International Trade Law
El Salvador has the basic international trade conventions in place plus a regional integration commitment and several free trade agreements. Historically, El Salvador has been the most industrialized and densely populated nation in Central America. It has been a member of the Central American Common Market (CACM) since the CACM was founded in 1962, and in recent years it has been one of the CACM’s most enthusiastic supporters. Industry represents 24 percent of the country’s gross domestic product, compared with only 11 percent for agriculture.
El Salvador became a member of the World Trade Organization (WTO) in 1995. It has free trade agreements with Mexico, Chile, and the Dominican Republic. Most of its exports enter the United States, Europe, and Japan duty-free under generalized systems of preferences unilaterally established by those destination markets. The country’s significant level of dependence on manufactured goods, compared with agricultural goods, helps to explain in part the nation’s consistent support for Central American economic integration, CAFTA, and various free trade agreements with other nations.
El Salvador imposes no special registration requirements for imports or exports, save on restricted items such as firearms, ammunition, explosives, medications, pesticides, and other items of toxic potential and on agricultural products subject to quotas, such as corn and rice. In essence, its schedule of tariff duties constitutes its only regulation of foreign trade for most goods.
Potentially, although it has no law on competition, the Salvadoran Constitution does prohibit monopolies and could be used against monopolies and monopolistic practices by either national or international concerns, but to date it never has been. Disputes growing out of its international trade generally are subject to WTO rules, also specifically applied through the special chapters in each of its bilateral agreements and by the Central American treaty for issues involving regional partners.
The Salvadoran Customs Service is a vigorous, effective agency that facilitates the movement of goods in and out of the country. Already very competent, it is striving to become more so.
Salvadoran international trade legislation is not highly developed, nor is it an area of the law that gives rise to frequent disputes before Salvadoran authorities. By and large, the country is content to allow international treaties like the WTO and the CACM, which become national law upon their ratification, to fill up the substantive rules that govern international trade. There is a concern that laws in this area need to be fleshed out, and they will continue to be reformed gradually.
As they described during the assessment process, private sector users of the agencies that administer international trade matters in El Salvador seem quite satisfied with current practices. They indicate that, across the board, procedures are handled quickly—in a transparent matter and with virtually no corruption. They believe the Government, from the president down, attaches great importance to international trade and generally supports it in every way it can.
Within the Salvadoran government, notably the Legislative Assembly, significant resistance to the WTO, CACM, and freer international trade does exist. Specifically, the political party Farabundo Martí National Liberation Front (FMLN) opposes free trade economic policies and does not agree with the CAFTA. To this point, however, the FMLN has neither the votes nor the representative voice to direct policies in this area.
