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The United States Supports Development and Investment in Guatemala

The United States and Guatemala share a close and historic trade relationship. And for over five decades AmCham has been an ally in deepening and modernizing the relationship to the benefit of both nations We share a commitment to strengthening Guatemalan institutions, creating a better business climate, stemming corruption, and supporting the rule of law. We do this because we know it will reinforce commercial relations between our two nations and provide a better platform for growth for business, workers and the governments that serve them. We know that promoting bilateral trade increases prosperity. It generates thousands of jobs. It drives innovation.

William W. Popp Ambassador of the United States of America in Guatemala

Our partnership with Guatemala also remains broad because we know that health, security and education, and accountable government are vital to accelerate economic growth. For this reason, we are investing in and partnering closely with Guatemala’s law enforcement to support its capacity to stop transnational crime, address genderbased violence, and make communities more secure. The United States is also Guatemala’s trusted partner in public health. We responded to the COVID-19 Pandemic by donating 8.5 million Moderna vaccines; and the medical equipment we donated -respirators, mobile hospitals, and technical assistance for laboratories -- continue to support Guatemala’s health system. In 2023 we will mark the 20th anniversary of the PEPFAR initiative to end global HIV/AIDs. U.S. investment in Guatemala’s HIV/AIDs response has supported 16 HIV assistance centers and the treatment of 22,000 Guatemalans facing HIV/AIDs.

In 2021, President Biden designated the fight against corruption a core national security priority for the United States and released the first U.S. Strategy on Countering Corruption. Corruption also ranks as one of the root causes of irregular migration because it stifles competition, limits opportunity and blocks access to resources. The United States has repeatedly demonstrated its commitment to supporting Guatemalans in their fight against corruption by holding corrupt actors accountable and denying them travel and financial access to the United States. Economically speaking, fighting corruption is key to a level playing field for all. It promotes government accountability, a better business environment, and it protects the rule of law – all of which are good for business. We know that without clear rules, consistently applied, it is difficult for domestic companies to grow their operations and international companies are dissuaded from investing in Guatemala. AmCham members can be partners in this cause. We applaud AmCham member companies who are promoting the use of codes of ethics and compliance standards. Your leadership in this area moves Guatemala forward. Ensuring that Guatemala is a country where corrupt actors cannot act with impunity will increase the confidence of Guatemalan citizens in their institutions and the U.S. private sector’s interest in doing business with Guatemala.

In the coming year, we will continue to address irregular migration wholistically through government, civil society and private sector partnership. No economy is well-served if its next generation of workers and entrepreneurs sees leaving the country as necessary for success. The private sector is essential to changing this paradigm. In 2021, Vice President Kamala Harris launched the Call to Action for the private sector to generate economic opportunities in Guatemala and the region. Companies like Microsoft, MasterCard, Starbucks, PriceSmart and many AmCham members have joined the effort. Through the Call to Action, they are betting more than $2 billion towards factories, jobs, production and trade. But growth is a twoway street and we also want Guatemalan companies to find opportunity in the United States. To that end, more Guatemalan investors joined the official delegation that participated in the SelectUSA 2022 Investment Summit than any other country in Central America. SelectUSA is a unique opportunity to learn about transparency, legal certainty, and robust infrastructure that the United States offers. We want even more Guatemalan investors to join the SelectUSA 2023 Investment Summit to be held in early May 2023 in Washington, D.C. Our Foreign Commercial Service is ready to connect your business to opportunities in the United States.

Looking forward, we also know that trade is not enough. Strong businesses grow from good infrastructure. We applaud Guatemala’s approval of the first-ever public-private partnership to expand the Escuintla-Puerto Quetzal highway. As we look back on the challenges of the COVID-19 pandemic and the growing realities of climate change, more infrastructure projects can improve Guatemala’s competitiveness. To this end, trade partner agencies such as the U.S International Development Finance Corporation (DFC) and the Exim Bank have prioritized facilitating access to credit for energy, digitalization, waste management and, of course, infrastructure projects. Similarly, after the COVID -19 pandemic, Guatemalan participation in trade fairs in the United States has resumed, helping entrepreneurs learn about new technologies, equipment, and services that on offer in the United States across a broad range of sectors.

2023 will be a landmark year for our investment in the U.S.Guatemala relationship when we open our state-of-the-art new embassy campus in Zone 16. This LEED certified campus, which has been constructed by a team of nearly 2,000 U.S. and Guatemalan workers, is not only a lasting symbol of US-Guatemalan relations but also a modern platform to accelerate our diplomatic and consular work. It will facilitate more efficient travel and commerce between our countries by expanding our capacity to provide visa services for Guatemalans and support to American citizens. In launching our new Embassy, AmCham partners have been with us from the start. You were instrumental in our inaugural event: our first in-person Independence Day celebration since the pandemic in July 2022. We look forward to many more AmCham collaborations in our new diplomatic home in the years to come. The work of the U.S. Embassy is to make sure that the U.S.-Guatemalan relationship stands for progress and growth. We are grateful that AmCham remains a key and enduring partner in that effort!

AmCham, more than your business advisor, a business insurance policy

AmCham, ‘’Your concierge for business.’’ We are the largest binational Chamber in Guatemala, constituted on May 23rd, 1967 now celebrating 55 years since our creation. We are proud to say we are made up of national and international companies, representing a diverse business sector in the country, currently having 450 members. We also promote in the Chamber binational trade between Guatemala and the US, as well as attracting Foreign Direct Investment into our country.

AmCham Guatemala is part of the Association of American Chambers of Commerce in Latin America and the Caribbean (AACCLA), whose headquarters is in Washington D.C., with a network of 23 AmCham’s, more than 20,000 members who, in turn, represent over 80% of American investment in the region. This year we had the

Waleska Sterkel de Ortiz Executive Director

honor and great responsibility of being part of AACCLA’s Board of Directors. Juan Pablo Carrasco, AmCham’s President, once again holds the position of Vice President, while yours truly holds the position of Vice President for Executive Management, renewing our commitment with our member companies by continuing to work hand in hand with our national and foreign members in order to simplify and harmonize processes and procedures in international trade.

AmCham seeks to promote bilateral relations with the US through business appointments, rapprochement with national and international bodies, commercial and investment analyses, brand positioning through the Chamber, job fairs, commercial support in matters of internationalization and exports and in turn, a solid and benevolent relationship with our institution. We are also aware at the Chamber about the importance of business networking and the joint work of our members, therefore, we foster and promote our member committees by commercial sector.

Our 10 Committees are work groups that unite members who seek to expand their network of contacts and act on behalf of the business sector and want to make an impact for their respective line of business in order to have an effect at a country level. Our Committees are broad and are based on the economic sectors of our members, who seek to have the support of the largest binational

Chamber in the country. In addition of being promoters of the Guatemalan commercial and economic development, we are fond of using an analogy where we function as medical or automobile insurance. A person does not expect to use the insurance for their vehicle or to need to go to a hospital, but they are grateful to have one when the opportunity arises. Our members come to us in search of solutions to their problems. Throughout the years, we have understood that our work goes beyond just being an important reference point for business, it is also to support them in their search for a solution and backing they may need and therefore, becoming an ally to facilitate trade.

We have learned through all these years of experience how the business sector has been innovating and we have been adapting at its side at every step of the way in order to provide additional and better tools, allowing us to call ourselves “your business advisor.”

Grecia Ramírez Trade Center Manager

16th anniversary of CAFTA-DR

Free trade agreements are a powerful tool for the growth of a region. They are a linking agreement signed by two or more countries to make a pact on the granting of mutual tariff preferences and reduce non-tariff barriers for the trade of goods and services. So in 2003, it was only natural to seek the negotiation of an agreement between Central America and its main trading partner, the US. It is no secret that Guatemala has had a marked dependency on the northern country. According to the Secretariat for Central American Economic Integration (SIECA, acronym in Spanish), in 1951, of the US$74.5 million of total exports, 89.9% had the US as their final destination.

Initially in 2003, the agreement was known as Central America Free Trade Agreement (CAFTA), since it only included the Central American countries and the US. The incorporation of the

Dominican Republic in 2004 made the acronym change to CAFTA-DR, and all the signatory countries ratified it before July 2005, except for Costa Rica, which ratified it in October 2007.

Sixteen years have passed since it came into force and taking into account the geographic proximity that the region represents for the United States, the agreement has provided trade between the countries with legal certainty for doing business and tariff benefits between the signing parties all throughout these years, as long as these products have complied with requirements such as rules of origin, technical and sanitary specifications. The application of the agreement has also transformed governmental institutions, not only though legislative reforms, but also with procedures and structural changes, seeking to be more efficient and timely with the requirements.

Nonetheless, as in everything, it is time to analyze how the agreement is actually being used, although we should never lose sight of the trade with the US due to this market’s great potential. It is important to remember that the agreement was also signed with other countries in the region, Central America and the Caribbean, which are par excellence, a market that must be leveraged by our companies.

As mentioned before, due to the validity of this agreement, each country had to carry out procedural reforms in their processes, as well as legislative ones. Also, they had to reason technically, their resolutions based on more advanced regulations than those applied locally at that time. In addition, the countries had to work together on issues which, specifically in the case of Central America, resulted in a more integrated bloc.

The application of the CAFTADR in a multilateral manner, gives way to Central American entrepreneurs to have a new form of doing business. In some sectors such as chemical, dairy and plastic products, different regulations are applied in which the use of American raw materials grants origin to the end product, thus enjoying tariff preferences they did not have before. This has implied a change in supply sources, benefiting the US, Central America and the Dominican Republic alike, bringing costs down in processes and products, achieving greater competitiveness.

Adapting the Guatemalan Logistics Sector in the face of the supply chain crisis

Logistics activities in Guatemala have benefited in recent months due to the reactivation of international trade after COVID-19. Nonetheless, the container crisis generated worldwide brought about a considerable increase in maritime cargo transportation prices without the growth in the country’s imports and exports ever stopping. Logistics is an industry that has never stopped during the pandemic despite constantly facing national and global challenges.

The closure of major ports around the world, the conflict between Russia and Ukraine, the COVID-19 pandemic and the lack of pilots are some of

Jeison Bennett President

the factors that caused the crisis within the supply chain to explode at a peak moment for the world. In addition, another major factor that triggered this crisis is the increase in freight rates and the upward trend despite low prices at certain times of the year.

Within the business ecosystem, logistics is a key factor to achieve competitiveness. This sector allows the regeneration of regional and international trade, as well as fostering trade interactions between countries. Guatemala’s logistics sector has become dynamic, but competitive at the same time in terms of supply and demand. This, in turn, means another challenge other than the ones mentioned before: What can I do so that my logistics company does not lose ground in the market’s demand?

One of the innovations that have become fashionable within logistics has been e-commerce, which, being demanding to logistics operations of all companies regardless of size or line of business, became much more robust, allowing them to offer agile and reliable services today, where it is expected that requesting a product and receiving it are dealt with the same immediacy. This is where the air service or courier is an effective option.

To this, the most recent problem must be added: The disruption in terms of product availability. This trend has become relevant as a result of the reduction in demand for certain products coming from the other side of the world, causing containers to lose the constant route flow they maintain and the availability of items to be scarce.

In the face of this, the logistics sector has immersed into a constantly innovating environment since 2020. New life modalities force this sector to innovate operations, optimization, adaptation and even the human factor. The dynamic is that logistical adaptations will mark the path to operate in the future for Guatemalan logistics, in terms of electronic innovation and streamlining of processes.

Carla Caballeros Executive Management

Trusted partners

More than 15 years have passed since the implementation of the Free Trade Agreement between the US, Central America and the Dominican Republic (CAFTA-DR), consolidating the close trade relationship and mutual benefit for companies and citizens of those countries. Currently, more than 30% of Guatemalan exports worldwide has the US market as destination and close to 35% of what Guatemalan companies import comes from that same country.

The sustained growth of imports and exports is a clear reflection of the agreement’s impact, but above all, of the trust between partners. Trust in the quality and safety of products and processes. Confidence in the compliance with agreed conditions between individuals and companies. Still, there are also external factors in international trade operations that may threaten operations and the environment of companies in both sides of the border.

Experts in various forums agree that some of the main threats to global supply chains are: Contraband, transnational organized crime, product counterfeiting, lack of security of property rights, security of operations at ports and borders and cyber security.

The American Chamber of Commerce in Guatemala and the Chamber of Agriculture are two institutions that see eye to eye on the importance of corporate security and robust risk management systems that allow to identify, plan and act in order to prevent and mitigate risks associated to these transnational threats. With this vision in common, both chambers joined efforts and resources two years ago in order to provide technical support to members, facilitating information, tools and services that strengthen business management.

The “Security Business and Compliance” program was launched within the framework of a memorandum of understanding that promotes a collaborative alliance between both business organizations with the aim of contributing to the promotion and strengthening of a competitive and secure business environment. It focuses on prevention management in the areas of corporate security, anti-corruption and prevention of money laundering in international trade operations. Among its lines of action are: Training and interchange of good practices, technical assistance in the design of protocols, compliance management systems for prevention and awareness campaigns.

More trade, more investment, less migration. More than a slogan, it is a shared vision that AmCham and other private sector chambers jointly presented in Washington, DC a few years ago. This is indeed the way, only with the improvement of the business climate and the competitiveness of the country, there will be more investment and trade that facilitate entrepreneurship, job creation and the improvement of the quality of life in Guatemala in order to reduce illegal migration to the US to some extent.

Let’s be certified as an AEO! That was our CEO’s request.

Sometimes we do not measure the challenge of obtaining a certification. Based on my experience during the implementation process of the AEO Program’s requirements, I can say that the most difficult thing is changing the company’s culture. Arduous work is needed in order to establish, document and maintain controls that allow all our activities to be performed safely.

I recall that at the start of the implementation process, we read and reread all of the AEO Program’s requirements and we thought: It is unreachable!

There is so much work to be done! In spite of that, Senior Management’s support was fundamental by providing all the necessary resources during the process.

We put together an auditing team of six people from different areas who jointly worked on the documentation of all processes, procedures and formats. We conducted an internal audit to evaluate the compliance with requirements and finally, we executed those corrective and improvement actions necessary to deal with non-compliance issues, and we thought: Now we did it!

We indeed achieved the accreditation as an AEO figure, however, a bigger challenge was approaching. Now we had to generate all the traceability records of the activities that we established and documented.

On top of everything, what was now part of our internal organizational culture, had to be conveyed to all our stakeholders (customers and suppliers). We all had to be aligned with the security regulations and standards promoted by the AEO Program.

At that moment we understood that the real challenge is not only obtaining the certification, but maintaining it through the continuous improvement of our processes, respecting and taking care of their integrity.

Benefits

Through the accreditation as a AEO figure, we have many benefits that will allow us to create strategic alliances to facilitate secure trade, supported by good practices established in the Control and Security Management System (SGCS, acronym in Spanish).

Achieving that the maintenance and continuous improvement of the SGCS is part of our organizational culture, with the aim of ensuring processes to be executed correctly and securely, allowing us to strengthen credibility and competitiveness in the company for our stakeholders.

Given the mutual recognition agreements that exist internationally, interesting business opportunities can be found for certified companies. Additionally, receiving specialized training in the subjects of the logistics chain security, international trade and customs matters from the Superintendence of Tax Administration (SAT, acronym in Spanish) lead to the professional development of everyone involved, not to mention the maturity of the Control and Security Management System.

Challenges

our companies, however, the important thing is to recognize that all of these challenges will bring benefits.

I cordially invite you to take a risk, to make the decision to be certified as an AEO figure, to look for advice from organizations like AmCham who are committed with our

Embark on an adventure that will bring greater control, organization and clarity in the

Guatemala promotes business opportunities and job creation through Special Public Economic Development Zones (ZDEEP)

The Free Zone of Industry and Commerce “Santo Tomás de Castilla”- ZOLIC -, has been in operation since 1973 as an extracustoms area, providing facilities adjacent to the main port in the Guatemalan Atlantic to industrial, commercial and / or service users who are granted fiscal and logistical benefits by our Law.

It operates under quality and international certification standards such as Authorized Economic Operator (AEO) and the International Ship and Port Facility Security (ISPS) Code, which ensures security of trade operations based on international standards.

Byron Gaitán General Manager

The economic development promoted by ZOLIC over the last 50 years is no longer only for its area of influence in Puerto Barrios, Izabal. The reforms made to its Organic Law empowered it to create the Special Public Economic Development Zones (ZDEEPs, acronym in Spanish) and this is how the institution now serves more than 51 users in the fiscal property of Santo Tomás de Castilla and in the ZDEEPs in different regions of the country. Both ZOLIC and ZDEEP users are exempt of 100% of Income Tax for 10 years for new investments. They have a temporary exemption of Valued Added Tax, customs duties and other import fees for goods that enter the free zones, as well as duties on machinery and equipment, tax stamp exemption on acts and contracts, as well as having an exclusive customs delegation and something very important which is that the goods within the Free Zones do not cause abandonment.

In the last two years, 12 ZDEEPs have been authorized, being Escuintla, San Marcos, Zacapa and Izabal (Puerto Barrios) the first departments where they were created, with industrial, trade and agribusiness vocations, which strategically create logistic corridors that facilitate production and exports throughout the country.

In addition to responding to the need to expand the range of options for new investments, ZDEEPs are intended to create sources of formal employment. To this effect, the first four ZDEEPs in operation have generated more than 4000 indirect jobs and 600 direct jobs in the last two years and the projection is to generate 70,000 new jobs for the country once all of them are in operation.

ZOLIC is updated according to the trade and transparency dynamics of modern times and with a renewed image, it works following a strategy which consolidates alliances with national and international partners, working jointly with country-promoting agencies, chambers, institutions and associations, making known the relocation advantages that Guatemala offers to companies and industries that seek expansion, positioning it as a secure destination.

We are committed to the country’s development and the generation of formal employment. We are convinced that ZDEEPs are an attractive instrument for new investments that come accompanied by labor training, technology transfer, productive chains and sustainability.