Tax News | 05 September 2013

Guatemala Opts Into Central American FTA With Mexico

by Mike Godfrey, Tax-News.com, Washington

It has been announced that, as Guatemala has now approved its participation in the free trade agreement (FTA) between Mexico and the other Central American countries – Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua – the agreement entered into full effect on September 1, 2013.

Initiated in June 2008, with the first round of talks taking place in May 2010 and negotiations being concluded in October 2011, the FTA between Mexico and Central America was signed in November 2011. It has had to be ratified by the Governments of all of the countries before it could enter into force.

As the FTA was approved by Mexico in January and also by El Salvador and Nicaragua in September 2012, before Honduras and Costa Rica agreed to the FTA in January and July this year respectively, the agreement is now considered to be in full effect following Guatemala’s accession. However, the FTA only applies between Mexico and the other countries, but not among them.

The objectives of the new FTA include the increase and facilitation of trade by harmonizing tariffs, procedures and rules between Mexico and the other countries in the region; and by easing trade administration by, for example, having only one certificate of origin.