Overview

In November 2011, El Salvador and the United States signed the Partnership for Growth (PFG) Joint Country Action Plan (JCAP), which seeks to accelerate and sustain broad-based economic growth by addressing binding constraints in the areas of crime and insecurity, and low productivity in the tradables sector. For more information on PFG, visit http: //sansalvador.usembassy.gov/news/pfg.html. The United States is El Salvador's leading trade partner. In 2013, El Salvador's Central Bank (BCR) reported the United States had a 38.8% import market share, and 45.3% of Salvadoran exports were destined for the United States. Central America countries are other top trade partners. El Salvador still has not recovered from the world economic crisis. BCR statistics reported that El Salvador had a GDP growth of 1.8% in 2013; for that same year the GDP was $24.32 billion. The Central America Free Trade Agreement (CAFTA -DR) became effective in El Salvador on March 1, 2006. CAFTA-DR countries include: Costa Rica, Guatemala, Honduras, Nicaragua, and the Dominican Republic. El Salvador belongs to the World Trade Organization (WTO). In addition to CAFTA-DR, the country has free trade agreements with Chile, Mexico, Dominican Republic, Panama, Taiwan, Colombia, and Central America. It also has an Association Agreement with the European Union. Free trade agreements with Canada, Peru, Ecuador and Belize are under negotiation. A Partial Scope Agreement was signed with Cuba. El Salvador offers an open market for U.S. goods and services. Tariffs are relatively low, and were reduced further with the implementation of CAFTA-DR. The value-added tax (VAT) rate is 13%. In 2006, the Millennium Challenge Corporation (MCC) granted a five-year, $461 million compact to the Government of El Salvador (GOES) to improve the lives of Salvadorans through strategic investments in education, public services, agricultural production, rural business development, and transportation infrastructure. The compact ended in 2012. A second compact was approved in September 2013 and is currently awaiting signature and implementation pending the completion of certain actions related to the improvement of the country's investment climate and rule of law

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9781502312068

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