A Step Towards Regional Trade Integration with a Delay
Guatemala has officially completed its accession to the Free Trade Agreement (FTA) between the Republic of Korea and the Republics of Central America, after years of processes that began almost a decade ago for the rest of the region. Lawmakers approved the instrument in a late-night session of Congress, and thus Guatemala was the last of the isthmus countries to integrate into a framework designed to expand bilateral trade, promote investment, and stimulate economic cooperation with one of Asia’s most dynamic economies. Until today, Guatemala was the only country in the isthmus that did not participate in the commercial framework and was at a relative disadvantage compared to its neighbors, which have already been benefiting for years from preferential access to the South Korean market. For Guatemala, full integration in the Guatemala-Korea Free Trade Agreement is a strategic milestone to even the regional playing field.
Background: The Long Process to Accession
The Republic of Guatemala signed the Protocol of Accession in January 2024, but the full ratification process took an entire year. Administrative requirements, legislative processes, and analysis by several institutions of the technical obligations associated with the agreement have taken time and delayed the instrument. In contrast, other countries in Central America ratified their accessions nearly a decade earlier and have been taking advantage of tariff reductions and commercial benefits for several years. The entry-into-force timeline for the other countries is a clear indicator of Guatemala’s delay: Nicaragua and Honduras took effect on October 1, 2019; Costa Rica on November 1, 2019; El Salvador on January 1, 2020, and Panama on September 1, 2021. For these countries, several years of strengthening ties with the Korean market have been generating dividends in the diversification of trade and the expansion of exports of agricultural, industrial, and manufactured products.
Negotiations and Guatemala’s Absence in the Regional Treaty
Negotiations for the FTA began in June 2015 with the aim of opening Asian markets to Central American products. The treaty was finally signed on February 21, 2018, but Guatemala was the exception since, at the time, unresolved technical issues such as market access and product classification prevented its signing. These technical gaps prevented the country from signing the document at that time, which effectively postponed its participation and its access to the initial commercial benefits that the rest of the region has been receiving for several years. Only much later, through studies and economic analyses, was Guatemala able to identify sensitive sectors and those that could benefit the most from the agreement. It was also only then that a gradual and prepared adaptation could take place of the country’s industries to the competition that the arrival of South Korean imports would represent. This was a necessary process to prepare Guatemala to face the Guatemala-Korea Free Trade Agreement fully and strategically.
Legislative Process and Approval of Decree 18-2025
The initiative that would finally approve Guatemala’s accession was presented to the Legislative Directorate in December of the previous year. However, it was not until June of the following year that it was taken to the floor of the House, and it was only in late September that deputies began to debate it formally. These long delays had to do with the shifts in the political environment, the change in congressional priorities, and the time required for legislative deliberation in Guatemala. In the end, by 110 votes in favor, during a marathon session that left five decrees in total, Congress approved the measure as Decree 18-2025. Once published in the Official Gazette, the decree will enter into force eight days later. The only remaining procedural step is its transmission to the Executive Branch, where it will be subject to final review and sanction by the President of the Republic, which is usually a formality but is still a requirement for its implementation.
Commercial Impact and Opportunities for Guatemala
For its part, according to information from the Congress of the Republic, the FTA with Korea is an important opportunity to strengthen Guatemala’s commercial capabilities. The agreement would serve to promote trade expansion and diversification between the parties and to facilitate the cross-border flow of goods and services. South Korea is a market with solid demand for agricultural products, processed foods, textiles, and other goods, and it is therefore an attractive destination for Guatemalan exports. At the same time, Guatemalan industries would have better access to high-quality Korean technologies, machinery, vehicles, and electronics, under more favorable tariff conditions. For certain sectors such as manufacturing, construction, and telecommunications, access to imported inputs from Korea at lower prices could help to increase productivity and competitiveness. For exporters, producers, and investors, participation in the Guatemala-Korea Free Trade Agreement should therefore open up new opportunities.
Promotion of Fair Competition and Investment Conditions
Promoting fair competition and establishing transparent rules of the game in the framework of the free-trade zone are among the most important objectives of the trade instrument. With standardized guidelines for customs procedures, dispute resolution, intellectual property rights, and sanitary and phytosanitary measures, the FTA would create a predictable legal environment for investors and exporters. Guatemala in particular is expected to benefit from an increase in foreign direct investment (FDI) as Korean companies seek new production bases, assembly operations, or distribution channels in Central America. With stronger legal protections and clearer market-entry procedures, Guatemala is likely to become a more attractive investment destination for Korean firms and for companies in other countries.
Guatemala’s Technical and Productive Capacities
One of the most promising features of the FTA is its potential to contribute to the development of Guatemala’s technical and productive capacities. The country would benefit from cooperation programs that support technology transfer, industrial modernization, and workforce training. Korea has a global reputation as an innovative country and its leadership in sectors such as electronics, automotive manufacturing, and high-tech industries may open up opportunities for collaboration in areas such as education, digital transformation, and small-business development. In the long term, these types of cooperation could help Guatemala to upgrade its production chains, improve export quality standards, and enhance its participation in global value chains.
Strategic Importance for Guatemala’s Economic Policy
Guatemala’s accession to the FTA also has strategic importance for the country’s economic policy of strengthening international trade ties and diversifying export markets. In an increasingly globalized world, countries that establish trade agreements with advanced economies with a technology-intensive productive matrix can improve resilience and reduce dependence on traditional markets. Participation in the FTA with Korea is a way for Guatemala to position itself more competitively in Asia. This region is one of the fastest-growing in the world and, in the future, offers growing opportunities for Latin American exporters. With the Guatemala-Korea Free Trade Agreement in force, Guatemala can be more effective and prepared to face these emerging markets.
With the ratification of its long-awaited entrance into the FTA, Guatemala opens up a new stage of economic engagement with South Korea. The country is the last to join the agreement but this fact does not mean that it is not gaining access to a robust and strategically important commercial framework that could help it to support national development, stimulate flows and encourage deeper economic cooperation in years to come.