El Salvador accelerates its incorporation into Customs Union

By Eproint

"We announce our commitment to accelerate our full incorporation into Central America’s deep integration process to constitute a single customs territory, where goods from Guatemala, Honduras and El Salvador can circulate freely and in a more agile way," said María Luisa Hayem, Minister of Economy.

After a meeting with Salvadoran Government authorities on July 30, 2021, Hayem stated that the short-term goal is to install integrated border posts with trade facilitation lanes and control centers where officials from the three countries can work in a coordinated manner.

Since 2018 Guatemala and Honduras begun a Customs Union to address trade bottlenecks at the border, after expensive and time-consuming requirements of identical paperwork and duplicate processes on both sides of the border carried on for years. Through the Customs Union, both countries integrated their trade procedures at three common land borders, establishing adequate physical and organizational structures to deepen the regional integration process and, thus, facilitating the circulation of people and goods.

Supported by the Secretariat of Economic Integration in Central America (SIECA), the World Bank Group and the Central American Bank for Economic Integration, the union has lowered costs and speed up trade between both countries, cutting it from 10 hours to just 15 minutes.

According to the Economic Commission for Latin America and the Caribbean, incorporating El Salvador in the Customs Union shows positive variations for all three countries, with a combined GDP variation of between 0.3% and 0.8%. Equally, the study showed positive changes in trade, employment, and wellbeing. With the accession of El Salvador the Customs union will have an impact on 73.7% of Central America’s population and 69% of the region's trade, equivalent to USD 6,208 million, making the bloc the eighth strongest economy in Latin America.

The Secretary General of SIECA, Francisco Lima Mena, explained that El Salvador’s full integration into the union still needs the update of a roadmap that includes regional regulations, IT developments and the approval of an investment fund.