The Belize-Guatemala Partial Scope Agreement (PSA) is the first trade agreement that Belize has signed with another country bi-laterally. (View Agreement) Negotiations were launched on 22 November 2004. Belize had signed the Agreement on 26 June 2006, and the Congress of the Federal Government of Guatemala had approved the PSA in October 2009. The Guatemalan President has recently issued a decree to give effect to the agreement on April 4th 2010.
Existing Trade with Guatemala
Belize has a negative trade balance with Guatemala. This means that we import more Guatemalan products that we export Belizean products to Guatemala. (View illustration on Trade Balance). There are great export opportunities to be gained from the PSA with Guatemala.
Potential for Expansion in Trade
Based on the data provided by the Directorate for Foreign Trade, Guatemala imports products that Belize can easily supply on a predictable and consistent basis. These products are orange juice, spirited, whether or not sugared, sweetened or frozen, kidney beans, fresh fish, livers and roes, frozen shrimps and prawns, in shell or not, fish, crustaceans, molluscs, aquatic invertebrates, meat and edible meat offal, live poultry, live swine, bovine animals, and maize (corn). (View Tradable Import Data).
All of these products are currently being imported by Guatemala from the United States, Nicaragua and Ecuador. Noting that the provisions of the PSA provide for efficient land transportation, and based on Belize’s proximity to Guatemala, it is imperative that Guatemala be viewed as one of our major export markets.
Members of the productive sector will need to take advantage of this new agreement that allows for preferential access, in many instances, of goods exported from Belize to Guatemala.
Below provides a summary of key elements in the PSA with Guatemala.
The agreement is only partial in scope, meaning it allows for reciprocal (two-way) trade between Belize and Guatemala on a small number of goods. The Agreement covers 150 specified tradable products. The PSA specifies for the immediate elimination of tariffs by 50% and 100%; these goods are grouped in Category A. Under Category A products, Belize will be able to sell at preferential tariff margins to Guatemala products such as: tilapia, yellow maize (up to 20,000 MT at 0% duty), black beans (up to 875MT at 0% duty), rice, toilet paper, doors, windows, wooden and wicker furniture, matches, most citrus fruits and concentrate, mangos, guavas, watermelons, pineapples, plantains, among others. The goods marked with Category ‘A’ on Guatemala’s list are those products in which Guatemala has granted Belize preferential (duty free in many instances) access to their market.
The agreement also provides for Belize to gradually eliminate its tariffs it charges on Guatemalan imports by 50 and 100 percent over three years for those products categorized as ‘B’. Likewise, a gradual elimination of Belize’s tariffs on Guatemalan imports by 50% and then 100% over a five year period is contained in category ‘C’.
The Schedules of tariff concession and elimination are included in the text of the PSA.
Rules of Origin
A Certificate of origin is required when preferential tariff treatment is claimed. Each certificate is valid for 180 calendar days from date of issue and is valid for one use only. The Provisions of the PSA stipulate that Belize’s Custom and Excise Department is the only competent authority in Belize to issue Certificates of Origin for Belize’s exports to Guatemala.
Specifically, the Rules of Origin provisions in the PSA provide that to qualify for origin criteria, goods have to be wholly produced or substantially transformed.
Wholly produced means:
- goods from the mineral, plant or animal kingdoms (including those from hunting and fishing), extracted, harvested or gathered, born and raised or captured in one or both Parties;
- goods produced in one of the Parties from the goods cited in the preceding sub-paragraph above;
- goods produced exclusively from materials wholly produced in one or both Parties; or slag, ashes, residues, wastes and scrap, gathered or obtained from manufacturing and processing operations performed in the Parties, fit only for the recovery of materials.
Substantially transformation means:
- goods that go through a substantial transformation, produced in one or both Parties with non-originating materials must comply with any of the following conditions:
- goods that are classified in a tariff heading which is different from those headings in which all the non-originating materials used are classified; (CTC rule)
- goods in which the cif value of non-originating materials used in its production does not exceed 50% of the fob value of the goods produced; (value added rule) or except for goods classified in chapters 61 to 63 of the harmonized system, the goods resulting from assembly and mounting operations realized in one or both Parties using originating or non-originating materials of the Parties, when the cif value of the non-originating materials does not exceed 50% of the fob value of such goods;
- goods produced exclusively from originating materials;
- goods produced in a Party, that fulfill the specific rules of origin established in Article 6 of the Annex on Rules of Origin attached to the PSA;
- games or assorted goods, provided that all components used in their production satisfy the conditions established in the Annex on Rules of Origin.
The PSA also defines what would be considered as insufficient working or processing in which a certificate of origin will not be issued. (View PSA Rules of Origin Data)
The PSA provides for the promotion of investment between both countries. Particularly, the agreement speaks of joint venturing and the facilitation by both parties with respect to the issuance of necessary permits, licenses, and contracts for technical, commercial or administrative assistance with relation to investments.
The PSA also provides for a favourable investment climate to attract investment in both countries. Emphasis on the discouragement of anti-competitive business practices was enshrined in the chapter on Investments. The agreement also provides that investments of investors of either party shall not be nationalized, expropriated or subjected to measures that would nullify their value, or have effects equivalent to nationalization or expropriation.
The chapter on Investments also contains its own provisions for the settlement of disputes between an investor and the country to which the investment is made concerning any breach of obligations under the agreement.
Chapter Ten of the PSA covers land transportation to facilitate the trade of goods between Belize and Guatemala.
The chapter also contains key provisions on freedom of transit in which vehicles and their divers should be allowed to transport between the countries freely without any hassle. Transportation in the chapter does not refer to local load or cabotage but limited to the transportation of goods originating in Belize and Guatemala only.
A Land Transportation Committee will be established (six months after signature of the Agreement) to address all the problems currently existent at the Belize-Guatemala borders.