Addition of Guatemala to Korea-Central America FTA... "Expecting Export Expansion and Accelerated Entry into North and Central America"

Final Agreement Reached on Korea-Central America FTA Accession Negotiations with Guatemala

Guatemala, the largest economy in Central America with high growth potential, has additionally joined the Korea-Central America Free Trade Agreement (FTA). The government expects that exports through Guatemala and expansion into North America will accelerate.

On the 5th, Ahn Deok-geun, Director General for Trade Negotiations at the Ministry of Trade, Industry and Energy, announced through a video conference with the Guatemalan Minister of Economy that the negotiations for Guatemala's accession to the Korea-Central America FTA had been finalized, and signed the joint declaration of the agreement on the same day. The existing five Central American countries are Nicaragua, Honduras, Costa Rica, El Salvador, and Panama.

The Korea-Central America FTA was the first free trade agreement signed between an Asian country and the five Central American countries, and it came into full effect in March 2021 after ratification by each country. Thanks to the effects of the FTA, trade with the five Central American countries increased to $2.84 billion in 2022, showing an upward trend.

An official from the Ministry of Trade, Industry and Energy stated, "Guatemala, the largest market in Central America accounting for about 32% ($93.6 billion) of the total GDP and 37% (19 million people) of the population of the six Central American countries, is home to many companies operating throughout Central America, and is evaluated as having potential as a gateway to the Central American market. With Guatemala joining the Korea-Central America FTA, our companies’ exports and entry into the Americas region are expected to gain more momentum."

According to the Ministry, through this accession negotiation, Guatemala agreed to open most of the export items of interest from Korea, such as automobile parts, textiles, and steel, achieving a higher level of tariff elimination compared to the existing five Central American countries. Korea agreed to open items of interest to the other side, such as coffee and sugar, while protecting some sensitive agricultural products like rice, sesame, and natural honey. In the goods sector, Korea agreed to open 95.3% of items, slightly lower than the average of 95.6% for the existing five Central American countries, while Guatemala agreed to open 95.7% of items, higher than the 95.4% average of the five countries.

Director General Ahn said, "With Guatemala’s accession, the Korea-Central America FTA is expected to develop into a platform for our companies to expand their entry into the Central American market. We will support our companies’ active utilization so that it can serve as a catalyst for expanding trade not only with Central American countries but also for full-scale expansion into the Americas region, including North and South America."

The government plans to swiftly proceed with follow-up procedures aiming for formal signing within the year for Guatemala’s accession to the Korea-Central America FTA.