Note:  Advance written questions by WTO Members and replies provided by the Government of
Guatemala will be reproduced in document WT /TPR/M/94/Add.1 and will be available online
at:  http://www.wto.org/english/  tratop_e/tpr_e/tp_rep_e.htm.WORLD TRADE
ORGANIZATIONWT/TPR/M/94
27 February 2002
(02-0987)
Trade Policy Review Body
16 and 18 January  2002
GUATEMALA
Minutes of Meeting
Chairperson:  H.E. Mr. Pekka Huhtaniemi (Finland)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF
GUATEMALA 4
III. STATEMENT BY THE DISCUSSANT 6
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 8
V. REPLIES FROM THE REPRESENTATIVE OF GUATEMALA
AND ADDITIONAL COMMENTS 12
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 14WT/TPR/M/94
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The first Trade Policy Review of Guatemala was held on 16 and 18 January 2002.  The
Chairperson welcomed the delegation of Guatemala, headed by Dr. Arturo Montenegro, Minister of
Economy, and the discussant, H.E. Dr. Luis María Ramírez Boettner (Paraguay).  As usual, the
discussant would speak in his personal capacity and, in accordance with established procedures, he
had made available in advance a broad outline of the themes he intended to raise (document
WT/TPR/D/73).
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements
of the procedures of the meeting.  The Report by the Government of Guatemala was contained
in document WT/TPR/G/94 and that of the Secr etariat in document WT/TPR/S/94.  Copies of
advance written questions, submitted by: Canada;  Chile;  Costa Rica;  the European Union;  Hong
Kong, China;  Japan;  Korea;  Norway;  Switzerland;  and the United States had been transmitted tothe delegation of Guatemala.  These questions are reproduced in Annex I.  Replies provided at the
meeting by the representative of Guatemala to these and other questions are reproduced in
WT/TPR/M/94/Add.1.WT/TPR/M/94
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF GUATEMALA
3. The representative of Guatemala (Minister A. Montenegro) recalled his country's GDP per
capita (US$1,750) and its population data (11.4 million).  He noted that Guatemala had a small
internal market, and that for a small economy, like Guatemala, protectionism would entail high social,
political, and economic costs.  Guatemala, therefore, needed open external markets.  Over the years,
Guatemala had taken steps to participate fully in the international trading system, in both an
economically and socially progressive manner.
4. Guatemala had acceded to the GATT in 1991, was a founding Member of the WTO, and had
participated in the Uruguay Round.  Since 1996, Guatemala had unilaterally reduced tariffs, and tariff
dispersion, within the framework of the Central American Common Market (CACM).  Guatemala was
also actively participating in the negotiations on the Free Trade Area of the Americas (FTAA), and
had ratified free-trade agreements with Mexico and the Dominican Republic.  An aggressiveprivatization programme had been put in place in sectors, such as airlines, telecommunications,
energy, postal services, and railways.  Guatemala had also liberalized interest rates and exchange
rates, diversified its financial products, and strengthened its banking capital, while maintaining macro
economic discipline.
5. Guatemala had been affected by a long internal conflict, and poverty and social disparities still
characterized its multi-ethnic society.  Guatemala had formulated a poverty reduction strategy, and
had implemented a fiscal reform.  Guatemala had also made efforts to improve transparency, and
tackle institutional weaknesses.  Guatemala was a beneficiary of a World Bank (WB) programme on
transparency on public spending, and was negotiating a programme with the IMF to improve citizens'
control on public spending, and to set a floor on social spending.  Guatemala had also cooperated with
a joint WB/IMF programme to identify its financial system's challenges.  Guatemala wished to have
the WTO assistance in the area of competition law.  Guatemala was concerned about the currentglobal economic recession, which could lead either to protectionism or to competitive devaluations.
Guatemala invited leading trading countries to mainta in open trade, and to push for the success of the
round of trade negotiations launched in Doha.  Guatemala hoped that the fight against terrorism would
not be carried out at the expenses of democracy and individual liberties.
6. The Deputy Director of the Bank of Guatemal a underlined that macro economic stability was
fundamental to promote economic growth, and to create conditions favourable to trade flows.
Guatemala also believed that low inflation was important for economic agents' activities.  He recalled
the phases of Guatemala's growth rates over 1950-2001, and highlighted that a lesson obtained is that
fiscal and monetary discipline is required to reduce risks for foreign investors, to facilitate their access
to credit, and thus promote employment creation and wealth.  He noted positive trends in Guatemala's
macroeconomic indicators since 1991 and its efforts to reduce long-term interest rates.  Thanks to a
disciplined fiscal policy and a prudent monetary policy, the inflation rate had been at only one digit
since the second part of the 1990s, compared with a rate of 60% in 1990.  Guatemala was considering
a package of financial law reforms to conform to international standards, and had made progress with
regard to fiscal deficit.  Fiscal deficit was to be reduced, and stabilized.  He described the recent trendsof GDP.  Net international reserves had reached the highest level in the country's history with a value
of 4.3 months of imports and a level of more than US$2,000 million.  Uncertainty for foreign
investors had been reduced, with regard to a more flexible exchange rate policy and fewer Central
Bank's interventions.  Guatemala had also eliminated restrictions to capital movements, and passed a
law on free currency circulation, which allowed all currencies to circulate in the country.
7. The representative of Guatemala (Ambassador Lucy Martínez-Mont) noted that agriculture
represented 23% of Guatemala's GDP, 60% of it s merchandise exports, and 60% of employment.
The  country had been affected by fluctuations in coffee and sugar prices.  Guatemala also had aWT/TPR/M/94
Page 5
manufacturing capability:  textiles, clothing, chemicals, and other manufactured products, represented
32% of tangible exports.  Tourism was an important source of services exports;  tourism infrastructurehad been an area for foreign investment.  Guatem ala, as a member of the Cairns Group, promoted
liberalization in agriculture.  In spite of its difficulties and of the global economic slowdown,
economic policies implemented by Guatemala had shown its commitment to an open, market-oriented
economy.WT/TPR/M/94
Page 6
III. STATEMENT BY THE DISCUSSANT
8. The discussant (Dr. Luis María Ramírez Boettner) recalled that he had held the position of
United Nations Regional Representative in Guatemala for four years during the Central American
economic integration process.  He believed that Guatemala had made tremendous efforts to improve
its economy.  The process of modernization, trade liberalization, and international participation that
was currently under way would pave the way for sustainable economic and social development.
Guatemala's efforts deserved the backing of the international community.  Bringing 36 years ofinternal armed conflict to a peaceful end in just a few years, following the signing of the Peace
Accords in December 1996, was a major achievement.  The economic policy had been well chosen for
the return of political stability;  it endeavoured to resolve serious social problems and sought, through
education and training, to provide the human resources required to boost productivity while
incorporating new technology.  A gradual solution to Guatemala's social problems, which were actingas a brake on harmonious and well-balanced integrated human development, was a prerequisite for
economic growth and greater trade liberalization.  Three social aspects had a strong impact on
Guatemala and its economic development:  the gradual eradication of poverty, the relationship
between population and development, and the social integration of the entire Guatemalan population.
9. Guatemala's economic development over the last few years, in particular following its
accession to the WTO on 21 July 1995, revealed considerable progress with regard to economic
stabilization, a gradual fall in inflation, and the timely introduction of adjustments, including a range
of legislative measures, such as the adoption of a new foreign investment law, which had already
begun to bear fruit.  The opening up of the Guatemalan economy with a positive monetary, exchange,
and credit policy had led to an increase in GDP and, to a lesser extent, a rise in per-capita income,
which now stood at almost US$1,700.  The programme to strengthen the national financial system,
through the drafting of laws, such as those on banks and financial groups, financial supervision, theBank of Guatemala, the currency, and on insurance activities and other legal reforms could help to
make the entire economic system more efficient and solid;  it could also increase transparency, a
crucial factor for investment, and the competitivity of domestic production.  He asked when these
projects were expected to be approved and the reforms pursued.
10. The discussant drew attention to Guatemala's increased participation in international trade,
and its search for new markets, through the negotiation of various bilateral and regional agreements,
and the multilateralism represented by the WTO.  To date, this diversification had proved favourable
and manageable, particularly the bilateral agreements signed with El Salvador, Mexico, and Cuba, and
others were currently being negotiated, e.g., with Canada, as well as regional agreements, such as the
Central American Integration Treaty and Guatemala's active participation in FTAA treatynegotiations.  He asked what measures Guatemala envisaged to ensure that these trade agreements
were properly coordinated, and how foreign policy was to be kept consistent with trade policy.  Of
particular note was the 1961 Central American Integration Treaty, which might have had its ups and
downs but was a top priority for Guatemala, and required greater effort on the part of Central
American countries, whether the original five signatory parties alone (Guatemala, El Salvador,Honduras, Nicaragua, and Costa Rica) or, as may be the case, in the future, in conjunction with Belize
and Panama.  Given their similar origins, aspirations, and traditions, these countries could together
form a proper common market, which would represent greater economic and negotiating leverage than
mere bilateral agreements.  Indeed, a single country's negotiating power never matched that of the
group of countries belonging to a common market.  He enquired about the current status of thenegotiations on the establishment of a customs union in the subregion.
11. Guatemala remained a small and vulnerab le economy owing to the lack of economic
diversification, and its dependence upon very few agricultural products.  He asked what measuresWT/TPR/M/94
Page 7
were being taken by the Government to broaden its economic field, both in agriculture and for
boosting industrialization, which constituted one of the most important conditions for Guatemala'sintegrated development.  The existence of the CACM was of the utmost importance as a potential
basis for industrial development.  The agriculture sector, representing a 23% share of GDP, accounted
for 60% of its export earnings, a very high proportion for the economy as a whole, where there was a
notable lack of industrial products, the other major sector apparently being services.  He asked to what
extent this pattern was the result of statistical distortion, and what measures were being taken inrelation to the Central American Institute for Industrial Technology and Research (ICAITI), to boost
the industrial sector.
12. With regard to fiscal policy, the review had revealed that the tax burden was very low, making
it difficult to increase public investment, and that the State budget was geared more towards paying
the wages and salaries of the civil service.  He asked what measures were being taken by theSuperintendency of Tax Administration, established in 1998, to remedy this situation.  Another
pertinent factor was the 1996 Peace Accords, one of the provisions of which was to increase fiscal
revenue to 12% of GDP to finance social programmes.  The discussant asked whether this requirement
had been met.  With reference to the Maquila  Law and the Law on Free-Trade Zones, the discussant
noted that the statistics for Guatemala did not include exports or imports under these two laws.  Thismade it extremely difficult to obtain a true estimate for Guatemala's economy as a whole, and in
particular, for some sectors that were  acquiring considerable economic importance, such as textiles,
clothing, and non-traditional agricultural products.  The discussant asked whether statistics existed for
these sectors;  their absence would mean that the whole economy was being underestimated or that a
separate and dual economy was being created, which would be highly undesirable.  He asked what
measures Guatemala was taking to prevent this from happening and its economy from becoming
distorted.
13. Two measures were of considerable merit as both paved the way for greater foreign
participation in the country, these were:  the 1998 Foreign Investment Law, which provided foreign
investors with legal certainty;  and the creati on of the One-stop Investment Office, which greatly
facilitated administrative procedures for foreign investors.  National investors should not, however, be
left to one side and, in this respect, the discussant asked what measures were being taken, and whatfacilities granted for national investors and the repatriation of funds from abroad.  Due note had been
taken of Guatemala's firm decision to continue opening up its economy and liberalizing trade, and, at
the same time, upholding the multilateral trading system promoted by the WTO.
14. He acknowledged Guatemala's active participation in the WTO, in particular in defence of
special and differential treatment in agriculture for developing countries, and as one of the mainsupporters of the small economies.  Due note had also been taken of Guatemala's endeavours to
promote structural changes to strengthen its economy, and to encourage interactive complementarity
between economic and social aspects.  The discussant was confident that this first Trade Policy
Review would be of assistance to Guatemala as it pursued sustainable and environmentally friendly
development.WT/TPR/M/94
Page 8
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
COMMENTS
15. The representative of the United States recalled the U.S. assistance provided to Guatemala,
which focussed on education, health, and income and food security.  The U.S. Trade and Development
Act of 2000 had expanded Guatemala's trade opportunities by providing duty-free access to the U.S.
market for textiles, footwear, handbags, luggage, a nd other products.  Guatemala had made use of this
Act, in particular in apparel (from January to August 2001, 17.9% of total U.S. imports fromGuatemala had entered under the new categories).  The Act served as a bridging mechanism during
the negotiations towards an FTAA in 2005.  Economic growth had been steady with exports outpacing
GDP each year since the 1996 Peace Accord, which had provided a roadmap for economic and social
development in Guatemala.  The United States had provided capacity-building technical assistance to
help Guatemala to take advantage of open markets and the WTO system.
16. Poverty remained a serious problem, and economic growth was necessary to produce major
improvements.  This would require further liberalization in various areas.  For example, Guatemala
could improve its customs procedures and impl ement the WTO Agreement on Customs Valuation;
reduce the margin between its bound tariff rates on non-agricultural products and its average applied
MFN rates.  Guatemala also needed to reduce its reliance on import duties and taxes, which stillaccounted for a large part of its fiscal revenue.  The United States encouraged Guatemala to expand its
services commitments and enhance its own competit iveness in the global economy.  Guatemala had
made considerable efforts to improve the enforcement of intellectual property rights, through the
enactment of new legislation, and the strengthening of prosecuting institutions;  the United States
applauded the appointment of the special persecutor for intellectual property matters.  Guatemala's
privatization programme had slowed and a number of enterprises, including in financial services,
maritime transport, telecommunications, remained stat e-owned;  the United States urged Guatemala to
privatize the remaining state-owned enterprises.  The United States encouraged Guatemala to continue
to expand trade liberalization efforts in order to maintain the momentum of its economic growth.
17. The representative of Hong Kong, China valued its association with Guatemala in the ITCB
and acknowledged Guatemala's constructive participation in that context as witnessed by the generous
hosting of the ITCB Council of Representatives in 2000.  Hong Kong, China also expressedappreciation for Guatemala's commitments on economic liberalization, in particular the
implementation of the privatisation programme notably in telecommunications and public utilities,
and for its efforts to enhance protection of intellectual property rights, through legislation.  Guatemala
had considerably reduced its tariffs and non-tariff barriers, with the average tariff for all imported
products falling from 8.4% to 7% over 1998-01.  However, Hong Kong, China invited Guatemala tonarrow the margin between its applied and bound rates to increase market access predictability.
Hong Kong, China was pleased to note Guatemala's interest in taking forward the work on rules and
disciplines under the GATS, on subsidies, and on the elimination of MFN exemptions.  Hong Kong,
China encouraged Guatemala to consider the a doption of the WTO Code of Good Practice for the
Preparation, Adoption, and Application of Standards.   Hong Kong, China invited Guatemala to extend
and deepen its commitments under the GATS.  Referring to the Secretariat Report, Hong Kong, China
invited Guatemala to address, where needed, incompatibilities between its FTAs and multilateral
rules.
18. The representative of Switzerland acknowledged Guatemala's efforts to privatize
telecommunications, and noted that tourism had become an important source of foreign currency.
Switzerland welcomed measures taken to reduce customs duties and non-tariff barriers, and to
promote foreign investment.  Switzerland asked for Guatemala's view on the development of the
CACM, the Central American customs union an d the FTAA, and sought information about
implementation of Article 39.3 of the TRIPS Agreement.WT/TPR/M/94
Page 9
19. The representative of Japan recalled that her country supported Guatemala's efforts towards
liberalization, through capacity-building activities in  agriculture, transport, basic human needs, and
infrastructure development.  Japan was concerned about the high bound tariff rate and invited
Guatemala to reduce the gap between applied and bound rates.  Japan asked how Guatemala ensured
the overall consistency of its customs valuation sy stem with the WTO rules as it used two methods of
valuation.  Japan also invited Guatemala to extend its commitments under the GATS in the ongoing
services negotiations.
20. The representative of the European Union (EU) recalled that trade between Guatemala and
Europe was relatively modest, with coffee, sugar, bananas, oil and cardamom as main items.  Since
the beginning of the 1990s, exportation of non traditional products, such as fruit and vegetables had
however increased.  Guatemala benefited from the GSP, with a special treatment for agricultural and
industrial products.  The EU asked about Guatemala's plans to negotiate further bilateral or regionalfree-trade agreements.  The EU also sought information about the application of Article VII of the
GATT 1994, and on Guatemala's intentions to reduce its tariff bindings in the medium to longer term.
Referring to the Secretariat Report, the EU noted that the intervention of a customs broker was not
required for imports originating in CACM, and asked whether Guatemala intended to extend this
facility to other imports.
21. The EU asked whether Guatemala  intended to become a party of the ITA.  The representative
sought further explanation of Guatemala's provisions and practices on standards, and the role of the
COGUANOR, and of other Ministries.  The EU also wished to hear Guatemala's views on the
compatibility between its legislation introducing taxation on wine distribution and Article III of the
GATT 1994.  The EU asked how Guatemala had implem ented the provision of the TRIPS Agreement
on geographical indications, and sought additional information about measures taken to reduce and
simplify its import and export procedures, and to introduce modern customs and trade administrationprocedures.
22. The representative of Chile sought clarification about the law approved in 2001 on the
distribution and sale of wine foreseeing a different taxation for domestic and foreign wine, which was
inconsistent with Article III of the GATT 1994.  He noted that on 26 November 2001 Chile had
removed its safeguards measure on sugar.
23. The representative of Canada congratulated Guatemala for its progressive reduction of tariffs,
its limited use of non-tariff barriers, and for passing modern intellectual property legislation, including
new copyright and industrial property laws, in conformity with its obligations under the TRIPS
Agreement.  Efforts to set up a competition policy framework were also commendable.  Canada
appreciated Guatemala's steps towards implementation of the Customs Valuation Agreement;  it urgedGuatemala to increase its commitments under the GATS, and to reduce the gap between bound and
applied rates.  Canada noted Guatemala's participation in regional and bilateral free-trade
arrangements.  The development of a national poverty reduction strategy was welcomed.  Financial
sector reform, including the reform legislation currently before Congress, was important;  Canada
believed that, combined with the IMF Standby agr eement, such a strategy would send the right signal
to the business community.  Canada encouraged Guatemala to maintain its strict economic policy.
24. The representative of Costa Rica commended Guatemala's efforts to liberalize its trade
regime, and to put its legislation on protection of intellectual property rights in conformity with the
WTO rules.  Costa Rica saw with satisfaction changes in Guatemala's legislation in the area of foreign
direct investment.  Costa Rica encouraged Guatemala to pursue its policy on tax incentives.  CostaRica shared Guatemala's liberalization objectives in the negotiations on agriculture.  Costa Rica
sought information on the creation of the Superintendency of the Tax Administration, and on theWT/TPR/M/94
Page 10
methodology used for random merchandise inspection, and its relationship with trade facilitation.
Costa Rica also sought information on Guatemala' s procedures for the formulation of technical
regulations and standards, on the ban on genetically modified food, and on government procurement.
25. The representative of Norway recalled that increased government tax revenue was important
to fund social programmes.  Norway asked whether Guatemala expected to achieve the stated
objective of bringing its total tax revenue to 12% of GDP in 2002, and about the status of the
legislative reform of its financial sector.  Double insurance requirements for importers of goods fromGuatemala, and by a number of Latin-American  countries, was a problem for Norwegian coffee
importers.  The requirements for exported cargo to be insured either by flag-state or in the country
where the shipping company was situated seemed to pose an additional requirement.  Norway asked
about insurance of cargo transported by Guatemalan national-flag ships abroad.  Norway also asked
about Guatemala's plans to diversify its agricultural exports.
26. The representative of Korea acknowledged Guatemala's trade liberalization, and recalled that
investment by Korean companies had contributed to Guatemala's export promotion.  Korea hoped that
Guatemala would continue to offer favorable incentives to foreign investors, and to improve its
business environment.
27. The representative of India noted Guatemala's active role in the deliberations of the ITCB and
TMB, and commended its economic performance.  He referred to paragraph 2 of the Overview of the
Secretariat Report, which pointed out that consolidation of Guatemala's liberalization efforts would be
aided through specific capacity-building programmes to  secure lasting institutional stability, and that
the international community could continue to play an important role in this area.  India emphasized
the problems faced by small, and less developed countries in implementing WTO provisions, and
stated that capacity-building assistance was necess ary to ensure their full participation in the
multilateral trading system.
28. The representative of Australia welcomed Guatemala's trade and investment liberalization,
and commended its efforts to boost competitiveness and export performance in the agriculture sector,
including by expanding non-traditional agricultural exports.  Australia welcomed Guatemala's interest
in liberalizing trade in agriculture, and looked forw ard to collaborate through the Cairns Group in this
area.  Australia remained concerned, however, about the potential for FTAs to undermine the integrityof the multilateral trading system.
29. The representative of Uruguay commended Guatemala's participation in WTO activities.  As
members of the Cairns Group, both countries fought  against subsidies in agriculture, and promoted
better market access conditions for agricultural products.  Uruguay expressed its interest in seeing
Guatemala's market re-opened to Uruguay's meat.  Uruguay also asked about Guatemala's measures
on alcoholic beverages, in particular on wine.
30. The representative of Argentina commended Guatemala's commitment to free trade.
Argentina sought clarification about Guatem ala's law on sale and distribution of wine.
31. The representative of Pakistan appreciated Guatemala's steps to restore confidence, to
implement stable micro and macroeconomic policies, and to address the lingering impediments to
growth, including through tariff reductions.  Privatization and strengthening of pro-competitive
policies and regulations would enhance economic growth as well as Guatemala's living standards.
32. The representative of Bolivia noted that his country shared several of Guatemala's objectives,
including poverty reduction.  He mentioned Guatemala's telecommunications reform, including in
mobile telephony. Bolivia invited Guatemala to reduce the gap between applied and bound tariff rates.WT/TPR/M/94
Page 11
33. The representative of Morocco acknowledged Guatemala's efforts to open its trade regime,
and to promote competitiveness in conformity with its WTO commitments, including the reduction of
customs duties, non-tariff barriers, and privatization of state-owned enterprises.  Morocco encouraged
Guatemala to extend its commitments under the GATS.
34. The representative of Honduras commended Guatemala's efforts to modernize its economy,
and its commitment to open its trade regime in compliance with the WTO rules.
35. The representative of Barbados, noting difficulties faced by small developing countries in
international trade, commended Guatemala for its economic progress, and improving living standards.
Barbados hoped that the launch of a new round of negotiations would have a positive outcome.
36. The representative of  Brazil acknowledged Guatemala's efforts towards economic reform.  In
spite of its unstable political situation, Guatemala had made considerable progress towards more open
trade and investment regimes.  Noting that sugar was exempted from regional trade agreements, Brazilasked whether Guatemala intended to change this situation.
37. The representative of Jamaica stated that her country shared Guatemala's development
concerns, including economic restructuring and export diversification.  In spite of its achievements,
Guatemala still faced the challenge of poverty.  Guatemala had played a major role in ensuring that
the concerns of small economies were recognized at international level.
38. The representative of Mauritius acknowledged Guatemala's reforms in public administration,
trade, finance, and monetary and fiscal policy, and commended its contribution in the WTO work
programme on issues related to small economies.  Mauritius also noted that the international
community had assisted Guatemala in its liberalization efforts.
39. The representative of Ecuador expressed his country's appreciation for Guatemala's
contribution to the achievement of WTO objectives.
40. The representative of El Salvador acknowledged Guatemala's efforts to modernize its
economy, promote transparency, and consolidate its institutional and legal framework.  El Salvador
encouraged Guatemala to pursue its trade liberalization efforts.WT/TPR/M/94
Page 12
V. REPLIES BY THE REPRESENTATIVE OF GUATEMALA AND ADDITIONAL
COMMENTS
41. The Chairperson invited the representative of Guatemala to focus his responses on three main
themes:  (i) economic environment;  (ii) trade policies and measures;  and (iii) sectorial policies and
measures.
(i) Economic environment
42. The representative of Guatemala welcomed the U.S. intention to sign a free-trade agreement
with Central America, and hoped that such an agreement would contribute to reduce poverty in
Guatemala.  Guatemala had put in place its first wide-ranging tax reform, which provided for penalties
and sanctions for tax evasion, and included measures to increase Guatemala's tax base.  Guatemala
recognized the need to improve tax collection, and to increase the percentage of direct tax, tax on land,
and the VAT to ensure government income.  Guatemala had a fairly open investment regime, andwelcomed WTO technical cooperation in the area of competition policy.  Guatemala hoped that the
multilateral trading system would be strengthened, and unilateral preferential agreements phased out.
Guatemala wished to sign a free-trade agreement with Europe rather than having unilateral
preferences under Generalized System of Preferences-GSP.  He referred to progress made in Central
American integration initiatives, including the adhesion of Belize and Panama to SICA as well as tothe customs initiative with Mexico.  He noted that intra-Central American trade had increased over the
years.
43. The discussant welcomed a forthcoming FTA between the United States and Central
American countries as this was a further step towards trade liberalization.  He underlined that free
trade was preferable to unilateral preferences under GSP schemes.  He encouraged Guatemala to
pursue its taxation policy, and to ensure that privatization would not result in private monopolies,
which were worse than state monopolies.  He noted that WTO technical assistance could helpGuatemala's efforts.
44. The representative of Guatemala recalled his country's efforts to avoid the creation of private
monopolies.
(ii) Trade policies and measures
45. The representative of Guatemala noted that the draft law on Customs Valuation had been
finalized, but it had not yet been considered by Congress for approval.  Guatemala acknowledged both
multilateral and bilateral cooperation in this area.  Guatemala would make every possible effort to
enhance its institutional capacity with regard to cu stoms valuation, and undertook to provide further
details in this regard at a later stage.  On trade facilitation, Guatemala now had electronic forms for
both imports and exports and a single window for exports, had started automatization of customsprocedures, and had a programme on air transport (COMBEX-IM).  Guatemala remained committed
to the reduction of customs duties within the framework of the FTA's, and of the multilateral trade
negotiations.  Argentina's and Chile's wine had access to Guatemala's market.  Guatemala was setting
up a national quality system to guarantee consumer welfare, and had adopted the Code of Good
Conduct on technical standards.  Guatemala applied sanitary and phytosanitary measures inconformity with international standards, such as those of the International Office on Epizootics.
Guatemala took note of preoccupations with regard  to the meat market.  Free-trade zones and the
maquila regimes had been used as development instruments.  Guatemala hoped to develop a
competitive productive sector that met its fiscal obligations.WT/TPR/M/94
Page 13
46. Guatemala requested developed countries to avoid the development of tax competition among
developing countries, including through subsidies and taxes holidays, which would harm smallmarkets, like Guatemala.  On government procurement, Guatemala applied national treatment to
foreign companies, and invited its trading partners to improve their market access conditions as well
as transparency in this area.  Guatemala had also adopted legislation on industrial property, and
copyright in compliance with its WTO commitments.  Referring to the Ministerial Decision on TRIPS
and public health, Guatemala stressed that developing countries needed immediate access topharmaceutical products.
47. The discussant noted that the issue of customs valuation needed to be resolved through the
implementation of the WTO Agreement on Customs Valuation.  He welcomed Guatemala's initiatives
to facilitate trade, in particular the creation of the single window.  He then noted that developing
countries had to take a more active part in the formulation of technical standards so as to avoid theiruse as non-tariff barriers to trade.  He encouraged Guatemala to reduce the gap between applied and
bound rates, and to ensure transparency in its government procurement procedures.
48. The representative of Chile expressed  his country's hope that Guatemala's legislation on wine
would be modified.
(iii) Sectoral policies and measures
49. The representative of Guatemala recalled his country's strategy towards diversification and
agricultural development.  Guatemala hoped that negotiations on agriculture would be successful, in
particular in relation to market access.  Liberalization should provide Guatemala with the opportunity
to enjoy the benefits of its comparative advantage in agriculture.  Guatemala was also supporting rural
development, through telecommunications and electric services in rural areas.  Guatemala hoped to
achieve a sustainable and environmentally friendly exploitation of its forestry resources.  Guatemala
had made efforts to tackle institutional weaknesses in relation to trade statistics.  Guatemala also notedits interest for market access in textiles and clothing, and was a member of the International Office for
Textile and Clothing and of the TMB.  Guatemala was also considering the possibility for the
development of micro and small enterprises, and acknowledged the importance of access to micro-
credit.  Guatemala was committed to further liberalization of services under the GATS, through the
new round of negotiations, and was taking measures to address the challenge posed by its financialsector.  A law entered into force in December 2001, to bring Guatemala's practices on money
laundering into conformity with international law.  Guatemala wished to develop tourism as another
means to improve living standards.
50. The discussant noted imbalances across sectors;  the manufacturing sector was marginal.  He
also mentioned the importance of small and medium-size enterprises, and commended Guatemala's
efforts to promote tourism.  He encouraged Guatemala to further strengthen existing production of
wood, textiles and cotton, to pursue its rural development programme, and to explore the possibility of
further exploiting its maritime resources.
51. The representative of Mexico commended Guatemala's achievements and efforts in pursuing
its reforms.
52. The representative of Chile congratulated Guatemala for its efforts towards trade
liberalization.WT/TPR/M/94
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON
53. This first Trade Policy Review of Guatemala has been thorough and comprehensive, and has,
I am sure, taught us all a lot.  This is due very  much to the full and frank involvement of Minister
Montenegro and his delegation, and to the active engagement of many Members.  Through our
dialogue, we have obtained a better understanding of the trade-related policies and practices in place,
and of recent and planned changes.  At the outset, allow me to highlight also the support of Members
for Guatemala's ongoing modernization and liberaliz ation efforts, and their acknowledgement of the
progress made by Guatemala since the signing of the Peace Accords in 1996.
54. Members remarked on the important role that trade has played in promoting growth in
Guatemala, the largest economy in Central America.  They recognized the efforts undertaken to
improve economic and social conditions in Guatemala, and encouraged the authorities to maintain,
and indeed strengthen, the policies that have played a considerable role in this improvement.  In this
context, some Members suggested that Guatemala continue to rationalize its fiscal regime and reduce
its reliance on import taxes.  Members congratulated Guatemala on the past implementation of its
privatization programme, but underlined the need to move forward with this programme, promote
competition in the domestic market, and carry on other initiatives in order to consolidate recent
economic gains and raise living standards.
55. Members commended Guatemala for its active participation in the multilateral trading system.
They took note of Guatemala's stated conviction that liberalization of world trade is a central pillar of
economic development.  The Guatemalan delegation also affirmed clearly that it would not use
protectionist measures despite the difficult domestic and international circumstances its economy
confronts.
56. Members also noted Guatemala's growing participation in preferential arrangements, and
sought further information on a number of them;  th ey took note of Guatemala's point that it sought
FTAs rather than unilateral preferences.  Some Members raised concerns about Guatemala's
administrative capacity to participate effectively and simultaneously in all such initiatives.
57. It was noted that Guatemala has gained from it s participation in the multilateral trading
system.  However, some considered that Guatemala faced special constraints due to it being a small
developing country, and pointed to the need to provide Guatemala with trade-related technicalassistance.  Some Members indicated their readiness to provide such assistance, and requested
Guatemala to specify its needs in this respect.
58. Members appreciated that Guatemala's applied tariffs are relatively low.  However, several
suggested that by narrowing the current wide gap between applied and bound tariffs the predictability
of the import regime might be enhanced.  A number of Members were concerned about theconsistency with multilateral principles of a recently introduced tax on certain alcoholic beverages.
Many Members asked about customs procedures and trade facilitation in Guatemala, with some
urging Guatemala to effect improvements in these areas.  Guatemala indicated concrete steps are
being taken in this respect.
59. On sectoral policies, Members expressed particular interest in the development of the
agriculture and fisheries sectors, as well as in services activities.  Several Members noted that
Guatemala's applied and bound tariffs on agricultural products are particularly high.  Members
expressed their support for Guatemala's ongoing financial sector reform and asked for more
information on current developments.  Noting that Guatemala's GATS commitments are relativelyWT/TPR/M/94
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60. limited, several Members invited Guatemala to expand and deepen its commitments during
the current services negotiations.
61. Members also sought further clarification on a number of specific areas, including:
− trade statistics and efforts to improve them;
− import and export procedures, including insurance requirements;
− import regime for sugar;
− standards, technical regulations, and SPS measures;
− special investment and trade regimes;
− competition policy and related legislation;
− government procurement and eventual participation in the WTO Agreement on Government
Procurement;
− participation in the Information Technology Agreement;  and
− protection of intellectual property rights.
62. The Guatemalan delegation gave written and oral replies to questions posed during the
Review.  The replies provided have made a major contribution to this meeting, and were clearly
appreciated by Members.
63. In conclusion, through this Review we have gained a first-hand appreciation of Guatemala's
achievements since the signing of the Peace Accords, and the challenges that lie ahead.  It is my sense
that Members very much appreciated Guatemala's efforts to improve its economic and social
conditions, and encouraged it to continue down th is road in order to further its prospects for
sustainable economic growth and social developmen t.  Economic growth has gone hand-in-hand with
trade liberalization and other modernization efforts, and Members invited Guatemala to count on the
help of the international community to both secure lasting institutional stability and enhance its
participation in the global economy.
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