The Importance for Guatemala of Trade with the United States

 

Tony Malouf

Vice President CACIF

Historically, trade with the United States of America has played a crucial role for Guatemala. Since 1951, the U.S. has been the main destination for Guatemalan exports and this position was strengthened after the signature of the Central America – Dominican Republic Free Trade Agreement (DR-CAFTA). Despite the diversification of goods and markets that has developed in the country and which has meant being less dependent on the United States, the latter is still Guatemala’s main trading partner.

The Free Trade Agreement signed by the United States, Central America and the Dominican Republic (DR-CAFTA) in 2006 has facilitated trade and investment by eliminating import duties and other barriers to trade in goods and services. This, in turn, has opened the doors to a market of more than 320 million people

34.9 percent of the country’s exports now go to the United States. The main goods exported to the U.S. are garments, bananas and, thirdly, semiprecious metals and stones.

Export Destinations, 2015
United States El Salvador Honduras Nicaragua Canada Mexico Costa Rica

 

Source: CIA Factbook 2015

 

 

During the first quarter of 2016, the country exported a total of US$5,389,605,882, of which 33.45 percent (US$1,802,942,573) went to the United States.

The United States is also Guatemala’s main source of imports, especially oil by-products, machinery and mechanical devices, vehicles and transportation material. Guatemala currently imports 38.3 percent from the United States, compared with 13.4 percent from China.

The United States sees Guatemala as a destination for its exports, which makes it attractive for investors. According to the Bank of Guatemala, in 2015 the United States invested US$347.8 million, or 28.8 percent of the country’s foreign investment, in the country. These investments were made mainly in power, the manufacturing industry, commerce, banks and insurance companies.

The United States have been the main destination of exports of garments and textiles, especially since the signing of DR-CAFTA. Guatemala’s industry has specialized in catering to the needs of customers in the United States by creating more efficient plants, with more technology, that produce better-quality garments. The United States have, in turn, taken a fresh look at the region as a center for the supply of this type of goods and services, thanks to its strategic position and stability.

Trade relations with the United States, including the garment and textile industries and other sectors, have encouraged technological innovation, created jobs, improved the living conditions of the population and offered the challenge of making efforts geared towards diversification, quality improvement and the supply of goods and services.

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