FEBRUARY 2009 TRADE POLICY REVIEW OF GUATEMALA

UNCLAS GENEVA 000127


EEB/TPP/MTAA FOR CRAFT
USDA/FAS/ITP, MTND
USDOC FOR ITA

E.O. 12958: N/A
TAGS: ETRD WTRO USTR GT XK XM
SUBJECT: FEBRUARY 2009 TRADE POLICY REVIEW OF GUATEMALA


1. SUMMARY: WTO Members conducted the Trade Policy Review of
Guatemala on February 4 and 6, 2009. The head of Guatemala's
delegation, Vice-Minister Morales, discussed Guatemala's export
market diversification efforts and its firm belief in the
rules-based multilateral trading system, unshaken in the current
period of economic stress. Members highlighted Guatemala's
commitment to trade liberalization and advancements in the areas of
customs procedures and protection of intellectual property rights.
Areas of Members' concern included the large gap between bound and
applied rates, a lack of transparency in the government procurement
regime, and the need to phase out export subsidy programs by the
2015 deadline. END SUMMARY.

Statement of the United States


2. The representative of the United States made the following
remarks:


3. "The United States is pleased to welcome Vice Minister Morales,
Ambassador Sperisen-Yurt, and the rest of the Guatemalan delegation
to Guatemala's second Trade Policy Review. A great deal has
happened since Guatemala's last review in 2002, as the government
has continued to place a high priority on trade liberalization as
the core of its national development strategy. Guatemala's report
provided us with valuable background information, a useful
perspective and a framework to understand the government's trade
policy regime and practices since 2002. We also appreciate the WTO
Secretariat's comprehensive report, and thank the discussant,
Ambassador Mario Matus, for his important contributions to this
review."


4. "The United States and Guatemala enjoy a strong trade and
economic relationship. Our partnership takes place within the
broader context of excellent cooperation on a variety of matters of
mutual interest, including global UN peacekeeping efforts, ongoing
regional security and counter-narcotics efforts. Trade and economic
integration between the United States and Guatemala is an important
element of our bilateral relations and generates important benefits
for both countries and the region. Our bilateral trade was $7.1
billion in two-way trade in goods during 2007."


5. "For many years, our trade relationship with Guatemala was
driven by the unilateral trade preferences that the United States
provides through the Caribbean Basin Initiative trade preferences
program. This program has contributed to economic growth and
development in Guatemala. Our bilateral relationship changed
recently from one based on unilateral trade preferences to one based
on reciprocal free trade through the Dominican Republic - Central
America - United States Free Trade Agreement (DR-CAFTA),a regional
free trade agreement between the Dominican Republic, the United
States, and five Central American countries (Costa Rica, El
Salvador, Guatemala, Honduras, and Nicaragua)."


6. "Both the Secretariat's and Guatemala's reports indicate that
Guatemala is pursuing a strategy of trade liberalization at the
multilateral, regional, and bilateral levels. The United States
commends Guatemala on its path to trade liberalization, including
the adoption of liberalization measures -- unilaterally, regionally
and multilaterally. On the multilateral front, Guatemala has been
an active and constructive participant in the Doha Round, and we
greatly appreciate Ambassador Sperisen-Yurt's role as Chair of the
Trade Facilitation Negotiating Group. During the review period,
Guatemala submitted several notifications to the WTO for example on
domestic support for agriculture, customs valuation, and technical
barriers to trade."


7. "At the regional and bilateral levels, trade liberalization and
economic integration has been very important for Guatemala's trade
with its neighbors. The Central American Common Market establishes
the framework for Guatemala's trade policy. Moreover, CACM exports
have been key to Guatemala's export growth, representing 28.3
percent of its exports in 2007 and 19.3 percent of its export growth
over the previous year."


8. "Entry into force of the DR-CAFTA is another important trade
liberalizing step that Guatemala took during the review period. The
DR-CAFTA was signed in August 2004 and entered into force for
Guatemala on July 1, 2006. Under the agreement, the Parties remove
tariff and non-tariff barriers to trade and investment, which will
strengthen regional trade and economic integration. The DR-CAFTA
also includes important disciplines relating to: customs
administration and trade facilitation, technical barriers to trade,
government procurement, investment, cross-border trade in services,
financial services, telecommunications, electronic commerce,
intellectual property rights, transparency, and labor and
environmental protection. As Guatemala, the United States, and our
DR-CAFTA colleagues implement our FTA, we believe that our
commitments will contribute widely to the multilateral trading

system and expand world trade."


9. "In addition, Guatemala has free trade agreements with Mexico,
the Dominican Republic and Chinese Taipei and has concluded
agreements with Colombia, Chile, Panama and Belize, which are in the
process of ratification. Guatemala, together with the rest of
Central America, is also in the process of negotiating a free trade
agreement with the European Union."


10. "As noted in the Secretariat's and the government's reports,
the period of review was an active time for trade policy
liberalization and market opening strategies in Guatemala, and one
in which Guatemala's trade and economic liberalization policies and
integration have helped to mitigate the negative impact of economic
downturn. Guatemala implemented a number of significant
modifications to its domestic trade regime during this review
period. Many of these changes were necessitated by commitments that
Guatemala undertook in the DR-CAFTA. These changes can only enhance
global trade."


11. "In customs administration, for example, the Secretariat's
report notes that Guatemala has continued with the process of
reform, streamlining customs procedures and adopting the new Central
American regulations on customs procedures and valuation and taking
steps to improve functioning of its customs services. During the
period under review, Guatemala ceased to apply minimum customs
values."


12. "Both reports note that Guatemala has made several amendments
to its intellectual property legislation, which extend additional
protection to copyrights and industrial property rights beyond the
minimum standards provided in the TRIPS Agreement. Since its last
trade policy review, Guatemala has also ratified four WIPO treaties.
In its own report, the Guatemalan government notes recent efforts
to reinforce the Special Prosecutor's Office for Intellectual
Property Offences and the National Intellectual Property Committee.
The United States welcomes these efforts and Guatemala's commitment
to enhance the implementation and monitoring of its international IP
obligations. We would further welcome more specific information
about Guatemala's activities in this regard."


13. "We also welcome, as the Secretariat report recognizes, that
Guatemala has continued to build its capacity to apply technical
regulations and sanitary and phytosanitary measures, revised its
government procurement law, and introduced some reform in the areas
of energy, financial services and telecommunications."


14. "While the United States applauds these positive efforts, we
have concerns with some aspects of Guatemala's trade regime and the
limitations on reform in certain areas. We encourage Guatemala to
continue to strengthen its technical and administrative capacity to
apply correctly sanitary and phytosanitary measures, and we urge
predictable, transparent and non-discriminatory application of
Guatemala's new government procurement system."


15. "The tariff concessions that Guatemala grants under the free
zones regime continue to concern us. As the economic reform process
continues, we want to remind Guatemala of the need to take
preparatory steps now to fulfill its WTO and DR-CAFTA obligations
with respect to its free zones regime."


16. "More broadly, as the Secretariat's report suggests,
Guatemala's continued economic growth will depend on greater
efficiencies and competition in the domestic marketplace. The
United States encourages Guatemala to continue along the path toward
free market policies, and a regulatory framework that eliminates
distortions and encourages competition, with a particular focus on
the areas of electricity and telecommunications. We underscore the
conclusion in the Secretariat's report that the telecommunications
sector would benefit from a stronger regulatory body and more
competition."


17. "We thank the delegation of Guatemala for its willingness to
consider these points, as well as our written questions, and welcome
the opportunity to engage with Guatemala and other delegations in
this discussion of Guatemala's trade policy regime."

Chairperson's Summary Remarks


18. The Chairman, Ambassador Agah of Nigeria summarized the meeting
as follows:


19. "The second Trade Policy Review of Guatemala has allowed this
Body to appraise in detail the evolution of its trade policies since

2002. I thank Vice-Minister Morales, Ambassador Sperisen-Yurt and
their team for engaging so constructively in this Trade Policy
Review exercise. I would also like to thank the discussant,
Ambassador Matus, and Members who participated in the discussion as

part of this exercise."


20. "This has been a very positive review. We have heard
widespread acknowledgement by Members of Guatemala's macroeconomic
stability, its sustained growth during the period of the Review, and
its commitment to trade liberalization at multiple levels.
Guatemala has also received well-deserved commendation for the
reforms it has undertaken in customs procedures and for its advances
in the protection of intellectual property rights. Through these
and other reforms to liberalize and facilitate trade, Guatemala has
advanced its significance as a trading partner and its
attractiveness as a destination for investors."


21. "Our discussion has also highlighted the fact that a country's
trade policies, like the multilateral trading system itself, cannot
be seen in isolation from the broader economic environment. Noting
that the global financial crisis poses serious challenges for all
countries, several Members welcomed Guatemala's sustained commitment
to open markets. Members also observed that the liberalization of
trade policy in Guatemala had been one component in a broader reform
effort leading to the strengthening of both Guatemala's market
economy and its institutional framework. Although some improvements
have been made, it was, nevertheless, observed that poverty and
inequality remain high."


22. "Members commended Guatemala for its support for and active
participation in the multilateral trading system and the Doha
Development Agenda. They also pointed out that Guatemala has not
used anti-dumping, countervailing duties, or safeguard measures."


23. "On the other hand, Members expressed concerns in relation both
to transparency and to the ability of some agencies to carry out
their functions effectively in several areas. In response,
Guatemala provided updated information on the status of institutions
that have been established or in the process of formation, including
their composition and procedures. Guatemala also clarified numerous
aspects of the government procurement process, including the terms
under which foreign providers may participate; and provided
additional information on the country's SPS and TBT procedures.
Members also pointed to the wide gap between Guatemala's bound and
applied tariff rates, noting that reducing this gap would improve
the predictability of Guatemala's regime."


24. "In response to questions regarding the export subsidies
included in its free zones regimes, Guatemala reiterated its
commitment to meet the 2015 deadline for the elimination of these
measures. Some Members welcomed and acknowledged the importance of
the ongoing efforts to adopt competition policy legislation to help
address anti-competitive practices in the domestic market.
Guatemala also explained several aspects of the procedures by which
rights are granted and enforced, in response to requests by some
Members' for additional information regarding its protection of
intellectual property rights."


25. "Members also raised questions about the regulatory framework
in the electricity, telecommunications and insurance sectors. In
this context, Guatemala provided updated information on the status
of service sector reforms that have been recently enacted or are
still pending action in the legislature. Observing that Guatemala
has already undertaken, on an autonomous basis, significant
liberalization in its services sector in the years since the
conclusion of the Uruguay Round, Members invited it to bind these
reforms in the GATS to enhance legal certainty."


26. "In conclusion, we have, through this Review, gained a
first-hand appreciation of Guatemala's significant progress since
its first Review, and the challenges that lie ahead. Members very
much appreciated Guatemala's trade liberalization and other
modernization efforts, which had gone hand-in-hand with economic
growth. Members thus encouraged Guatemala to continue down this
road, in order to help its economy face the current world financial
crisis, and further its prospects for sustainable economic growth
and social development."


27. "I would like to close this meeting by thanking, once again, the
discussant and the Members who took part in this meeting for
contributing to an informative review. I should also thank the
interpreters for their usual hard work. I would also like to thank
the delegation of Guatemala for addressing the various issues that
Members have raised both in writing and orally. We look forward to
receiving responses to the follow-up questions within the next
month."

ALLGEIER