Doing Business in El Salvador?
Welcome to El Salvador! The U.S. Commercial Service can provide your company with relevant and current information about this country.
Market Overview
The bilateral commercial relationship between the United States and El Salvador is strong in both trade and investment. El Salvador uses the U.S. dollar as its official currency. The United States is El Salvador’s number one investor and leading trade partner. The majority of El Salvador’s imports come from the United States, and nearly 50% of El Salvador’s exports go to the U.S.
El Salvador is a member of the World Trade Organization (WTO), and has free trade agreements with the United States, Central America, Chile, Mexico, Panama, Colombia, Dominican Republic, and Taiwan. Recently it signed a free trade agreement with the European Union.
The U.S.-Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) entered its 6th year of implementation in El Salvador on March 1st, 2012. Like the rest of Central America, El Salvador offers an open market for U.S. goods and services. Tariffs are relatively low, and were reduced further with the implementation of CAFTA-DR. El Salvador’s Value Added Tax is a 13% rate.
Market Opportunities
El Salvador is a steady and growing market for U.S. goods and services. U.S. companies can take advantage of the CAFTA-DR free trade agreement to increase exports not only to El Salvador but to the rest of Central America.
Among the top sectors for U.S. exporters in the Salvadoran market are: Automotive Parts and Service Equipments, Dental Equipment, Travel and Tourism, and Food Processing and Packaging Equipment.
The Salvadoran government is also developing several major infrastructure projects such as: La Union Port; Renewable Energy Generation; Regional Telecommunications Interconnection; Regional Highway Interconnections; and Regional Electric Grid Interconnection.
Market Challenges
U.S. Commercial Service El Salvador encourages U.S. companies interested in the Salvadoran Market to be aware of certain challenges, and is ready to provide assistance to U.S. companies on how to address them. For more detail on market challenges, please see our: Country Commercial Guide 2012.
Market Entry Strategy
- The use of agents and distributors is the most common way to export U.S. products and services.
- One agent is usually sufficient as commercial activity is concentrated in the capital San Salvador and the size of the country does not justify regional agents.
- Agent or representative agreements should be non-exclusive. An exclusive territorial contract is recommended only when the business relationship has proven to be stable, professional, and profitable for both parties. An exclusive agent is entitled to compensation for damages upon termination of the relationship. A local lawyer should be consulted.
- U.S. companies should visit potential partners or agents prior entering into a relationship.
- U.S. firms should check the bona fides of potential partners as soon as a business relationship begins to develop.
- U.S. companies should receive legal advice from a local attorney on laws, regulations, taxation, labor, residence permits, and other related issues.
The U.S. Commercial Service El Salvador provides many services for U.S. Companies trying to enter the Salvadoran Market. For further information on commercial services, contact us or visit the Commercial Services Section.
