El Salvador Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

El Salvador is the 121st trading partner of the EU. Since 2019, exports from EU countries to El Salvador have been gradually decreasing, while imports have remained at similar values ​​for the last ten years. The balance of the trade balance has been significantly positive for a long time. The most exported to El Salvador are machinery and means of transport (31.1%) and chemical products (21.4%), to a lesser extent also food and metal products. In terms of imports, the highest imports into the EU are agricultural products (57.6%), specifically fish, and other foodstuffs and live animals.

  • Allcountrylist: Overview of major industries in El Salvador, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 456 732 802 592 542
Imports into the EU (million EUR) 233 201 186 166 198
Balance with the EU (million EUR) 223 531 617 426 343

Source: European Commission

Trade relations with the Czech Republic

After stagnating at low numbers for the past three years, exports to El Salvador picked up again in 2021 (even doubling from 2020 and returning to 2016 levels). Imports were similarly as low in 2021 as in previous years. The structure of trade exchange has persisted over the years: tantalum, tungsten and sewing machines are mostly exported from the Czech Republic, while textiles, cane sugar, rum and coffee are imported to the Czech Republic.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.1 0.5 0.3 0.5 ON
Imports to the Czech Republic (billion CZK) 1.4 0.1 0.2 0.1 ON
Balance with the Czech Republic (billion CZK) 1.3 -0.4 -0.1 -0.4 ON

Source: CZSO

Trade relations with countries outside the EU

El Salvador’s main trading partner is the United States, other partners include its Central American neighbors, Mexico and China.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) ON ON ON ON ON
Imports to countries outside the EU (million EUR) ON ON ON ON ON
Balance with non-EU countries (million EUR) ON ON ON ON ON

Source: EIU, Eurostat

Foreign direct investment

For several years now, El Salvador has been the country with the lowest direct foreign investment in the Central American region. In the first three quarters of 2021, direct investments worth USD 408.5 million took place in El Salvador, which was even less than in Honduras or Nicaragua. The main reasons for low foreign direct investment in the country are primarily the political situation, insufficient legal certainty and the deterioration of the country’s institutional status. In addition, the Salvadoran government does not have concrete elaborate investment plans and it is not clear what type of investment it would like to attract. Although the government is trying to raise its profile in the field of cryptocurrencies, the plans are mostly not realistic enough. The majority of direct investments in 2021 came from Panama (37%), USA (20%), Spain (14%).

There is no information on direct foreign investments of the Czech Republic in El Salvador.

FTAs and treaties

Treaties with the EU

In 1993, the Framework Agreement on Cooperation between the EU and the countries of Central America was signed, and in 2003, a new Agreement on Political Dialogue and Cooperation was signed. In 2004, during a meeting at the highest level, it was decided that the new framework document for regional cooperation would be the Association Agreement. The actual association agreement was signed on June 29, 2012 during the Central American Summit in Tegucigalpa (Honduras). The agreement consists of three main pillars: politics, cooperation and free trade, while the trade part of the Association Agreement has been provisionally implemented with El Salvador since 1 October 2013. With the entry into force of the agreement, the EU abolished 99% of tariffs on industrial products and fisheries. Conversely, Central America has pledged to provide duty-free access to all industrial products and fisheries by 2025.

Contracts with the Czech Republic

Mutual relations between the Czech Republic and El Salvador are governed by a series of treaties, which include in particular:

  • Agreement on the abolition of the visa requirement for all types of passports (signed on 23/04/2004); since August 1, 2004, the unilateral cancellation of the visa requirement for citizens of the Czech Republic (stay of 3 months max.) is in force.
  • Memorandum on cooperation in the field of tourism. (signed in May 2009 in Prague).
  • Agreement on Mutual Support and Protection of Investments (signed on 29/11/1999, in force on 28/03/2001).

Developmental cooperation

As a developing country, El Salvador is a frequent applicant and recipient of humanitarian and net development aid in connection with natural disasters (earthquakes, floods). Contacts between the Czech Republic and El Salvador in the framework of humanitarian aid and development cooperation are relatively rich. Since 1998, the Czech Republic has contributed a total of 9.5 million CZK to mitigate the damage caused by hurricanes Mitch and Stan, and the devastating earthquake in 2001. Furthermore, since 2011, the Czech Republic has financed several small local projects, the last implemented projects took place in 2020 in the Chalatenango area and Ciudad Delgado.

The EU participates significantly in the financial support of the region within the framework of bilateral and multilateral cooperation. As part of the bilateral program, El Salvador received EUR 149 million in support from the EU in 2014-2020. In 2021, a new integration tool for development cooperation NDICI-GE (Neighbourhood and Development and International Cooperation EU instrument) was approved in the EU. The provisional amount allocated to El Salvador under this instrument was set at EUR 59 million, while the thematic priorities under the Multiannual Indicative Program (MIP) for the period 2021-2027 for El Salvador were set as follows:

  • Digital transformation (focusing on the areas of the public sector and administrative management, information and communication technologies, vocational training): 37.3%
  • Green transformation (renewable energy sources, sustainable and smart mobility): 33.9%
  • Governance and human development (transparency, electoral assistance, human resource development): 16.9%.

Prospective fields of study (MOP)

El Salvador is not included in the ILO.

El Salvador Trade