Last Thursday, President Nayib Bukele of El Salvador announced a one-year suspension of import tariffs for twenty basic goods, including rice, for the United States and 65 other countries. This and ten other initiatives, most of which are focused on gasoline or propane prices, are meant to address inflation and help improve the economic conditions in the country.
El Salvador was just beginning to recover economically from the COVID-19 pandemic when inflation and oil/gas prices began rising; El Salvador’s annual inflation rate reached 6.7 percent in February.
“The Government is taking important measures to relieve the population so that Salvadorans do not feel or feel less the effects of global crises,” said President Bukele. “Hoarding will be a punishable crime.”
Five of the eleven initiatives were submitted to the country’s Congress yesterday during a special session and three of them were approved, including the suspension of import tariffs. The measures will go into effect once they are published in the Official Gazette, likely within the next few days, and will end on March 31, 2023.
“While this elimination of tariffs applies to all origins, not just the U.S., this is a bit of a precursor to what free trade will eventually look like with El Salvador,” said Peter Bachmann, USA Rice vice president for international trade policy.
“El Salvador’s out-of-duty tariffs for U.S. rice were 6.7 percent this year, going to 0 percent next year, so this announcement simply speeds up the fulfillment of CAFTA-DR (Central America – Dominican Republic free trade agreement). It’s not unreasonable to think that other Central American countries struggling with inflation will follow El Salvador’s lead.”
Last year, the U.S. supplied 85 percent of El Salvador’s rice imports. The U.S. typically exports about 80,000 tons of rice to El Salvador annually, valued at $25 million. Export sales have totaled 60,700 tons over the past seven months.