President Daniel Noboa announced Friday, March 13, 2026, that Ecuador and the United States of America signed the United States and Ecuador Reciprocal Trade Agreement (ART), which will eliminate tariff surcharges on Ecuadorian exports. Noboa shared the update to his official X account.

United States and Ecuador Sign Trade Agreement

The United States and Ecuador signing a reciprocal trade agreement is among the most trending topics related to this new trade policy.

The reciprocal trade agreement was negotiated to improve market access between Ecuador and the United States of America. Noboa wrote:

“We have just signed a Free Trade Agreement with the United States that eliminates the tariff surcharge that was affecting our products.”

The agreement removes tariff surcharges on 53% of Ecuador’s non-oil exports and will create new opportunities for additional Ecuadorian products to enter the U.S. market.

Here’s what the new trade agreement between Ecuador and the United States means for exporters.

• Increases Ecuadorian Export Market Access to the United States
• Tariff Surcharge Removed from Ecuadorian Exports Immediately
• President Noboa says the agreement takes effect immediately and will benefit Ecuadorian producers.

“The agreement benefits 53 percent of our non-oil exports, consolidates productive sectors that already generate thousands of jobs, and opens opportunities for new Ecuadorian products to access the U.S. market.”

The official Ecuadorian signing was handled by Luis Alberto Jaramillo, and Jamieson Greer signed for the Office of the United States Trade Representative. Ecuador and the United States finished negotiations earlier this month, in February 2026, after eight rounds of discussions.

The ART, or the United States and Ecuador Reciprocal Trade Agreement, officially improves Ecuadorian market access to the United States.

Key Ecuadorian Exports Included in the Agreement

The agreement immediately removes tariff surcharges on 53 percent of Ecuador’s exports to the U.S. that are not related to oil exports. Based on official trade statistics from 2025, this represents roughly $2.786 billion worth of goods.

The sectors that will see increased market access benefits include:

• Bananas & Plantains
• Pineapple & Mangoes
• Dragon Fruit or Pitahaya
• Ginger
• Chocolate & Cocoa Products
• Coffee – Green & Roasted
• Flowers & Floriculture Products
• Palm Hearts
• Fish & Seafood
• Processed seafood

The agricultural and agro-industrial sectors generate the majority of Ecuador’s non-oil exports and support tens of thousands of jobs nationwide, primarily in rural communities.

Minerals, including gold and copper, were also on the list of exports that will now have improved market access to the United States.

Gold and copper are vital minerals used in supply chains throughout the world, tied to green energy technology, electronics manufacturing, construction, and infrastructure projects.

Tariff surcharges will also be removed on an additional 1673 tariff subcategories. This will allow Ecuador to expand its export reach beyond these goods and into higher-value exports.

Reduces Costs for Imports

The reciprocal agreement also improves market access for goods entering Ecuador.

Many of the imports that will see reduced tariffs include capital goods and machinery that Ecuadorian companies need to improve productivity.

The new tariff structure took into consideration the need to modernize key sectors of Ecuador’s economy. Many imports will see tariffs reduced to zero within the agreement’s immediate implementation or over short transition periods.

Imports that will benefit include, but are not limited to:

• Farm machinery
• Construction machinery
• Industrial machinery
• Parts for manufacturing goods
• Raw materials & industrial inputs

These reductions will help businesses source capital goods at a lower price and should reduce costs for companies operating in Ecuador.

Improving access to capital goods also aligns with efforts by the government of Ecuador to improve industrial capacity and create a more efficient supply chain.

Financing and Investment

In addition to increasing Ecuadorian exports and reducing costs on imports, the agreement was negotiated with a focus on investment.

Government officials state the ART will provide Ecuador greater access to financing through institutions like:

• Exim Bank of the United States
• S. International Development Finance Corporation

The Exim Bank of the United States and USIDFC can offer financing for projects related to:

• Energy infrastructure projects
• Critical minerals
• Transportation infrastructure
• Digital technology

Government officials hope that improving Ecuador’s access to financing under this agreement will encourage investment from international partners.

Trade Facilitation

Trade facilitation is another important part of the new United States and Ecuador Sign Trade Agreement.

The central goal is to improve the way that goods enter and leave Ecuador. Simplifying customs procedures and reducing red tape will decrease transit times and decrease costs for businesses that export goods.

Provisions being rolled out include:

• Digitization of customs paperwork
• Accelerated customs clearance times at ports of entry
• Increased transparency across Ecuador’s regulatory framework
• Alignment of technical standards when possible

Supporting trade facilitation reforms ensures Ecuador can remain competitive in industries where time-sensitive shipping is crucial, such as agriculture and other perishable goods.

Intellectual Property Rights

The United States and Ecuador reciprocal trade agreement includes provisions to improve intellectual property rights protections in Ecuador.

Improvements to intellectual property regulations allow for trademark registration, patents, industrial designs, and copyrights to be protected under Ecuadorian law.

Stronger protections provide an incentive for innovation and allow Ecuador to develop competitive advantages in knowledge-intensive industries.

Labor & Environment

Labor rights are addressed within the trade agreement’s labor chapter. Environmental provisions are also included.

Ecuador’s labor provisions encourage:

• Improved workplace conditions
• Ability for workers to collectively bargain
• Adherence to international labor standards

Environmental protections outlined in the agreement focus on the sustainable use of Ecuador’s natural resources. Regulations include:

• Resource management
• Ecological protections
• Sanitary and phytosanitary standards for Ecuadorian agriculture

United States and Ecuador Take Steps Toward Sustainable Trade

Finally, the trade agreement includes provisions related to digital trade and regulatory cooperation.

Both of these components are designed to reduce the administrative burden associated with cross-border trade. They include:

• Regulatory coherence
• Support for ecommerce
• Alignment of technical regulations

Digital trade continues to grow around the world, and these provisions look to improve Ecuador’s access to digital trade sectors.

United States Ecuador Trade Agreement Creates Path Forward

Improved trade with the United States creates a pathway forward for Ecuador’s diversification efforts. The benefits of the agreement will be tangible for Ecuadorians and should strengthen the trade relationship between the two countries going forward.

The rapid expansion of Chinese automakers in Brazil is fueling debate over tariffs, competitiveness, and the impacts on the domestic industry.

In 2025, China further strengthened its position as the world’s largest vehicle exporter, shipping 8.3 million units, a 30% increase over 2024. This volume is more than double the 4 million vehicles exported by Japan, the second-largest exporter, which lost the top position two years ago.

This advance has triggered unprecedented changes in some of the world’s largest vehicle markets, accompanied by various protectionist responses in the form of tariffs. Although such measures may slow vehicle imports, they have not diminished China’s aggressive drive to export its surplus production to any country willing to accept it. Chinese manufacturers are also pursuing alternative strategies, such as exporting vehicles in knocked-down or semi-assembled form, as is currently happening in Brazil with BYD and GWM, among other manufacturers waiting to do the same. These strategies have accelerated the presence of Chinese automakers in Brazil, where several companies are testing different market-entry and production approaches.

Mexico is currently the clearest example of what happens when markets remain open to Chinese manufacturers. In 2024, China exported 485,000 vehicles to the Mexican market. In 2025, imports increased 29% to 625,200 units, making Mexico the largest buyer of Chinese cars in the world. In both years, GM led sales with Chevrolet models produced in its Chinese joint venture with SAIC.

However, the actual sales of Chinese vehicles in Mexico grew only slightly in 2025—just 1.2% over 2024, reaching 306,600 units and capturing 20% of the market, which totals about 1.5 million vehicles. This occurred because Mexico implemented measures to curb imports of cars from China.

The mismatch between imports and sales reflects a pattern similar to what is happening in Brazil: imports increased ahead of higher tariffs. Previously, tariffs ranged from 15% to 20% for countries without trade agreements with Mexico. This year, the tariff on vehicles originating from China was raised to 50%.

With the tariff increase on the horizon, Chinese manufacturers rushed to import more vehicles than they could immediately sell, building inventories at lower prices so they could continue to exploit the market with competitive advantages for some time—something they have also been doing in Brazil. This tactic has further intensified debate about the long-term competitive impact of Chinese automakers in Brazil.

Different Forms of Protectionism

The Mexican government, which has traditionally maintained a liberal policy and kept its market open to foreign trade, clearly yielded to pressure from multinational automakers operating in the country, many of the same companies that operate in Brazil and call for protectionist measures there because they cannot compete with Chinese manufacturers.

It is worth noting that Mexican protectionism is occurring in a country that is considered far more competitive for the automotive industry than Brazil, according to studies frequently presented by foreign automakers whenever they seek to highlight Brazil’s lack of international competitiveness. In Mexico’s case, however, even this favorable environment has not been enough to contain Chinese competition.

It should also be noted that Mexico’s protectionist response to the influx of Chinese vehicles is even stronger than Brazil’s measures. Years ago, Brazil reduced the 35% import tariff to zero for electric and hybrid models. Since 2024, however, the government has begun restoring the tariff. By July of this year, the rate will return to the maximum allowed by the World Trade Organization (WTO) for assembled or semi-assembled SKD vehicles. For vehicles imported as fully disassembled CKD kits, the tariff is scheduled to rise to 35% in January 2027.

Although Mexico and Brazil are similar markets, their circumstances differ. Brazil’s market is larger and historically more protected. Imports of Chinese vehicles, while growing significantly in recent years, still represent less than 10% of the market. Even so, the rapid expansion of Chinese automakers in Brazil is prompting policymakers and industry leaders to reconsider the long-term structure of the country’s automotive sector.

In 2025, 187,300 Chinese vehicles were registered in Brazil, a 55.6% increase over 2024, but they accounted for only 7.3% of the total 2.55 million light vehicles sold. As in Mexico, however, imports have been accelerated to avoid higher tariffs. Shipments have far exceeded actual sales, and Brazil became the fifth-largest buyer of vehicles produced in China, importing 322,100 units, behind Mexico, Russia, the United Arab Emirates, and the United Kingdom, and slightly ahead of Saudi Arabia, Belgium, and Australia.

The Mexican Model Would Be Disastrous in Brazil

Unlike Brazil, Mexico has historically been far more open to vehicle imports, signing tariff-exemption agreements with numerous countries, including Brazil. This is largely because manufacturers in Mexico export most of their production to the United States and Canada, tariff-free under the USMCA trade agreement.

To illustrate the scale: manufacturers operating in Mexico produced 3.9 million vehicles in 2025, of which 3.4 million were exported. These volumes far exceed the domestic market of roughly 1.5 million units per year. Mexico’s supplier base is relatively limited, and vehicles are assembled using large quantities of imported components in facilities commonly known as maquiladoras.

With this export-oriented structure, Mexico can afford to keep its domestic market open to importers, particularly because internal sales volumes are not large enough to justify building factories solely to serve the Mexican market.

This landscape became even more constrained after the United States imposed a 100% tariff on cars imported from China, including those produced in Mexico with imported components. It is therefore no coincidence that BYD concluded that this configuration did not align with its business model and, at least for now, abandoned plans to invest in a manufacturing facility in Mexico.

Brazil, by contrast, exports less than 20% of its vehicle production, primarily to Latin American markets—including Mexico, where it is now losing ground to Chinese competitors. Consequently, the Mexican model would be far more destructive to Brazil’s automotive industry, particularly to the supplier network that has been developed over decades of localization.

China Adapts to Brazil

For the time being, Chinese manufacturers cannot afford to forgo the Brazilian market, which remains one of the largest in the world, still open to their vehicles. They continue to face significant production surpluses that must be exported.

Even as they are compelled to localize some production to mitigate rising tariffs in Brazil, they will not stop importing part of the vehicles they sell in the country. Instead, they will assemble the models with the highest sales volumes locally.

Over the next five years, Chinese automakers in Brazil are expected to “Mexicanize” Brazilian production, using large quantities of imported components from China, whether through individual parts shipments or through SKD and CKD kits.

One method for meeting minimum local-content requirements will involve assigning imports of components to captive suppliers from China, which will be established in Brazil.

Through these arrangements, Chinese vehicle manufacturers are likely to maintain their competitive advantage in Brazil, while making only a limited contribution to the domestic automotive supply chain. This is the outlook currently visible, although it remains subject to change as domestic industry pressure increases from manufacturers that struggle to compete internationally and are losing ground in the domestic market.

Record exports produced in 2025 reaffirm the country’s role in manufacturing devices used to treat sleep apnea and other sleep disorders.

The Costa Rican manufacturing operation of multinational Philips reached a new milestone in 2025, producing over 15 million devices designed to treat sleep apnea and other sleep disorders.

The production record reaffirms Costa Rica’s emerging role as an important manufacturing hub for medical technology exported to markets around the world. The milestone also highlights the continued growth of medical devices manufactured in Costa Rica.

Philips manufactures medical devices in Costa Rica used to treat sleep disorders, specifically sleep apnea, which impacts millions of patients around the world.

“Producing over 15 million devices this year represents the highest production volume this business unit has seen in recent years,” said Rodrigo Víquez, plant manager of Philips Costa Rica’s S&RC business unit. “Not only does this reaffirm our capacity to meet growing global demand, but it also showcases the talent we have here in Costa Rica.”

Costa Rica continues to grow its presence in the global medical device industry. Over the last decade, Costa Rica has become a hub for medical device manufacturing in Latin America.

Multiple multinational corporations have established operations within the country to produce high-tech medical devices that are exported to other countries in North America, Europe, and Asia.

These factors have allowed medical devices manufactured in Costa Rica to continue increasing their presence in international markets.

Philips manufactures medical devices that allow patients to breathe more easily while sleeping. These devices are part of therapies used to treat sleep apnea.

Manufacturing devices that require advanced technologies and can be used for medical purposes requires facilities, equipment, and employees with specialized skills and training.

“The global demand for devices and technology focused on wellness and healthy sleep habits continues to rise. Costa Rica has established itself as a key player in meeting this demand through manufacturing,” said Víquez.

The Need for Better Sleep and Treatments that Allow for It

Millions of people around the world suffer from some type of sleep disorder that can greatly impact the quality of sleep they receive on a nightly basis. One of the most common breathing disorders is called Obstructive Sleep Apnea.

Obstructive Sleep Apnea is a disorder that causes a person to have their breathing temporarily pause while they sleep. These pauses can range from a few seconds to minutes and can happen 30 or more times an hour.

If sleep apnea goes untreated, it can cause a variety of health problems that range from high blood pressure to stroke. Even metabolic diseases and diabetes have been linked to individuals with sleep apnea.

Other effects of poor sleep or sleep disorders can include:

• Decreased performance at work
• Higher risk of accidents
• Extreme sleepiness during the day

Sleep apnea is one of many sleeping disorders that could affect millions of people worldwide. In fact, it’s estimated that over 500 million people around the world have sleep apnea.

By manufacturing devices focused on providing therapy for sleep apnea, medical devices manufactured in Costa Rica are able to help provide solutions to patients worldwide.

Devices That Can Help Provide a Good Night’s Sleep

The devices produced by Philips help keep airways open while an individual sleeps. Philips incorporates the devices into machines that provide air pressure to patients while they sleep.

There are many components that go into the production of these devices. Medical devices manufactured in Costa Rica have to follow rigorous standards set by the international bodies that regulate medical device production. This ensures that the products produced meet quality standards and are safe to use.

Medical devices manufactured in Costa Rica that focus on providing sleep therapy often require:

• Technical employees who are trained in precision injection molding
• Employees trained to assemble components with precision
• Employees who work in clean room facilities
• Quality Assurance teams to test and validate the devices

Over 800 employees work at Philips’ medical device manufacturing operation in Costa Rica. They work in different aspects of the production process from beginning to end.

Philips in Costa Rica hits production milestone of over 15 million devices for 2025

“The dedication of our Costa Rican employees has allowed us to innovate and improve these types of devices to provide better comfort and usability for patients,” said Víquez. “As we continue to grow and reach production milestones, we will also continue to bring jobs and advanced operations to the country.”

Advancements in Medical Technology Produced in Costa Rica

Costa Rica’s medical device industry continues to expand as more and more multinationals establish operations within the country.

Currently, there are manufacturers of medical devices in Costa Rica that produce everything from pharmaceutical packaging to respiratory devices. Medical devices manufactured in Costa Rica employ thousands of employees and export billions of dollars’ worth of products to international markets.

Costa Rica’s medical device industry has positioned itself to take on high-value manufacturing that requires detailed technical expertise.

“Costa Rica has been successful in attracting companies that don’t just want to set up a generic manufacturing facility, but rather want to set up world-class production operations that specialize in medical devices,” said Rodrigo Víquez of Philips Costa Rica.

Sleep Issues Are Medical Issues

Sleep plays a vital role in your overall health and well-being. For people suffering from sleep disorders, getting a good night’s rest can be difficult. According to the Centers for Disease Control and Prevention, common signs of sleep apnea include:

• Snoring loudly on a regular basis
• Breathing that stops and starts during sleep
• Morning headaches
• Feeling tired after a full night’s sleep
• Trouble focusing

There are many things you can do to help yourself sleep better. However, if you think you might be suffering from sleep apnea or another sleep disorder, you should visit a medical professional.

Some ways to promote better sleep include:

• Keeping a consistent sleep schedule
• Avoid drinking alcohol close to bedtime
• Avoid looking at screens before bed
• Create a calm sleeping environment

Devices like those produced by Philips and other medical devices manufactured in Costa Rica help relieve patients who suffer from sleep disorders.

The future is not knocking on the door of the energy transition—it has already arrived. Chile just sent a signal to the market that will impact infrastructure development, and investment flows across LatAm: an actionable plan to unlock 42 investment projects valued at US$16.3 billion for energy projects in Chile.

If you are a founder or investor focused on infrastructure, climate tech, or clean energy in LatAm, here is why this matters and what you can do about it:

What unlocked US$16.3 billion?

A plan has been put forth by the Ministry of Energy and the National Energy Commission (CNE), in coordination with other governmental agencies such as the Environmental Evaluation Service (SEA) and InvestChile. This comprehensive proposal seeks to ease the regulatory, environmental, and financing hurdles faced by energy projects in Chile that are already identified as viable and ready to go.

Industry data currently places Chile’s energy investment pipeline at over US$19 billion (already evaluating or building) across 108 projects. This means that this select group of 42 Projects represents the leading edge of a much larger portfolio of energy projects in Chile. 98% of this investment is slated to come from the private sector and has significant foreign participation.

Where will money flow? The sectors that will see investment are:

• Electric power generation (solar, wind, hydroelectric): ~40% of total. Projects include the Rucalhue Hydroelectric Plant, the Horizonte Wind Farm, and the Aurora Solar Photovoltaic Park
• Energy storage (BESS): ~34%. Chile saw 73 battery projects penciled in for 2025 alone, along with another 30 battery storage systems currently under construction worth US$4.221 billion.
• Green hydrogen: ~13%. Chile launched its National Green Hydrogen Strategy 2026–2030 in March 2026, seeking to meet both export and domestic demand.
• Electric transmission: ~11%. Chile has over 30 transmission projects currently in the expansion stage, including HVDC transmission lines able to move up to 3,000 MW across regions

The regions where the projects are located are Antofagasta, Atacama, Magallanes, and Maule, which concentrate over 70% of total investment (> US$10.9 billion). Several of the largest energy projects in Chile are found in these regions.

Delving deeper into macroeconomic indicators. Foreign investment and sector dominance.

Project unblocking is part of a wider trend. InvestChile closed 2025 with 463 registered projects totaling US$16.246 billion already in the implementation phase, an annual growth of 16.8% compared to 2024. Energy was the sector that most approved projects, even surpassing mining (US$9.006 billion).

Private investors are also showing commitment. Companies such as Enel have announced US$2 billion in investments in Chile for 2026–2028. US$1.6 billion will be destined to power generation and ~US$500 million toward distribution. Announcements of this magnitude lend credibility to the fact that Chile is not just capturing capital but retaining it.

SEN adds renewable capacity, by when?

In a report published in January 2026, Chile’s Ministry of Energy estimates that the National Electric System (SEN) will incorporate an additional 8,972 MW of capacity from 2025 to 2029. Thanks to the current pipeline of renewable energy projects, Chile will experience the largest addition of capacity in 2027.

Estimates show that by April 2026, total installed capacity will reach 39,023 MW, with 70% generated by renewable sources.

As of January 2026, Chile’s installed capacity reached 37,798 MW, with 51% generated by Non-Conventional Renewable Energy (NCRE). This impacts pockets far beyond renewables units. Greater renewable capacity = cheaper electricity for corporates and industries + more competitive territories to recruit data centers, green mining, and exports.

Why should this matter to founders or investors in LatAm?

Energy infrastructure is the table on which every unicorn’s risk appetite is based. When a country unlocks US$16.3 billion in energy projects, that has implications for startup and venture activity 5 or 10 years down the line because it will have lowered electricity prices throughout the medium-term and laid the foundation for emerging industries.

Countries that remove bureaucratic hurdles, welcome private capital, and give investors/readers a clear roadmap for the future are allowing entrepreneurs to do their jobs: build great companies.

For energy tech startups, industrial PropTech, agritech, smart cities, and electric mobility, Chile just positioned itself as one of the most active testing labs in LatAm with:

• Regulation that doesn’t just exist but is active, and paving the way for projects
• Cheap capital looking for opportunities in established sectors
• US$122 billion CADTE plan: Long-term Energy Planning until 2032

Takeaways. 3 action items.

1. How are technology suppliers and contractors participating in these projects sourcing software, monitoring, automation, and other B2B services? Chile just opened up US$16.3 billion in checkout.
2. Find co-investment opportunities in battery storage facilities or Distributed Generation projects, especially those in the top-4 regions by investment.
3. Coarse-target the energy operator sector with SaaS, IoT, or fintech solutions that can capitalize on available project pipeline (now they have projected cash flow!) and increasing digitalization needs.

Conclusion

Chile just gave everyone the definitive answer as to what its energy ambitions are for this decade. With public leadership from the Ministry of Energy and the National Energy Commission (CNE), bullish private-sector investment destined to fund energy projects in Chile, and an updated green hydrogen strategy, this is an ecosystem ready for mining.

Startups and VCs with an infrastructure emphasis and investors looking for exposure to LatAm countries with regulatory certainty should follow the development of these energy projects in Chile closely.

The South American nation is considering the implementation of another tax-free zone in Argentina, this time targeting retail consumption.

The aim is to encourage shopping, tourism, and commerce in the Argentine interior.

Under the proposed initiative, which is still under discussion by government officials, imported products would be allowed to be sold in certain areas at a reduced tax rate, lowering their final price for consumers.

These types of projects have been implemented around the world and are usually referred to as “duty-free stores” or “tax-free commercial areas.”

“There are many countries that have sought to attract tourism and consumption by creating commercial areas where taxes are reduced,” said one official regarding the proposal.

Improving Consumption through a Tax-Free Zone in Argentina

The officials leading the project are considering it as part of a series of economic measures that seek to:

• Stimulate consumption
• Become more competitive vs neighboring countries
• Attract shoppers and tourists
• Bring forward private investment

As such, the idea behind a tax-free zone in Argentina is tied to broader efforts to liberalize commerce and encourage consumerism.

Tax-Free Zones Explained

A tax-free zone is an area within a country where goods can be imported with few or no customs or tax-related obligations.

These areas, sometimes known as free trade zones or duty-free areas, allow for:

• The tax-free importation of goods
• The reduction or exemption of certain taxes for retailers
• Special regulatory and logistical treatment for businesses

Originally, tax-free zones were established to promote industrial development and exports. Some still function under these rules.

Free trade zones became popular in the middle of the 20th century as countries sought to attract foreign investment.

In recent years, nations have been using these areas to promote consumption. The goal is to develop a shopping destination akin to duty-free outlets found in tourist areas and international airports.

Such areas are now common in Latin America. In Argentina, tax-free zones have been used mostly to promote industrial activity and exports.

Attracting Tourists and Domestic Consumers

Another goal of the proposed retail tax-free zone is to attract Argentines who currently travel abroad to shop.

Cross-border shopping is common in Argentina, especially in provinces that border countries such as Brazil and Uruguay.

By lowering tax rates on retail goods to those encountered in nearby countries, it is hoped that domestic shoppers will begin shopping in Argentina rather than abroad.

“The project seeks to keep domestic consumption inside the country while also attracting foreign visitors,” said an official.

Jurisdictions around the world use tax-free shopping as a means to both keep consumers from shopping abroad and attract foreign tourists.

Tourists can spend their money domestically while taking advantage of well-known brands at lower prices.

Argentina Already Has Tax-Free Areas

Argentina isn’t starting from scratch when it comes to tax-free areas.

The country currently hosts at least two free trade zones. These areas are spread across multiple provinces and have been set up to promote:

• Industrial development
• Exports
• Logistics activity

Free trade zones allow businesses to import raw materials and merchandise without paying customs duties, as long as they follow rules associated with exporting or producing goods.

Likewise, Argentina previously launched duty-free shopping complexes for tourists. The most well-known is located in the country’s Patagonia region.

The shopping mall includes:

• Electronics stores
• Clothing retailers
• Beauty shops
• Furniture outlets
• Among others

As Argentine consumers have changed the way they shop, visiting malls in Argentina is no longer the only option.

E-commerce has boomed in Argentina in recent years, with many shoppers visiting international online stores.

Shoppers can now purchase goods from other countries without leaving their homes, a convenience that has had some domestic retailers crying foul.

Both examples provide key lessons for the proposed tax-free zone.

Regional Developments and Changing Consumption Habits

While cross-border shopping is nothing new in Argentina, something that is fairly new is online shopping from international markets.

Here are three key trends that have affected the retail landscape over the last decade:

• The explosion of e-commerce in Argentina
• The rise of international e-commerce
• New policies that made it easier for Argentines to purchase goods from other countries

Thanks to these factors, many Argentine consumers are now shopping online from other countries.

With that in mind, officials are looking to create a zone that could provide the domestic market with a fighting chance against foreign e-commerce.

How Could a Tax-Free Zone Benefit Argentina?

Retail tax-free zones have the potential to provide numerous benefits to the Argentine economy. These include:

• Encouraging private investment into shopping centers and supporting infrastructure
• Creating jobs within the tax-free zone in Argentina
• Fostering tourism development (hotels, restaurants, etc.)
• Developing commercial hubs outside of Argentina’s traditional strongholds

Tax-free zones can act as catalysts for growth that extend far beyond retail. In many cases, these projects help establish entirely new entertainment and services districts.

Policy Considerations

As with any tax incentive, tax-free zones are not without their downsides.

Risks include:

• Domestic industries being unable to compete with tax-free products
• Domestic retailers being unable to compete with international retailers that can sell within the tax-free zone
• Damage to the local tax base
• Fraud and other unwanted side-effects

For this reason, many governments implement stringent rules when creating these areas.

Policy could include:

• Limits on how much shoppers can purchase within the tax-free zone
• Limits on what types of products can be sold within the zone
• Strict surveillance to ensure that imported goods are not brought back into the country
• Monitoring the flow of goods into these types of zones will be critical to the tax-free zone’s success in Argentina.

Similar Projects Around the World

Argentina is not the first country to implement tax-free zones for retail.

Similar projects can be found all over the world in:

• Airports
• Tourist attractions
• Border towns

Outside of airports, one of the more common examples of tax-free zones can be seen in tourist destinations.

Airport duty-free shops are some of the most recognizable tax-free areas in the world. These stores allow travelers to shop before they leave the country without paying certain taxes.

Over time, this concept has been expanded to include shopping malls in tourist destinations. Tourists can spend their money within the country while receiving discounts on certain goods and brands.

How Will Argentina’s Tax-Free Zone Compare?

It remains to be seen if Argentina will implement a tax-free zone.

If the country decides to implement another tax-free zone in Argentina, it has the potential to create a new retail destination for tourists and Argentine shoppers.

Another tax-free zone in Argentina could:

• Increase tourism
• Spur private sector investment
• Create employment
• Foster regional development

Much of the tax-free zone’s success will depend on how it is implemented.

Some of the factors that will determine its success include:

• How goods can be purchased within the tax-free zone
• Infrastructure and logistical support for businesses within the zone
• Its competitiveness compared to shopping in other countries

Online shopping is continuing to change the way we consume goods. As a result, traditional shopping districts must evolve in order to stay relevant.

Tax-free zones provide one method that countries can use to lure consumers.

Formulating a National Investment Promotion Strategy

The Central American nation is moving forward with the formulation of an Investment Promotion Strategy for the purpose of improving its capacity to promote Honduras as an investment destination. The plan is being led by the National Investment Council (CNI) in coordination with a group of technical specialists from the European Union (EU), who will assist Honduras in defining its value proposition and identifying priority sectors as part of the process.

Authorities and government representatives from Honduras understand the need to position the country as a strategic investment destination among investors worldwide. They have also identified the need to create an orderly process for carrying out actions related to promoting Honduras as an investment destination.

The National Investment Council has established alliances with key sectors of the public and private productive apparatus, as well as multilateral organizations, to begin developing an orderly mid and long-term roadmap with the objective of structuring Honduras as a reliable investment destination.

Workshops Bring Key Economic Actors Together

From March 4th to 6th, the CNI hosted working sessions attended by representatives of important sectors from both Tegucigalpa and San Pedro Sula. These workshops were planned with the purpose of jointly analyzing Honduras’ potential from an investment standpoint and defining the country’s strategy to position Honduras as an investment destination.

Participants in these workshops represented the following:

• Government institutions and ministries
• The private sector
• Productive sectors associations
• International cooperation entities

In total, there were 92 attendees representing 63 companies and institutions involved in creating Honduras’ new investment strategy. This showcases the level of interest that exists among Honduras’ economic actors to improve the perception of Honduras as an investment destination.

International Technical Support from the European Union

The workshop participants were joined by an international team of specialists led by Ramón Tejeiro, Silvana Torres, and Susana Casablanca, who facilitated sessions with the technical team of the National Investment Council (CNI). Topics discussed during these meetings centered around the identification of opportunities, challenges, and strategic opportunities.

These workshops are part of the ongoing collaboration between Honduras and the European Union. In this case, the project ties into the Global Gateway initiative led by the EU.

Global Gateway seeks to promote sustainable investment projects as well as economic development through partnership programs.

The initiative places special focus on promoting investments that seek to provide long-term value as well as ensure the environmental sustainability of partner countries.

“The Global Gateway strategy seeks to accelerate sustainable and viable projects, prioritizing quality, transparency, and environmental care,” said Ramón Tejeiro.

Competitive Advantages of Honduras as an Investment Destination

Honduras boasts several advantages that make it an ideal destination for companies looking to expand their operations throughout the Americas.

Among the main advantages discussed during the workshops are:

• Centrally located within America
• Access to two oceans through logistics corridors
• Various natural resources
• A relatively young workforce

Manufacturing and Export Opportunities

Honduras is also looking to highlight specific sectors in which it has competitive strengths. During the workshops, multiple sectors were identified as priorities for attracting investment.

Key sectors for investment mentioned during workshop sessions:

• Agroindustry
• Electricity
• Transportation
• Manufacturing
• Tourism
• Business services

An investment promotion strategy should identify sectors in which the country has a comparative advantage. By positioning these sectors as pillars of economic development, it will be possible to attract investments that create jobs and contribute to the growth of exports.

Strategic Pillars to Strengthen Investment Promotion

To accomplish this, the CNI has identified 5 pillars that will help strengthen the position of Honduras as an investment destination. They are as follows:

• Promote Honduras internationally as an investment destination
• Prepare bankable projects
• Establish better coordination with institutions
• Facilitate access to financing
• Ensure the business environment is attractive and consistent

Agriculture as a Strategic Sector

During the workshop sessions, the topic of agriculture was discussed at length. Santiago Vélez, representative of the Inter-American Institute for Agricultural Cooperation (IICA), pointed out that this sector is strategic for Honduras’ investment portfolio.

“It is a sector that not only helps us achieve food sovereignty but also allows us to generate exports and employ Honduran citizens,” said Vélez.

Companies interested in investing in Honduras need to know about specific projects they can be involved with. Santiago Herrera, Manager of Economic Policy at COHEP, advised that we need to provide clear and viable projects to catch the attention of investors.

“Investors want to see projects prepared by the country, so they know what they would be potentially investing in,” said Herrera.

Infrastructure and Connectivity Improvements

Improving Honduras’ territorial connectivity is essential for sectors such as tourism. Juan Fernando Carranza, highway coordinator at the Secretariat of Infrastructure and Transportation (SIT), explained that by improving the country’s roads, it could open up more opportunities for tourist attractions and development.

“The construction of highways not only improves the integration of producers with their markets but also allows us to attract tourism through improved access,” said Carranza.

Construction Sector and Employment Opportunities

The construction industry in Honduras recognizes the importance of bringing more investment into the country. David Hércules, representing CHICO, explained that this industry can play a key role in employing Honduran youth.

“When we increase investment in our country, we are not only creating jobs in the construction industry but across the entire economy,” said Hércules.

Tourism as a Driver of Economic Growth

Representatives from the Tourism sector had the opportunity to share their perspectives on positioning Honduras as an investment destination. Aracely Alvarado, representative of the Honduras Convention and Visitors Bureau, mentioned that increased tourism brings numerous benefits to the country.

Tourism takes advantage of other sectors such as transportation, hospitality services, and more to further drive economic activity.

“We have to continue improving our efforts to position Honduras as a tourist destination,” said Alvarado.

Better air connectivity was mentioned as an important factor to increase tourism. Airlines are often the first point of contact that foreigners have with Honduras and other countries around the world.

For this reason, improving the country’s airport infrastructure and air connections to international destinations is also part of the strategy to position Honduras as an investment destination.

International Promotion and Investment Outreach

As part of the strategy to position Honduras as an attractive investment destination, CNI and the EU team will continue to work on international promotion activities. Some of these activities may include:

• Investment forums
• Business alliances
• Investment missions to key financial centers
• Meetings with institutional investors

These types of activities will allow Honduras to make its voice heard in the most important investor platforms around the world. By telling Honduras’s story, the country aims to successfully position itself as a competitive and reliable investment destination.