Industrialists support the announcement of FTA negotiations with China

With access to a market of more than 1.4 billion people and consolidated as the second largest economy in the world, the People’s Republic of China will become El Salvador’s next trading partner, according to the announcement made on November 9 by President Nayib Bukele and the ambassador of the Asian nation in the country, Ou Jianhong.

“China and El Salvador express their willingness to start the process of negotiating the free trade agreement (FTA) soon,” said the Chinese diplomat.

In this regard, the economic adviser of the Salvadoran Association of Industrialists (ASI), Rigoberto Monge, affirmed that the opening of commercial relations between nations is always a political decision and that this has the approval of the industrial sector, which sees new opportunities in the alliance to introduce national products in the global market.

“As a private sector, we consider it very favorable insofar as conditions are generated to increase commercial and financial relations between our country and the rest of the world. We welcome initiatives of this nature as long as they themselves entail the necessary consultation mechanisms with the national productive sector”, he pointed out.

For the economist, the negotiation process could be quite short because El Salvador, being already a signatory to other similar agreements, has managed to accumulate a trade pattern that identifies its potential against other competitors.

In this sense, he considered that two of the industrial sectors that would benefit most from this FTA could be textiles and clothing and food and beverages, and on a more general scale, he sees an important space for the country’s agricultural flagships, such as coffee and sugar.

The Minister of Finance, Alejandro Zelaya, also referred to the issue and said that this announcement opens a range of possibilities for El Salvador, and joins the Latin American nations that already have agreements of this type with China, such as Chile, Peru, and Costa Rica, in the Central American region.

“This opens the doors for Salvadoran producers in terms of exports and also opens the door for attracting foreign investment,” said the official.

Zelaya stated that the country already has trade agreements with countries such as the United States, South Korea, the European Union, Central America, and Mexico, among others, and that this understanding with China is part of the country’s quest to open its economy to the world, a necessary element at a time when the international economy is vulnerable due to various factors.

“We are going to start diversifying our national production, and we are also going to start receiving more investment. President Bukele has been very emphatic: we want to trade, we want to do business with countries that are developed and that consider themselves powers”, he ratified.

For Minister Zelaya, this announcement signifies a turning point in the national economy that can transform the productive matrix and, consequently, increase the income of Salvadorans.

Regarding President Bukele’s announcement that the negotiation process will be carried out quickly, he said that this has to do with a coherent response to the demand of the international economy, which, being affected by various phenomena, needs solutions, and that here there is a great opportunity for El Salvador to open up to a new market.

On the other hand, Minister Zelaya ruled out the possibility that the talks with China would jeopardize the Central American Free Trade Agreement (CAFTA), which El Salvador is a signatory to and is currently in effect.

Costa Rica’s experience on the matter

Costa Rica is to date the only Central American nation to trade with China under the conditions of an FTA, which entered into force in 2011, and in 2021 exports to the Asian nation totaled $308 million, according to data from the Ministry of Foreign Trade (Comex) of that country.

Tilapia, shrimp, flowers, plants, cocoa, paints, chocolates, and hearts of palm, as well as raw materials, including textiles, are the main products that Costa Rica sells to this market.