The United States and the Republic of Guatemala have announced a historic new Framework for an Agreement on Reciprocal Trade, representing a major strengthening of the long-standing economic relationship between both nations. Building on the foundation established by the CAFTA-DR trade agreement (in effect since 2006), this new framework is designed to modernize trade, remove friction, enhance regulatory transparency, and secure more resilient supply chains for U.S. companies.
For MTAR—and for the broader Central American manufacturing ecosystem—this new Agreement underscores Guatemala’s growing strategic importance as a reliable, compliant, and high-performance production hub for U.S. brands.
Below is a breakdown of what the Agreement includes and why it matters.
1. Streamlined Regulatory Processes for U.S. Exports
Guatemala has committed to eliminating or simplifying a wide range of non-tariff barriers, with improvements including:
Faster regulatory approvals for U.S. exports
Reduced red tape for pharmaceuticals and medical devices
Removal of restrictions on remanufactured goods
Acceptance of U.S. automotive standards
Streamlined Certificate of Free Sale requirements, including:
Acceptance of electronic certificates
Elimination of apostille requirements
Faster product registration timelines
Why this matters:
Efficient regulatory channels mean faster flow of machinery, inputs, and technology into Guatemala—directly supporting higher-quality, more efficient manufacturing across the region.
2. Stronger Market Access for U.S. Agriculture
Guatemala will:
Maintain science-based regulatory frameworks
Prevent unnecessary barriers to agricultural imports
Recognize U.S. regulatory oversight and certification
Why this matters:
Stable, transparent agricultural import rules help keep cost structures predictable for food-and-agriculture companies operating supply chains across Central America.
3. Expanded Intellectual Property Protections
Guatemala has committed to:
Fully implement key international IP treaties
Resolve long-standing issues highlighted in the USTR Special 301 Report
Strengthen enforcement mechanisms
Why this matters:
This commitment supports innovation-driven industries, protects proprietary technology, and increases confidence for companies investing in Guatemala.
4. Transparency for Geographical Indications (GI)
Guatemala will ensure that commonly used terms—especially for cheese and meat products—are not restricted unnecessarily.
Why this matters:
This protection reduces brand risk and keeps markets open for U.S. food manufacturers selling into Central America.
5. Digital Trade Protections: A Modern, Open Digital Economy
Guatemala will:
Refrain from imposing taxes on U.S. digital services
Promote free, secure cross-border data flows
Support a permanent moratorium on customs duties for electronic transmissions at the WTO
Why this matters:
Digital trade protections directly benefit SaaS, logistics platforms, ERP/PLM systems, and supply-chain technologies—strengthening Guatemala’s role as a modern, digitally integrated production hub.
6. Improved Services Regulation
Guatemala will take actions under the Joint Initiative on Services Domestic Regulation to modernize licensing, permitting, and cross-border service rules.
Why this matters:
This increases efficiency and reduces overhead for U.S. companies operating in the region or servicing clients in Guatemala.
7. Customs Modernization & Better Regulatory Practices
Guatemala has committed to:
Adopt global best practices in customs operations
Improve transparency in regulatory decision-making
Why this matters:
Faster and more predictable customs clearance strengthens production timelines—critical for nearshored apparel and consumer goods.
8. Protection of International Labor Standards
Guatemala will:
Prohibit imports made with forced or compulsory labor
Strengthen its labor laws and enforcement
Why this matters:
This aligns Guatemala more closely with U.S. compliance requirements and elevates ethical sourcing standards—key for brands prioritizing ESG and social responsibility.
9. Strengthened Environmental Protections
Guatemala will adopt and enforce high environmental standards, including:
Actions against illegal logging
Improvements to forest governance
Stronger enforcement of fisheries-related measures
Efforts to combat illegal wildlife trade and mining
Full implementation of the WTO Fisheries Subsidies Agreement
Why this matters:
Environmental stewardship continues to be a top priority for U.S. brands operating in the region—this commitment supports long-term sustainability.
10. Oversight of State-Owned Enterprises and Industrial Subsidies
Guatemala will address distortionary SOE practices and industrial subsidies that could impact bilateral trade.
Why this matters:
Transparent market conditions improve competitiveness and reduce risk for private-sector investors.
11. Supply Chain Resilience & National Security Cooperation
Both nations will work together on:
Securing supply chains
Enhancing innovation
Countering unfair non-market policies from third countries
Addressing duty evasion
Strengthening investment security
Why this matters:
This aligns Guatemala even more closely with U.S. strategic manufacturing priorities—especially as brands diversify away from Asia and pursue nearshoring.
12. Government Procurement Protections
Guatemala will restrict access to central-level procurement for suppliers from non-FTA countries—similar to U.S. procurement rules.
Why this matters:
Creates a more level playing field for U.S. suppliers and strengthens alignment between both countries’ procurement systems.
13. Next Steps: Toward Full Implementation
Over the coming weeks, the United States and Guatemala will finalize and sign the Agreement. In recognition of Guatemala’s commitments, the United States will remove reciprocal tariffs on certain qualifying Guatemalan exports, including:
Select products that the U.S. does not produce domestically in sufficient quantities
Certain textiles and apparel originating under CAFTA-DR
Why this matters for apparel brands and MTAR’s partners:
Lower tariffs + stronger compliance infrastructure + fast production cycles = an even stronger business case for nearshoring to Guatemala.
What This Means for MTAR Clients
The new Trade Framework further solidifies Guatemala’s position as a high-trust, high-compliance, strategically aligned manufacturing partner for U.S. brands seeking:
Faster lead times
CAFTA-DR duty-free benefits
Supply-chain resilience
Ethical and sustainable production
Reduced geopolitical risk
Closer proximity to the U.S. market
At MTAR, we see this as another major step forward in reinforcing Guatemala’s role within the Western Hemisphere supply chain. Our commitment remains the same: delivering best-in-class quality, transparency, and partnership as the regional trade landscape continues to strengthen.
