Trade and Business in El Salvador

The objectives of the subject “Foreign Trade and Business in the Republic of El Salvador” are the following:

1. To analyze the Salvadoran Economy and Foreign Trade (Import, Export, FDI);
2. To know the business opportunities in El Salvador;
3. To explore the Salvadoran trade relations with the country of the student;
4. To know the Salvadoran Free Trade Agreements (FTAs);
5. To examine the profile of Salvadoran Companies;
6. To develop a business plan for the Salvadoran Market.

The Subject “Foreign Trade and Business in El Salvador” belongs to the following Online Higher Educational Programs taught by EENI Global Business School:

Masters (MIB): Business in America, International Business, Foreign Trade, Pacific.

Doctorate (DIB): American Business, World Trade.

Course: Business in Central America.

Learning materials in or El Salvador Salvador.

1. Credits of the subject “Foreign Trade and Business in El Salvador”: 1 ;
2. Duration: one week.

Salvadorian Free Trade Agreements and Market Access

1. El Salvador and the Latin American Economic Area;
2. Central American Integration System (SICA)
   1. Central American Common Market (MCCA) - Integrated with the SICA -.
3. Association of Caribbean States (ACS);
4. Latin American and Caribbean Economic System (SELA);
5. Mesoamerica Project;
6. Taiwan-El Salvador Free Trade Agreement (FTA);
7. El Salvador Free Trade Agreements (Central America): Chile, European Union, and Colombia;
8. El Salvador-Honduras-Taiwan Free Trade Agreement (FTA);
9. Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR);
10. Colombia-Northern Triangle (El Salvador, Guatemala, Honduras) Free Trade Agreement;
11. Dominican Republic-Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua) Free Trade Agreement (FTA);
12. Mexico-Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua) Free Trade Agreement;
13. El Salvador-Ecuador Free Trade Agreement;
14. Panama-El Salvador Free Trade Agreement (FTA);
15. United Kingdom-Central America Free Trade and Economic Integration Agreement;
16. El Salvador-Cuba Partial Scope Agreement;
17. Latin American Integration Association (ALADI) (observer).

Trade Facilitation Programs

1. World Trade Organization (WTO)
   1. WTO General Agreement on Trade in Services (GATS);
   2. WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS);
   3. WTO Agreement on Technical Barriers to Trade (TBT);
   4. WTO Agreement on Preshipment Inspection (PSI);
   5. WTO Agreement on Safeguards (SG);
   6. WTO Trade Facilitation Agreement (TFA).
2. World Customs Organization (WCO)
   1. Revised Kyoto Convention (RKC).

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American Trade and Economic Organizations:

1. Inter-American Development Bank (IDB);
2. Organization of American States (OAS);
3. Economic Commission for Latin America and the Caribbean (ECLAC);
4. Community of Latin American and Caribbean States (CELAC)
   1. European Union-CELAC Summit.
5. Forum for East Asia-Latin America Cooperation (FEALAC).

Global Organizations:

1. United Nations (UN)
   1. Conference on Trade and Development (UNCTAD);
   2. International Trade Centre (INTRACEN);
   3. World Intellectual Property Organization (WIPO).
2. World Bank (WB);
3. World Trade Organization (WTO);
4. International Monetary Fund (IMF).

The Republic of El Salvador.

1. El Salvador occupies an area of 21,041 square kilometers in North of Central America;
2. Population of El Salvador: 6.3 million people, the highest population density in Latin America (Iberian America);
3. The borders of El Salvador are Guatemala, Honduras, and Nicaragua;
4. Salvadoran Capital: San Salvador;
5. The official language of El Salvador is Spanish and Mayan languages;
6. El Salvador gained the independence from Spain in 1821;
7. Abolition of Slavery in El Salvador: 1824.

The main religion in El Salvador is Christianity (6.7 million people).

1. Catholics: 5.3 million people.

El Salvador belongs to the Western Civilization - Latin American Economic Area.

Economy of El Salvador.

1. El Salvador is situated in a strategic position in Central America, which gives it advantaged access to the largest Latin American and the United States markets;
2. The main sectors contributing to the economic growth were agriculture and services (telecommunications, transportation, and banking);
3. Salvadoran gross domestic product: 22,114 million dollars;
4. The recent global economic crisis has led to slower growth of the Salvadoran economy, but the impact has been less than in other Central American Countries;
5. The Salvadoran currency is the U.S. Dollar (USD);
6. Since 2001, the Republic of El Salvador is a dollarized economy (absence of currency risk), the economy of El Salvador presented the lowest inflation and interest rate in Latin America (Iberian America);
7. The Republic of El Salvador ranks as the fourth most transparent country in Latin America (Transparency International);
8. The rating agency Moody has been giving “investment grade” to El Salvador since 1997;
9. The Macroeconomics stability in El Salvador allowed closing with a 4.7% economic growth rate of the gross domestic product;
10. The inflation in El Salvador has decreased since the 90 until reaching a rate of 4.9%, the lowest rate at the regional level;
11. This is a result of the reforms that the Government of El Salvador implemented in 1989, with the goal of stabilising an economy to attract the foreign direct investment: deregulation of fuels, fiscal reforms, international trade barriers elimination, public finances strengthening, financial system reforms, monetary integration policy, which stipulates that the United States dollar is the official currency of El Salvador since the law came into effect;
12. The aforementioned has led El Salvador to obtain the recognition from prestigious international entities that have distinguished El Salvador for its economic stability, ease of doing business, and competitiveness, among other aspects.

Salvadoran Companies.

1. In 2001, after establishing an excellent business relationship with the Investment Promotion Agency, the Spanish Calvo Group, with a presence in five continents, decided to install its largest tuna processing factory in El Salvador. The new plant, built on the Pacific coast of the department of La Unión, in the eastern zone of El Salvador, provides jobs to 3,000 employees;
2. Pettenati is one of the largest textile companies in Brazil. Pettenati started operations in El Salvador in November 2008 like easiness to reach the United States Market taking advantage of Free Trade Agreements;
3. SYKES is a global leader providing customer contact management solutions and services in business process outsourcing (BPO) arena. In 2001 the company research Latin America and the Caribbean looking for a destination to install the contact centre. They found many of these factors in El Salvador and started operations in 2003. SYKES El Salvador has 1,400 employees.

International Trade of El Salvador.

1. The Foreign Trade of the Republic of El Salvador experienced a severe recession in 2009 (global economic crisis) affecting the external demand;
2. Salvadoran imports: 7,254 million dollars;
3. The main export and import markets of the Republic of El Salvador: foreign trade with the largest trading partners, which are the markets with which El Salvador has signed Free Trade Agreements and the Central American Common Market accounted for 90% of the Salvadoran exports and 70% of its imports;
4. The main Salvadoran Export Markets are Taiwan (86%), Mexico (17%) and the Dominican Republic (7%);
5. Top twenty-five Salvadorans export products account for 54% of the total exports: textiles (26%), agribusiness (11%), food, and beverages (4%), machinery (3%), paper products and cardboard (3%) and chemical industries (2%);
6. Among the top twenty-five imported products are mining, textiles, agribusiness, chemical, food and beverages, machinery, mechanical and electrical equipment, plastic, and rubber manufacturing.

PROESA, the Investment Promotion Agency of El Salvador, is the Government agency responsible to promote the foreign direct investment (FDI) in El Salvador.

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