from the Oversight Board for the Public Accountancy and Auditing Profession.  
Viewed at:  http://www.consejodevi gilancia.gob.sv/registros.php. 
72 ASIA online information.  Viewed at:  http ://www.asiasv.org/index.php?mod=article&cat=asia. 
73 ACAAI online information.  Viewed at:  http://www.acaai.org.pa/estatuto 1.html. El Salvador WT/TPR/S/226/Rev.1 
 Page 87 
 
 
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Bulletin), June.  Viewed at:  http://www.bcr. gob.sv/uploaded/content/ category/1548300865.pdf. 
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Central American Bank for Econom ic Integration (BCIE) (2008), Annual Report 2007 .  Viewed at:  
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