Belize-Guatemala Partial Scope Agreement (PSA)
The Belize-Guatemala PSA was signed in 2006 and entered into force in 2010. It is the first bilateral trade agreement signed by Belize. Its objected is to strengthen the economic and political relations between Belize and Guatemala by facilitating, promoting, diversifying and expanding trade in goods that fit the origin criteria outlined within the Agreement. In accordance with this objective, the PSA primarily focuses on:
- Granting preferential margins on tariffs, eliminating non-tariff barriers to trade and establishing clear technical regulations and sanitary and phyto-sanitary measures;
- Promoting investments through the establishment of a legal framework aimed at ensuring legal certainty;
- Facilitating land transportation of goods through the elimination of discriminatory transit barriers;
- Establishing an efficient, transparent and effective system to resolve trade disputes.
The agreement is only partial in scope as its name suggests, 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 (tariff lines).
Tariff concessions refer to the reduction or elimination of import duties imposed on the importation of good included in the list of goods covered by the Agreement when such good satisfy the origin criteria as spelt out in the Agreement. Market access reciprocally granted according to different categories – Category “A”, Category “B” and Category “C”. These Categories vary by the amount of time required for the tariffs to be eliminated and thus provides for a phased reduction.
Category “A”: Originating goods with a preference margin between 50% and 100% are entitled to 100% tariff concessions upon entry into force of the Agreement. Preferences that Guatemala grants to Belize under this Category applies to goods 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 concentrates, mangoes, guavas, watermelons, pineapples and plantains, among others.
Category “B”: Goods with a preference margin between 50% and 100% receive tariff preferences in three equal annual cuts.
Category “C”: Goods with a preference margin between 50% and 100% receive tariff preferences in five equal annual cuts.
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 preferential tariffs that Belize grants to Guatemala and vice versa are included in Annex I and II of the PSA.
Existing Trade with Guatemala
Belize has a trade deficit with Guatemala. i.e. Belize imports more from Guatemala than we export. There are tremendous export opportunities to be explored from the Partial Scope Agreement with Guatemala.
Expanding Trade with Guatemala
Data shows that Guatemalan imports are products that Belize can seamlessly supply on a predictable and consistent basis. These products are:
- Orange juice (in all its forms)
- Kidney beans
- Fresh fish
- Livers and roes
- Frozen shrimps and prawns
- Fish crustaceans
- Live poultry
Guatemala currently imports the above products from the United States, Nicaragua and Ecuador. Noting that the provisions of the PSA provides for efficient land transportation, and based on Belize’s proximity to Guatemala, it is imperative that Guatemala be viewed as one of Belize’s export markets.
The Agreement provides for investment promotion between both countries. Investment activities such as Joint Venture 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. In strengthening the investment climate between both countries, the PSA has provisions that discourages anti-competitive business practices, provisions that protects against nationalization, expropriation or measures that would nullify the value of such investments. Also built-in into the agreement are dispute settlement provisions in the event of a breach of obligation.
Chapter ten (10) of the Agreement covers land transportation to facilitate the movement of goods between both countries.
The chapter also contains key provisions on freedom of transit in which vehicles and their drivers should be allowed to transport between both countries without any hassle. Note that 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.