Overview of Trade between Switzerland and Guatemala
– Trade between Switzerland and Guatemala dates back to 2015 and has remained relatively stable. Imports have fluctuated between CHF 46 M. and CHF 51 M. and exports between CHF 28 M. and CHF 33 M. According to Swiss data, total trade in 2019 was 76.9 million, a slight 7% decrease compared to 2018. Therefore, Guatemala traditionally has a trade balance surplus with Switzerland. In Central America, Guatemala is the fourth most important country in trade with Switzerland after Panama, Costa Rica and Nicaragua.
– The value of imports from Switzerland also decreased compared to 2018 (CHF 29.1 M., -10.6%). This drop can be attributed to a decrease in imports of chemical industry products that fell by 35% between 2018 and 2019. Switzerland’s exports to Guatemala include especially chemical and pharmaceutical products (40%), machinery (28%) as well such as precision instruments and watches (18%). Similarly, Guatemala exports to Switzerland almost exclusively coffee (87%) and alcoholic beverages (5%).
Trade Agreements – Switzerland – Guatemala
The following agreements can be considered relevant for the import and export activities between Switzerland and Guatemala.
– Switzerland Guatemala Trade Agreement
With the Trade Agreement between Guatemala and Switzerland of 1955, the countries undertake to grant advantages, benefits or privileges so as not to discriminate against the producers of the other contracting party. This applies in particular to similar products originating in a third country in relation to customs duties, fees and taxes of any kind and charges imposed on imports and exports. In addition, products of Swiss origin that are imported into Guatemala will be subject to the lower duties and charges that Guatemala currently applies to similar products from other countries. This excludes concessions for the purpose of facilitating border traffic and the establishment of a customs union or a free trade zone.
Investment Protection Agreement
In 2002, Switzerland and Guatemala signed an Investment Protection Agreement, requiring the parties to promote and authorize reciprocal investments and to issue the necessary permits in accordance with their laws and domestic legislation. The Investment Protection Agreement stipulates that Swiss investor’s investments in Guatemala must be treated fairly and enjoy full protection and security. It also stipulates that Swiss investments cannot receive less favorable treatment than that accorded to national or third-country investors. The agreement also requires the immediate granting of payment transfers in connection with an investment in a freely convertible currency. Finally, the agreement gives Swiss investors rights in the event of expropriation or nationalization measures. If one of the two countries adopts these measures, it would be obliged to pay the investor compensation corresponding to the fair market value of the investment.
– EFTA Free Trade Agreement – Central America
The Protocol of Accession of Guatemala with respect to the Free Trade Agreement (FTA) between the Central American States and EFTA was signed in June 2015. In February 2020 the corresponding law was approved by the Congress of the Republic of Guatemala. However, ratification by the Executive is still pending. NAFTA regulates trade in goods such as industrial goods, processed agricultural products, fish and basic agricultural products. In addition, it includes services, as well as the protection of intellectual property, investment, public procurement, the elimination of technical barriers to trade, including sanitary and phytosanitary measures, competition law and technical cooperation. It also contains a chapter on trade and sustainable development.
– Once in force, the agreement will strengthen economic relations between Guatemala and Switzerland and will open new commercial opportunities. At the same time it will increase legal certainty and reduce administrative obstacles and customs duties.