RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/226 
6 January 2010  
 
(10-0001) 
Trade Policy Review Body Original: Spanish 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
EL SALV ADOR 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by El Salvador is attached. 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trad e Policy Review Body on El Salvador. El Salvador WT/TPR/G/226 
 Page 3 
 
 
CONTENTS 
 
  Page 
I. INTRODUCTION 5 
II. ECONOMIC AND TRADE POLICY ENVIRONMENT 5 
III. TRADE POLICY DEVELOPMENTS 7 
 (1) I NTRODUCTION  7 
 (2) M ULTILATERAL SYSTEM  7 
 (3) R EGIONAL FORUMS  8 
 (i) Central American Common Market 8  (ii) Bilateral relations 8 
IV. FUTURE POLICY  DIRECTIONS 8 
 
 
 El Salvador WT/TPR/G/226 
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I. INTRODUCTION 
1. Since its last trade policy review, El Salv ador has made considerable progress on the 
economic front and has continued to consolidate its st rategy of appropriate inte gration in international 
trade through active participation in the trad e negotiation processes and through policies aimed at 
attracting foreign direct investment. 
2. The success of this trade policy h as been reflected in a sharp growth in exports of Salvadoran 
products, chiefly non-traditional products, and in  an increase in foreign direct investment. 
3. El Salvador's trade policy agenda will conti nue to focus on improving foreign market access 
for the country's products and services, taking ad vantage of the free trade agreements and the 
additional market opportunities that could resu lt from the multilateral negotiations under the 
Doha Round, and on protecting El  Salvador's trade interests and diversifying its exportable 
production. 
4. The ultimate aim of this strategy is to contribute to national human development policies in 
harmony with the new technological trends and de velopments which, among other things, help to 
generate new sources of employment and to improve  the living standards and welfare of Salvadoran 
citizens, thereby contributing to the fulfilment of the Millennium Development Goals. 
II. ECONOMIC AND TRADE POLICY ENVIRONMENT 
5. El Salvador's economic progress since the l ast trade policy review in 2003 has been 
considerable, chiefly thanks to the implementati on of macroeconomic policies aimed at achieving 
sustained growth in the country's gross domestic product (GDP), to the promotion of investment and 
hence employment, to the sound dom estic financial system, and to the ability to control inflation. 
6. Real GDP grew at an average rate of 3.1 per cent during the period from 2003 to 2008, 
peaking at 4.7 per cent in 2007.  Meanwhile, inflation was kept below 5 per cent during the period 2003-2007, reaching 5.5 per cent in 2008 chiefly owing to the increase in food and fuel prices.  In spite of this, inflation began to dec line during the first months of 2009. 
7. In the fiscal policy area, efforts have been  made over the past few years to stabilize 
government finances, keeping the fiscal deficit down to reasonable levels, est ablishing a government 
policy to control expenditure, and im proving the tax collection system. 
8. On the domestic front, the economic results at June 2009 reflect the serious impact of the 
international financial crisis:  foreign trade flows were down, chiefly owing to  a decline in demand in 
the main destination markets as well as a fall in fa mily remittances, which account for about 16.2 per 
cent of GDP.  In fact, economic activity is still on th e decline, with a GDP for the first quarter of 2009 
of -1.8 per cent and a decrease in the formal employment indicator. 
9. Although we are seeing the first promising signs  that the world economy may be stabilizing, 
the recovery on the domestic front is generally expected to be slow.  At this stage, it is still difficult to 
assess the precise impact of the crisis on our economy.   But quite apart from the crisis, last November 
the country was seriously affected by Hurricane Ida,  which caused loss of life and damage to housing, 
streets and bridges.  According to official estim ates, total losses exceeded one billion dollars.  As a 
result, national plans had to be rethought in a number of areas. 
10. Trade in goods and services continues to be one of  the main motors of El Salvador's economy.  
During the period under review, exports grew on aver age by 10 per cent per year starting in 2005.  WT/TPR/G/226 Trade Policy Review 
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However, this trend was reversed by the interna tional economic crisis, and in 2009 exports declined 
by 16.5 per cent. 
11. As regards the composition of El Salvador's e xports, during the period un der review industrial 
goods accounted, on average, for 74 per cent of the total, while agricultura l goods made up 26 per 
cent.  Among the main exports were traditional produc ts such as sugar, coffee and shrimps, as well as 
made-up articles and non-traditional products, whose sh are has increased sharply over the past few 
years. 
12. During the period under review, imports showed an upward trend, with an average growth 
rate of 10 per cent per year starting in 2003.  However, during the first quarter of 2009, annual 
imports fell by 28.7 per cent, with intermediate goods and inputs for the maquila industry leading the 
way. 
13. Services activities in El Salvador grew at an increasing pace.  In 2008, services exports 
reached US$1,510,000,000.  Trav el services provide the main source of services export revenue in 
El Salvador, with transport in second place follo wed by telecommunications and financial services. 
14. Given their continued importance in prom oting the country's economic and social 
development and in encouraging a nd attracting investment, particul ar mention should be made of 
schemes such as the free zones. 
15. Foreign direct investment (FDI) in El Salv ador grew by 13.2 per cent between 2007 and 2008 
to US$6,701,400,000, of which US$1,999, 800,000 correspond to 2008.  Among the sectors which 
attracted the most FDI were the financial, communications and electricity sectors.  This growth in 
FDI was possible thanks to the efforts made to improve the business climate by offering investors 
economic stability and legal security.  However, the current economic situation could adversely affect 
this trend. 
16. Overall, El Salvador has taken a considerab le number of initiatives to make it easier for 
investors to establish themselves in the country, fo r example:  reforming the Intellectual Property 
Law;  reforming the Commercial Code and alteri ng the minimum capital requirement for setting up a 
company;  introducing a single window in the Natio nal Investment Office (O NI) to act as a one-stop 
shop for investors;  and creating the Comprehensiv e Services Window at the Commercial Registry of 
El Salvador, bringing together the offices of the National Registration Centre, the Ministry of Finance, the Ministry of Labour, and the Salvadoran Social Security Institute (ISSS), to help with business registration formalities. 
17. Similarly, aware of the need for a clear regulat ory framework that would enable it to develop 
a more competitive and efficient market based on tr ansparency and accessibility, El Salvador created 
the Law on Competition as well as an autonomous authority, the Supervisory Authority for Competition, which applies the Law on Competition independently. 
18. The Law on Competition seeks to promote free competition among economic agents 
operating on the market in order to boost economic efficiency.  It regulates practices considered to be 
anti-competitive and establishes rules governing economic concentrations. 
19. Another of the main trade policy areas that has received special attention over the past few 
years is trade facilitation.  The time required for trade transactions has been considerably reduced 
through the simplification of formalities and promo tion of the use of electronic data systems among 
the government offices concerned.  In particular , transactions have been computerized, export El Salvador WT/TPR/G/226 
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formalities centralized through the creation of the Single Export Window, and a quality system 
implemented by the government agencies in charge of foreign trade. 
III. TRADE POLICY DEVELOPMENTS 
(1) INTRODUCTION  
20. The main objective of El Salvador's trade policy is to promote, facilitate and consolidate the 
country's integration into the world economy by st rengthening trade and investment flows between 
El Salvador and the rest of the world, and by fine-tuning the Central Amer ican integration process. 
21. The achievement of this objective will essentia lly involve enhancing access for Salvadoran 
products and services to foreign markets by taking advantage of the free trade agreements and the 
additional market opportunities offered by the multi lateral negotiations, and diversifying exportable 
production. 
(2) MULTILATERAL SYSTEM  
22. El Salvador remains committed to the multilateral trading system which, it is convinced, will 
help members to integrate into world trade syst ematically and according to transparent rules. 
23. El Salvador is taking an active part in the Doha Round, and has made contributions to the 
negotiations on agriculture, market access for non- agricultural products (NAMA), rules, trade in 
services, trade facilitation, intellectual property, an d others.  It would like to secure a balanced 
outcome to these negotiations, and will contribute in a balanced manner to achieving that goal, taking 
account of its development needs and of special circumstances. 
24. Accordingly, El Salvador is putting forward va rious proposals with countries that share its 
approach, such as the Group of Small, Vulnerable Economies and the Group of 33. 
25. El Salvador also attaches considerable impor tance to the discussions on Aid for Trade, an 
initiative which it hopes will help the developing countri es to take advantage of the benefits resulting 
from the international commitments that they have  been assuming, as well as those to be assumed 
under the current Round which, it is convinced, are a necessary complement in that respect. 
26. In addition to taking part in the negotia tions under the Doha Development Agenda, 
El Salvador also takes a special interest in the ordinary work of the different WTO bodies and 
committees, in particular the issues being discussed in  the areas of technical barriers to trade, sanitary 
and phytosanitary measures and TRIPS, as well as the trade-related envir onmental discussions, and 
others.  It also attaches particular importance to the work being done by the Dispute Settlement Body, 
which ensures compliance with WTO rules and which is currently being discussed by Members with a 
view to improving the system. 
27. El Salvador participated in the Seventh Ministerial Conference, which discussed the 
WTO's prospects in an effort to strengthen the set of transparent and balanced rules governing trade, 
as well as the Organization's institutional framework. WT/TPR/G/226 Trade Policy Review 
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(3) REGIONAL FORUMS  
(i) Central American Common Market 
28. During the period under review, El Salvador, together with the other countries of the 
Central American region, continued to deepen its integration process with a view to building up a 
customs union.  Recent developments include th e conclusion of a Framework Agreement for the 
Establishment of a Central American Customs Un ion on 12 December 2007 which was ratified by 
El Salvador as early as July 2008.  Similarly, in  January 2009 El Salvador and Guatemala signed a 
Protocol amending the Framework Agreement for th e Establishment of a Customs Union between the 
territories of the Republic of El Salvador and the Re public of Guatemala in order to give the process a 
common institutional organization with the authority to manage and administer the various stages, 
activities and procedures involved. 
29. As of May 2009, the common external ta riff was 95.7 per cent harmonized among the 
countries of Central America, and most of the produc ts originating in the region are traded freely. 
30. As of June 2009, 35.7 per cent of Salvadoran exports went to the other Central American 
countries, which together constitute the country's second export destination, while imports from the 
Central American countries accounted for 21.6 per cent of Salvadoran imports. 
(ii) Bilateral relations 
31. Alongside its efforts in the multilateral fra mework, El Salvador is pursuing trade 
opportunities with its leading partners as a means of fu rthering its integration in world trade.  To that 
end, it has signed bilateral trade agreements w ith Mexico, the Dominican Republic, Chile, Panama, 
United States, Chinese Taipei, and Colombia. 
32. At the same time, it is negotiating an associa tion agreement with the European Communities 
and is in discussion with Canada and CARICOM. 
33. As a whole, El Salvador's trade within th e framework of these agreements accounts for 
approximately 88 per cent of total exports and 79 per cent of total imports.  It is therefore important 
that the government focus its efforts on taking full advantage of the opportunities afforded by these 
agreements, which give it preferential access for its goods and services exports.  El Salvador considers 
that these agreements contribute significantly to  economic growth and the creation of new jobs. 
IV. FUTURE POLICY DIRECTIONS 
34. Following the presidential elections of Marc h 2009, a new government took over on 1 June, 
so that the principle of democratic change-over continues to be upheld. 
35. El Salvador will continue its efforts, in strict  compliance with its international commitments, 
to achieve the proper integration of the country into the international economy by seeking better 
market access conditions for its products and ser vices.  The goal of this new Government is to 
continue encouraging the country's active participa tion in bilateral and multila teral trade negotiations.  
Essentially, El Salvador will create mechanisms to narrow the foreign trade gap by supporting 
exportable production of traditiona l goods, non-traditional goods, maqu ila activities with increased 
value added, etc.  It also plans to contribute to th e diversification of export destination markets;  build 
up national production capacity, making it more compe titive in relation to imported goods in order to 
reduce the country's vulnerability to changes in the world economic climate;  and to promote foreign 
trade that generates employment and contribut es to boosting productivity and future capacity. El Salvador WT/TPR/G/226 
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36. The main objectives of El Salvador's trade policy will be:  to create jobs, to attract foreign 
investment, to promote production chains and to stre ngthen competitiveness.  This will be done with a 
view to generating well-paid, quality employment  opportunities that should help to improve the 
overall standard of living of the population wh ile offering better development opportunities. 
37. El Salvador will continue to work towards en suring a good negotiating climate by creating a 
more transparent economy with clear market ru les, an economy that inspires confidence among 
investors and the population as a whole. 
38. Fiscal policy will continue to aim towards optim izing current expenditure through efficient, 
honest, transparent, disciplined and responsible ma nagement and administrati on of public finances, 
ensuring fiscal sustainability, responsible macroe conomic management and compliance with the 
relevant legislation.  It also hopes to progressive ly and steadily raise returns on revenue and improve 
the allocation of public expenditure and investment  with a view to substantially reducing poverty, 
fostering inclusiveness and reducing ine quality in the Salvadoran population. 
39. Another essential target will be to reduce trade transaction costs, chiefly through 
improvements to the administrative processes linke d to customs facilitation which will undoubtedly 
contribute to the development of international trad e, and to guarantee comp liance with the rules and 
regulations governing the continuous  flow of goods through procedur es aimed at the facilitating and 
controlling of the management and administration of customs activities. 
40. Finally, this Government will continue to co mmunicate closely with Salvadoran society and 
the country's productive sectors so that it can conduct the country's trade policy in a cooperative and 
transparent manner, and ensure that the benefits of  trade serve to boost th e living standard of its 
population. 
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