Friday, February 12, 2010
The World Trade Organization’s (WTO's) latest Trade Policy Review on El Salvador has commended the authorities on their efforts to liberalize trade but has warned that fiscal privileges still distort economic incentives.
“El Salvador has continued to liberalize its trade regime since its previous Trade Policy Review in 2003, and has made progress in modernizing customs, eliminating unnecessary licensing requirements, enhancing the transparency of technical regulations and SPS (sanitary and phytosanitary) measures, and strengthening the institutional framework for competition policy and government procurement. As part of its liberalization efforts, El Salvador has also entered into three new preferential trade agreements and continues to assign high priority to deepening Central American integration,” the WTO Secretariat’s report states.
However, the WTO said that economic growth has been "modest" and underpinned by remittances from abroad. "In addition, the performance of the manufacturing sector has been below expectations, notwithstanding El Salvador’s long-standing policy of granting subsidies and fiscal privileges to exporters,” the report stated.
The WTO urged El Salvador to address the challenges it faces by taking additional steps to liberalize its trade regime on an Most Favored Nation (MFN) basis and reassessing its export strategy with a view to eliminating economic distortions.
The report along with a policy statement by the government of El Salvador, formed the basis for the third Trade Policy Review (TPR) of El Salvador by the Trade Policy Review Body of the WTO on February 10 and 12, 2010.