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U.S. Statement on the Trade Policy Review of Nicaragua
December 4, 2012

Statement delivered by Ambassador Michael Punke
U.S. Permanent Representative to the WTO

December 4, 2012

Thank you, Chair.

The United States is pleased to welcome Minister Solórzano, Ambassador Carlos Robelo Raffone, and Nicaragua’s entire delegation to the third Trade Policy Review of Nicaragua.  We would first like to recognize the excellent work of the Secretariat and the Government of Nicaragua in compiling the reports before us.  They thoroughly detail Nicaragua’s key trade policy objectives and developments since its last review in 2006.  We would also like to thank our discussant, Ambassador Matus (Chile), for providing helpful and insightful contributions to this review.

The United States and Nicaragua enjoy a strong trade and economic relationship.  Trade and economic integration between the United States and Nicaragua are key elements of our bilateral relations and generate important benefits for both of our countries and for the region.

For many years, our trade relationship with Nicaragua was driven by the unilateral trade preferences that the United States provides through the Caribbean Basin Initiative trade preferences program.  This program contributed to economic growth and development in Nicaragua.  Our bilateral relationship changed from one based on unilateral trade preferences to one based on reciprocal free trade through implementation of the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR), a regional free trade agreement between the Dominican Republic, the United States, and five Central American partners: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

The CAFTA-DR represents a key trade-liberalizing step taken by Nicaragua during the review period.  The CAFTA-DR was signed in August 2004 and entered into force for Nicaragua on April 1, 2006.  Under the agreement, the Parties agreed to remove tariff and non-tariff barriers to trade and investment, which has strengthened regional trade and economic integration.  The CAFTA-DR also includes important disciplines relating to:  customs administration and trade facilitation, technical barriers to trade, government procurement, investment, cross-border trade in services, financial services, telecommunications, electronic commerce, intellectual property rights, transparency, and labor and environmental protection.

The impact of CAFTA-DR on our bilateral trade flows is evident and has remained strong despite the impact of the global financial crisis in 2008 and 2009.  Between 2005 (pre-CAFTA-DR) and 2011, U.S. and Nicaragua total two-way trade in goods more than doubled, from over $1.8 billion to nearly $3.7 billion.  The United States imported a total of $2.6 billion from Nicaragua in 2011, an increase of 29.7 percent from 2010.  U.S. goods export to Nicaragua totaled $1.1 billion, an increase of 7.8 percent from 2010.  Our CAFTA-DR partner countries combined would currently be our 13th largest goods trading partner with $59 billion in total two-way goods trade in 2011.

Much has happened since Nicaragua’s last review in 2006, as the government has continued to promote access to foreign markets and has sought to enhance Nicaragua’s integration into the global economy.  The United States commends Nicaragua on the direction of its trade liberalization strategy, as Nicaragua continues to pursue greater integration in the global economy by opening markets, stimulating domestic production and promoting national efficiency, diversification, and competitiveness.

Both the Secretariat and the Government reports note Nicaragua’s commitment to uphold free trade, a strategy that Nicaragua has pursued at the multilateral, regional, and bilateral levels.  On the multilateral front, Nicaragua has been an active Member of the WTO, as noted by the Secretariat’s report.  At the regional and bilateral levels, economic integration and preferential trade agreements have been increasingly important elements of Nicaraguan trade liberalization, as Nicaragua has sought to further liberalize trade through preferential agreements with a number of countries.  Significantly, in addition to the CAFTA-DR, Nicaragua and other members of the Central American Common Market continue to take steps to deepen Central American economic integration, including actions to strengthen institutions, to harmonize regulations, and to facilitate trade.  Nicaragua also has trade agreements with Mexico, the Dominican Republic, Chinese Taipei, Panama, and has concluded trade negotiations with Chile.  Nicaragua and its Central American partners have completed negotiations of an Association Agreement with the European Union, and Nicaragua is intensifying its trade relations with a number of other countries through the “Bolivarian Alliance for the People of our America” (ALBA).

As indicated by the Secretariat and Government’s reports, the period of review was also an active time for trade policy reform within Nicaragua.  Nicaragua implemented a number of significant modifications to its domestic trade regime, amending its institutional and legal framework to reinforce the trade liberalization process.  During the review period, Nicaragua enacted a number of new laws and regulations, both domestically and at the regional Central American level.  Many of these changes were prompted by commitments that Nicaragua undertook in the CAFTA-DR.  We further commend Nicaragua for the progress it has made in the customs area by implanting a risk assessment system and reducing customs clearance times over the review period.

While the United States applauds these positive efforts, there are, nonetheless, specific areas of Nicaragua’s policy regime where further action could lead to improved trade and investment opportunities and flows.  We encourage Nicaragua to continue along the path toward free market policies and greater integration into the global economy, including by addressing governance issues, such as strengthening the rule of law and predictable, transparent and non-discriminatory application of measures.  While we note the improvement in custom clearance times, we agree with the Secretariat’s assessment that further improvements could be made to streamline customs formalities, for example, by reducing the number of physical inspections and cutting clearance times further.  We submitted advance written questions, many of which touched upon these areas where further improvements could potentially be made, and we greatly appreciate Nicaragua’s efforts to provide responses.

In closing, I would like to emphasize that we continue to value our close work with the Government of Nicaragua – both bilaterally and in the WTO.  We remain committed to working with Nicaragua and our other WTO partners to strengthen and build on the WTO’s rules-based foundation.  We thank the delegation of Nicaragua for its participation in this important process, and welcome the opportunity to engage with Nicaragua and other delegations in a discussion of Nicaragua’s trade policy regime.

Thank you.