Flows of Goods and Services
In 2003, flows of goods measured more than U.S.$8.9 billion with $3.1 billion in exports and $5.8 billion in imports. Service flows totaled over $1.8 billion with $930 million in imports and approximately $782 million in exports. El Salvador’s top five trading partners are the United States, Guatemala, Mexico, Honduras, and Costa Rica, with the United States accounting for almost two-thirds of exports and half of imports and other traders accounting for approximately 10 percent or less each. Major products flowing out of the country are coffee, sugar, and textiles. Major products flowing into the country are consumer goods, automobiles, food, raw materials, and capital goods. Although coffee and sugar have been a significant part of the Salvadoran economy for decades, the economy has become more diversified and exports include fish, balsam, textiles, leather goods, clothing, processed food, tobacco, furniture, wood and metal products, and chemicals.
To further facilitate trade, El Salvador must improve the laws, institutions, and operations of its trade-related institutions, including its Customs agency. These improvements will help create modern institutions that are managed, staffed, and equipped to achieve the appropriate balance between facilitation and control. These advancements, in turn, will provide reduced trade transaction costs.
El Salvador’s trade-related institutions are making progress in developing more modern and reliable public services through numerous and significant changes to its regulations, organization, and operations. Recent changes include passage of customs simplification laws compliant with international standards, agency integration at border crossings, improvements in customs recruiting and training, streamlining the export process, and increased security. These actions have led to reduced clearance times and trade transaction costs.
Yet, although there has been significant progress, serious obstacles hinder the efficient and secure movement of trade across Salvadoran borders. Major challenges facing El Salvador include further streamlining customs clearance processes, further integrating of border institutions, enhancing risk management, maintaining and improving on recent gains in security and integrity, and addressing border agencies’ infrastructure needs.
In this section, we analyze legal, institutional, and operational constraints that impede trade expansion and recommend ways to minimize those constraints. First, our analysis focuses on the legal framework for the primary border institution, Customs. Second, we consider the institutional issues regarding Customs management, organizational capacity, and operations. Third, we review other key public institutions involved in trade facilitation—including the Ministries of Agriculture, Health, and National Police—and their role in trade facilitation. Last, we identify major recommendations to improve trade facilitation in El Salvador.
