72627 v1 World Trade Indicators 2009/10 Guatemala Trade Brief Trade Policy milk, yellow corn, eggs, maize flour, vegetable oil, chicken, rice, and fertilizers.2 The latest MFN Tariff Trade Restrictiveness Index (TTRI)1, on which Guatemala is ranked 68th out of 125 countries and scores 5.9 percent, indicates that its External Environment trade regime is more open than that of an average Latin America and Caribbean (LAC) or lower-middle- According to the Market Access TTRI3 (including income country (with TTRIs of 7.6 and 8.6 percent, preferences) of 1.4 percent, on which it is ranked 35th respectively). Its tariffs on both agricultural and (out of 125), Guatemala’s exports enjoy low tariff manufactured goods (with TTRIs of 8.4 and 5.5 barriers compared to the LAC and lower-middle- percent, respectively) are lower than the average for its income country averages of 2.0 and 2.3 percent, comparators. Its TTRI including preferences is 4.9 respectively. The 2008 rest of the world simple average percent, a significant decrease from 7.2 percent in applied tariff (including preferences) on Guatemala’s 2006. The 2008 simple average MFN tariff is low at exports has risen to 10 percent from 3.3 percent in 5.6 percent, and when taking into account the 2004. But, when taking into account the level of preferences, the simple average applied tariff is even exports, it is much lower at 1.6 percent, with its lower at 5.4 percent. Guatemala’s maximum tariff agricultural exports facing a tariff of 2.7 percent and its (excluding alcohol and tobacco) is 40 percent, lower non-agricultural exports of 0.9 percent. than the regional average of 74.9 percent. The trade Guatemala’s most important trade arrangement is the policy space, as measured by the wedge between DR-CAFTA with the United States that became bound and applied tariffs (the overhang), was effective in 2006. DR-CAFTA consolidates and maintained at around 36.6 percent (in 2008) expands the current access that Central American throughout the 2000s. Regarding the extent of its countries currently have to the U.S. market, while commitment to trade liberalization in services, extending broadly reciprocal access for U.S. goods to Guatemala ranked 107th out of 148 countries their own markets. The decision to make the according to the GATS Commitment Index. The provisions of the agreement applicable multilaterally is government rarely uses nontariff barriers and does not deepening regional integration efforts and facilitating require import licenses. the creation of a Central American Customs Union.4 In response to the food crisis, in February 2008, Negotiations for an Association Agreement between Guatemala and three of its fellow Central American the EU and six Central American countries, including Common Market countries canceled import taxes on Guatemala, which began in 2007 and include a free wheat flour until the end of 2008 or up to a maximum trade agreement (FTA), have been postponed as of of 10,000 imported tons. In May 2008 the government July 2009, due to the political instability in Honduras.5 unilaterally eliminated tariffs on wheat flour, powdered Guatemala has a flexible exchange rate policy with limited intervention.6 In nominal terms the Guatemalan quetzal appreciated by 1.5 percent against the U.S. dollar in 2008.7 Unless otherwise indicated, all data are as of August 2009 and are drawn from the World Trade Indicators 2009/10 Behind the Border Constraints Database. The database, Country Trade Briefs and Guatemala ranked 110th in the Ease of Doing Business Trade-at-a-Glance Tables, are available at index in 2009, which compares the business http://www.worldbank .org/wti. environment of 183 countries. In addition, the Logistics Performance Index, a measure of the ease of If using information from this brief, please provide the trade facilitation, rates Guatemala at 2.53 on a scale following source citation: World Bank. 2010. “Guatemala from 1 to 5 with 5 being the highest performance. Trade Brief.� World Trade Indicators 2009/10: Country Trade This is compared with 2.57 for the LAC region and Briefs. Washington, DC: World Bank. Available at 2.47 for countries in the lower-middle-income group. http://www.worldbank.org/wti. World Trade Indicators 2009/10 Guatemala Trade Brief Guatemala ranked 75th in the world and 12th in the Notes LAC region (with Chile leading the regional group). The area in which it performed the best was timeliness 1. TTRI calculates the equivalent uniform tariff that of shipments in reaching their destinations and it would keep domestic welfare constant. It is weighted by needs most improvement in increasing the quality of import shares and import demand elasticity. transport and information technology (IT) 2. FAO, 2009. infrastructures. 3. MA-TTRI calculates the equivalent uniform tariff of trading partners that would keep their level of imports constant. It is weighted by import values and import Trade Outcomes demand elasticities of trading partners. Guatemala’s real (in constant 2000 U.S. dollars) 4. SICE, 2009. growth in total trade of goods and services was 8.4 5. Bilaterals.org, 2009, and European Commission, 2009. percent in 2007, and accelerated to a high of 10.8 6. WTO, 2008. percent in 2008, but is expected to shrink by 2.5 7. IMF, 2009. percent in 2009. The real growth rate of exports 8. WTO, 2008, and Guatemala Central Bank, 2009. dipped slightly from a high of 10.8 percent in 2007 to 9. Guatemala Central Bank, 2009b. 8.1 percent in 2008. Imports of goods and services 10. Guatemala Central Bank, 2009a. accelerated to a high of 12.5 percent in 2008. Both exports and imports are expected to decline in 2009, by 2.6 percent and 2.4 percent, respectively. References Bilaterals.org. April 2009. “EU-Central America.� Total trade grew in nominal terms by an estimated . 19.3 percent in 2008. Nominal exports grew by an Economist Intelligence Unit (EIU). 2008. Country Profile estimated 21.1 percent. The United States remains Guatemala’s main trading partner (accounting for 2008: Guatemala. EIU. almost 40 percent of exports and imports) followed by European Commission. July 1, 2009. “EU-Central Central America. One third of total goods exports are America: Association Agreement’s Talks Postponed exported by the maquila industry, and over half of this Following The Situation in Honduras.� . coffee, which accounts for around 12 percent of all Food and Agriculture Association of the United Nations exports, grew by 19 percent in 2008. The next largest (FAO). 2009. “Policy Measures Taken by exports, sugar and bananas, make up 7 and 6 percent Governments to Reduce the Impact of Soaring of all exports and grew by 5.6 and 6.3 percent, Prices (As of 15 December 2008).� FAO, New respectively.8 In contrast to the strong growth in 2008, York, NY. nominal exports are expected to fall by 8.5 percent in Foreign Trade Information Service (SICE). 2009. 2009. Year-on-year export growth rates have “Central America-Dominican Republic-United States.� fluctuated between growth and decline for each of the . this period is 4.5 percent lower than the total for the Guatemala Central Bank. 2009a. “External Trade Statistics.� same period in 2008.10 Nominal import growth was to decline by 11.2 percent in 2009 due to a contraction ———. 2009b. “Foreign Exchange Export Earnings.� in domestic demand as well as lack of available credit. economy, having accounted for 11.4 percent of GDP International Monetary Fund (IMF). 2009. International in 2008. However, this is a decrease from 12.5 percent Financial Statistics (Country Tables). IMF, of GDP in 2007. FDI inflows accounted for 2.2 Washington, DC. percent of GDP in 2008. World Trade Organization (WTO). December 23, 2008. “Trade Policy Review: Guatemala.� WTO, Geneva.