The stock of U.S. foreign direct investment in Guatemala was $133 million in 1994, 2.9 percent less than that in 1993. U.S. direct investment in Guatemala is concentrated largely in manufacturing, petroleum and finance.

IMPORT POLICIES

Tariffs

Guatemala, along with other members of the Central American Common Market (CACM) (Costa Rica, El Salvador, Honduras and Nicaragua) is working toward full implementation of a common external tariff (CET) of between 5-20 percent for most products. However, in 1995 the members of the CACM agreed to reduce the CET to O-15 percent, but allowed each member country to determine the timing of the changes. With the agreement of the CACM, in 1995 Guatemala dropped the MFN tariff on capital goods to one percent from the CACM base rate of five percent. With certain exceptions, there are no duties for products traded among CACM members.

Customs Valuation Policies for Poultry

Notwithstanding agreement to switch to transaction value for the calculation of tariffs on chicken parts as part of its Uruguay Round commitments, the Government of Guatemala continues to use a reference price methodology. As a result, for tariff purposes, imports are valued at about double their actual prices. Additional protection for chicken producers is provided by a 300 metric ton per month tariff rate quota (TRQ). Imports within the quota pay a 20 percent duty while imports in excess of the TRQ pay a 45 percent duty.

Failure to Expand the Poultry Tariff Rate Quota

Guatemala has failed to meet its commitment to expand the TRQ on poultry imports from 3,600 mt per year to 5,500 mt effective January 1, 1995 and 5,650 mt effective January 1, 1996. Lost U.S. sales because of this protection are estimated at $2.5 million for 1995.

Apple Import Permits

The Government of Guatemala agreed during its GATT accession and in its Uruguay Round commitments

U.S. companies have cited the uncertainty of obtaining a license as the reason they have not expanded their investment to distribute U.S. apples. The result is an estimated $ 1 million in lost export sales.

Grain Price Bands

Price bands for corn and rice were eliminated in late 1995. Guatemala is likely to eliminate the price band for sorghum, the only grain still covered, in 1996.

STANDARDS, TESTING, LABELING AND CERTIFICATION

Under Guatemalan law, products sold in the domestic market must be registered and carry labels in Spanish. Both enforcement of and compliance with the law are irregular. If fully enforced, the requirement could restrict and/or delay the entry of an estimated $39 million of U.S. exports due to the time required to test and register products.

GOVERNMENT PROCUREMENT

Under the government procurement law, all government purchases over $161,000 must be submitted for public competitive bidding of no less than five bidders. Foreign suppliers must meet pre-qualification requirements and submit bids through locally-established representatives. Exceptions exist only when a project is considered to be so urgent as to be declared a national emergency, in which case the government can forego the bidding process and may acquire the goods or services from local firms or through dealers for direct importation. The embassy is unaware of any discrimination against products of U.S. origin, which generally enjoy good success in the government procurement market.

LACK OF INTELLECTUAL PROPERTY PROTECTION

Although Guatemala is making some efforts to modernize its IPR regime, its protection of intellectual property rights remains inadequate.

Copyrights

A 1992 law authorized a Government of Guatemala regulatory entity to enforce the international IPR obligations of local cable TV operators. To date, however, no implementing action has been taken and the entity has not been established. In 1994, on the basis of agreements between Guatemalan cable TV operators and the Motion Picture Exporters Association of America (MPEAA), a 1991 GSP petition alleging persistent copyright infringement and piracy of satellite signals was withdrawn. In October 1995, citing violations of those agreements by cable companies, the MPA (successor to the MPEAA) voided the 1994 agreements and instructed cable operators to cease transmission of MPA signals. A number of cable companies ignored the demand and continued pirating the signals while they sought to reopen negotiations with the signal providers. Video piracy apparently has diminished. Guatemalan law does not expressly protect computer software.

Patents

Guatemala's patent law is out of date and deficient in several areas. These include limiting protection to only fifteen years (ten years for food, beverages, medicines and agrochemicals), broad compulsory licensing and parallel import requirements. A number of subject areas are not patentable including mathematical methods, living organisms, commercial plans, surgical, therapeutic or diagnostic methods, and chemical compoundsor compositions. Under the WTO TRIPs Agreement, Guatemala was required to establish a patent "mailbox" for pharmaceutical and agricultural chemical products by January 1, 1995, but has not done so.

Trademarks

Guatemala's law does not provide sufficient protection for owners of well-known trademarks as the right to exclusive use is granted to the first to file. This has permitted third parties to register and use (or prevent others from using) internationally-known trademarks. Sales of falsified name-brand clothing and other merchandise are wide spread in Guatemala. Guatemala is a signatory of the 1994 revision of the Central American Convention for the Protection of Industrial Property. If the convention comes into force and is ratified by Guatemala, some of these deficiencies would be overcome. In January 1996, however, the Guatemalan Congress voted against ratification of the Convention.

SERVICES BARRIERS

Majority foreign ownership in telecommunications services is not permitted. Professional services, such as legal and medical, may be offered by anyone who has passed the Guatemalan licensing exams and has properly incorporated. The major U.S. CPA firms have affiliates in Guatemala.

INVESTMENT BARRIERS

Guatemala generally welcomes foreign investment, although the complex, often confusing welter of laws and regulations can sometimes be discouraging. Legislation designed to assure national treatment, clarify investment rules and speed-up registration was adopted in 1995, but has yet to be implemented. Restrictions on foreign investment remain in several sectors of the economy including public utilities, auditing, insurance, mineral exploitation, forestry and the media. In response to the need for additional investment in telecommunications and electricity supply, the government is continuing to seek ways of encouraging further foreign participation.