WTO SERVICES NEGOTIATIONS: ACCESS PRIORITIES FOR

UNCLAS GUATEMALA 000229

SIPDIS


USTR FOR CHARLIE HOOKER

E.O. 12958: N/A
TAGS: ETRD WTO
SUBJECT: WTO SERVICES NEGOTIATIONS: ACCESS PRIORITIES FOR
GUATEMALA

REF: SECSTATE 270998


1. Guatemala provides national treatment for most services
providers, as reflected in the limited number of
nonconforming measures for Guatemala listed in the agreed
text of the Central America Free Trade Agreement (CAFTA).
Exceptions to national treatment include maritime
transportation and financial services. In the latter
category, banks may create branches but must meet capital
adequacy ratios based on the branch's own balance sheet and
are given a shorter period than domestic banks for remedying
capital shortfalls. In addition, insurance companies must
incorporate locally and may not open branches (to be phased
out under CAFTA). Otherwise, the principal obstacle to the
U.S. services sector is in the standard array of professional
services where service providers must meet domestic academic
and certification criteria. CAFTA calls on parties "to
develop mutually acceptable standards and criteria for
licensing and certification of professional service
suppliers."


2. Branches and subsidiaries of U.S. firms provide
professional services in a wide variety of areas such as
banking, insurance, telecommunications, accounting and
advertising, but a number of other areas are largely
untouched, reflecting the country's relatively low level of
development, a history of internal conflict, and a
post-conflict environment of violent crime that dissuades new
investment and associated services. The potential interest
of various sectors to U.S. suppliers should increase to the
extent that CAFTA attracts new investors who will seek high
quality U.S. services and as the security environment
improves.


3. The list of services below is keyed to reftel and includes
an access priority ranking (1 - 5) and a market openness
ranking (high, medium or low). Explanatory notes follow
rankings, as appropriate.

--Legal services (4, medium) - Non-discriminatory
educational, exam and bar association requirements.
--Architectural services (5, medium)
--Urban planning and landscape architecture services (5,
medium)
--Computer and related services (3, high)
--Research and development services (5, high)
--Real estate services (4, medium) - A history of clouded
land titles makes consistent enforcement of property rights
difficult and dissuades real estate sector investment.
--Advertising services (3, high)
--Rental leasing services (5, medium)
--Market research and public opinion, polling services (4,
medium)
--Management consulting services (3, high)
--Technical testing and analysis services (4, high)
--Services incidental to agriculture, hunting, fishing and
forestry (3, medium)
--Services incidental to mining (3, medium) - Recent violent
protests and interference in a major gold mining project are
a reminder that mining has historically been a sensitive
issue in Guatemala.
--Energy services (2, high) - Recent efforts by the
semi-autonomous Human Rights Ombudsman to oppose subsidy
reductions and rate structure rationalization diminish
investor confidence in the sector.
--Services incidental to energy distribution (2, high)
--Placement and supply services of personnel (4, medium)
--Investigation and security (2, high)
--Related scientific and technical consulting services (4,
high)
--Maintenance and repair of equipment (3, high)
--Building-cleaning services (4, high)
--Photographic services (4, high)
--Packaging services (3, high)
--Printing, publishing (3, high)
--Convention services (3, high)
--Courier services (2, high)
--Telecommunication services (2, high) - Allegations of
interconnection abuse by a dominant carrier and a weak
regulatory institution detract from an open legal framework.
--Audiovisual services (4, high)
--Construction and related engineering (3, medium)
--Distribution services (4, medium) - CAFTA commitment to
eliminate exclusive distribution contracts grandfathered by a
1978 law.
--Educational services (2, high)
--Environmental services (2, high) - Will need to comply with
the CAFTA environmental chapter.
--Tourism and travel-related services (1, high) - High crime
rates continue to plague the tourism industry. However, the
GOG is actively recruiting foreign investment into this
sector.


--Recreation and sporting services (2, high) - Linked to
tourism.
HAMILTON


NNNN