The United States Department of Commerce, International Trade Administration (ITA), is organizing a Trade Mission to Honduras, Guatemala, and El Salvador from May 16 to 20, 2016. The purpose of this mission is to assist U.S. companies in launching or increasing exports of U.S. safety and security goods or services to Guatemala, El Salvador, and Honduras. Participating firms will gain market insights, make industry contacts, solidify business strategies, and advance specific projects, with the goal of increasing U.S. exports of products and services to the Northern Triangle of Central America. The mission will include customized one-on-one business appointments with pre-screened potential buyers, agents, distributors, and joint venture partners; meetings with industry leaders, market briefings, and networking events.
TARGET SUB-SECTORS FOR U.S. EXPORTERS INCLUDE:
Burglar and motion alarms, sensors, intrusion detection systems, CCTV cameras, metal detectors, access control equipment, biometrics, electronic surveillance, remote monitoring, sensors, perimeter security, fire and smoke detection systems and alarms, body armor, uniforms and tactical gear, commercial personal defense products, security training services, retail security systems, sensor tags.
II. COMMERCIAL SETTING
Companies in all three countries suffer from security issues affecting their property, employees and business operations. Most security issues derive from the prevalent gangs that operate in the Northern Triangle through extortions, thefts, and threats against employees’ personal safety. Companies in the region report spending up to 20% of their budgets on safety/security equipment and services to safeguard their employees and operations. The mission supports the federal government’s Look South initiative, which encourages U.S. companies to explore opportunities in the United States’ 11 free trade agreement (FTA) countries in Latin America. The FTA in the region, CAFTA-DR, includes the following five Central American countries: El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The mission also supports the Alliance for Prosperity in the Northern Triangle.
The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) represents the 14th largest U.S. export market in the world in 2013, and the third largest in Latin America behind Mexico and Brazil. The United States exported $29.5 billion in goods to the five Central American countries and the Dominican Republic in 2013, over 74 percent higher than the level in 2005, the year before the Agreement first entered into force. The agreement consists of tariff reductions, reduced non-tariff trade barriers, and loosened distribution arrangements. The reduction of trade barriers and loosening of distribution arrangements has created a more stable and transparent trading and investment environment making it easier and cheaper for U.S. companies to export their products and services to trading partner markets. As a result of the FTA, 100 percent of U.S. consumer and industrial goods exports to the CAFTA-DR countries are no longer subject to tariffs. To be eligible for tariff-free treatment under the FTA, products must meet the relevant rules of origin.
Regionalization is a driving force for business in Central America. Factories and distribution networks tend to serve a regional, rather than national, market. The proximity of the CAFTA-DR countries to each other has also driven investors to consider the advantages between countries when deciding where to invest and build new factories.
Alliance for Prosperity in the Northern Triangle
The Alliance for Prosperity in the Northern Triangle is a plan to respond to the economic and social challenges, including rampant violence and insecurity affecting Guatemala, Honduras, and El Salvador. The Northern Triangle suffers from a rate of violence that is above the averages for Central America and Latin America and are linked to a rise in the volume of drugs passing through the Northern Triangle in route to the United States and Europe and to a high level of street gang membership. The Northern Triangle governments are now focusing on strengthening government institutions and the justice system in order to attack the roots of the problems of violence and the lack of safety in their countries.
Guatemala is the largest country in Central America, with a population of roughly 14 million and it accounts for one-third of the region’s GDP. The U.S. is Guatemala’s largest trading partner, with 40% of imports coming from the U.S totaling $6.1 billion in 2014. Additionally, the U.S. is the leading source of foreign investment in Guatemala. Foreign investors are generally accorded the same treatment as nationals with few regulatory and legal restrictions in place. About 200 U.S. firms have a presence in Guatemala.
There are some market challenges in Guatemala. Primarily, issues with corruption and a lack of transparency have given rise to complaints. The U.S. government continues to advocate on behalf U.S. companies and for open, fair, and transparent tenders in accordance with CAFTA-DR obligations. Finally, crime and weak judicial institutions remain serious challenges to doing business in Guatemala.
Safety and Security Industry
Guatemala’s safety and security equipment market size for 2013 was $517 million with $274 million in equipment imported from the United States. The general public has little or no confidence in law enforcement agencies believed to be corrupt. Citizens also recognize the lack of the ability of the police to protect private property and companies. The lack of public confidence in law enforcement has created a high demand for private security solutions. Companies as well as individuals are taking security into their own hands hiring private security and demanding more security systems. The country roughly has 22,000 active police officers and 100,000 to 120,000 private guards. Private businesses in Guatemala devote between 10% and 15% of their annual budgets on security products and services and growth in this industry is expected to continue. All security products in Guatemala are imported. U.S. products have good brand recognition and account for 52% of the market and this share is increasing. Import taxes on security products range from 0% to 15%, plus a VAT of 12%.
El Salvador, with a population of 6.4 million, offers an open market for U.S. goods and services and a dollarized economy. The United States is El Salvador’s main trading partner with 41% of the market share for the country’s imports. U.S. products are generally favored, though they face strong competition from other international suppliers. El Salvador is only a 3-4 hour flight from key U.S. cities and four U.S. carriers operate in the country. Under CAFTA-DR, 100% of U.S. consumer and industrial goods enter El Salvador duty free (for goods that meet the country of origin requirements). In 2014, U.S. exports to El Salvador were $3.3 billion, up by 2.2% ($73 million) from 2013. There are over 100 U.S. companies with market presence in El Salvador including: AES, Microsoft, Arrow Electronics, Kraft, Pricesmart, Caterpillar, Xerox, John Deer, Walmart, 3M, Delta, American Airlines, United, Colite, Cisco, Kimberly Clark, as well as dozens of U.S franchises.
Honduras is an important gateway for U.S. exports entering the Central American market due to its strategic location as well as the presence of the largest maritime port in the region. Honduras has some of the lowest logistical costs in the region and the largest deep-water port, Puerto Cortes, which is the first port in Latin America to qualify under the Megaports and Container Security Initiative (CSI). The U.S. is Honduras’ main trading partner with 49.8% of imports coming from the U.S. in 2013 totaling $5.3 billion. Following the implementation of CAFTA-DR, about 80% of U.S. goods now enter Honduras duty-free with the remaining tariffs due to be phased out by 2016.
The United States represents the most significant source of direct foreign investment and trade in the country. Currently, more than 150 U.S. companies are currently operating in Honduras. Corruption may constrain successful commercial activities in Honduras with a judicial system perceived to be subject to outside influence and largely non-transparent resolution of disputes. Personal security is a major concern in Honduras.
The demand for safety and security equipment in Honduras is high due to the high crime rate in part caused by street gangs and drug trafficking activity. The Violence Observatory of the National Autonomous University of Honduras determined in its preliminary statistics report that the rate of homicides in Honduras to date is 40.2 per 100 thousand inhabitants. According to a survey conducted by CID-Gallup 1 of every 3 Honduran homes have been victims of petty theft or burglary. This is the highest in the region followed closely by Guatemala and El Salvador.
In May of 2012, the Government of Honduras implemented a security tax on financial transactions which it has invested in various security projects such as radar systems, security cameras, military vehicles and motorcycles, bullet proof vest, and uniforms. The security market in Honduras is highly competitive as demand has grown over recent years. There are currently 50 companies registered with the Security Service Providers Association, employing over 20,000 people. Additionally, there were over 700 registered private security companies in 2013. In the informal sector, companies that are not licensed or trained often provide residential monitoring services. Most professional companies in Honduras provide prevention, monitoring, and secure transportation services, or distribute surveillance and general safety equipment.
The following products and services offer the best sales potential in the country: CCTV cameras, metal detectors, uniforms and tactical gear, biometrics, access control systems, commercial personal defense products, and alarms. Importers in Honduras strongly prefer U.S. equipment due to a reputation for high-quality and reliability.
The goal of the mission is to help participating U.S. companies gain market insights, make industry contacts, solidify business strategies and identify potential partners, agents, distributors, and joint venture partners in Guatemala, Honduras, and El Salvador. The delegation will have access to US&FCS Commercial Officers, Commercial Specialists, and other U.S. government officials during the mission, learn about business opportunities, and gain first-hand market exposure from the markets in the region. Trade mission participants already doing business in Central America will have the opportunity to further advance business relationships and explore new opportunities. U.S. companies new to the three markets will gain support in finding agents, distributors, and joint venture partners through this mission, laying the foundation for successful long-term ventures by providing business-to-business introductions and market access information.
IV. MISSION SCENARIO
The mission will stop in Guatemala City, Guatemala, San Pedro Sula, Honduras and San Salvador, El Salvador. In each city, participants will meet with pre-screened potential agents, distributors, and representatives, as well as other business partners and government officials. They will also attend market briefings by U.S. Embassy officials, site visits, and networking events offering further opportunities to speak with local business and industry decision-makers.
Sunday, May 15, 2016
San Pedro Sula, Honduras
Travel Day/Arrival in San Pedro Sula, Honduras Welcome Reception
Monday, May 16, 2016
San Pedro Sula, Honduras
Business-to-Business (B2B) Matchmaking Appointments
Tuesday, May 17, 2016
Guatemala City, Guatemala
Site Visit in San Pedro Sula (TBD)
Travel to Guatemala City
Market Briefing and Networking Reception
Wednesday, May 18, 2016
Thursday, May 19, 2016
San Salvador, El Salvador
Travel to San Salvador, El Salvador
Market Briefing and Networking Reception
Friday, May 20, 2016
Saturday, May 21 , 2016
Depart for the United States/Travel Day
All parties interested in participating in the Safety and Security Trade Mission to Guatemala, El Salvador, and Honduras must complete and submit an application for consideration by the U.S. Department of Commerce. All applicants will be evaluated on their ability to meet certain conditions and best satisfy the selection criteria as outlined below. A minimum of 10 U.S. companies and/or trade associations and a maximum of 12 companies and/or trade associations will be selected to participate in the mission from the applicant pool. U.S. companies or trade associations already doing business with Guatemala, El Salvador, and Honduras, as well as U.S. companies or trade associations seeking to enter these countries for the first time may apply.
After a company and/or trade association has been selected to participate on the mission, a payment to the U.S. Department of Commerce in the form of a participation fee is required.
The participation fee will be US$3,800 for a small or medium-sized enterprise (SME)1 and US$4,800 for a large firm.
The fee for each additional representative is US$450.
Conditions of Participation:
Selection Criteria for Participation:
Selection will be based on the following criteria, listed in decreasing order of importance:
Referrals from political organizations and any documents containing references to partisan political activities (including political contributions) will be removed from an applicant’s submission and not considered during the selection process.
Mission recruitment will be conducted in an open and public manner, including publication in the Federal Register, posting on the U.S. Department of Commerce trade mission calendar (www.export.gov/trademissions) and other Internet web sites, press releases to general and trade media, notices by industry trade associations and other multiplier groups, and publicity at industry meetings, symposia, conferences, and trade shows.
Recruitment will begin immediately and conclude no later than Friday, March 4, 2016. The U.S. Department of Commerce will review applications and make selection decisions on a rolling basis until the maximum of participants is reached. We will inform all applicants of selection decisions as soon as possible after applications are reviewed. Applications received after the deadline will be considered only if space and scheduling constraints permit.
HOW TO APPLY:
Applications can be downloaded from the trade mission website or can be obtained by contacting April Redmon at the U.S. Department of Commerce (see contact details below.) Completed applications should be submitted to April Redmon.
U.S. Commercial Service Safety and Security Team:
Ms. April Redmon
Senior International Trade Specialist
U.S. Commercial Service-Virginia/Washington, D.C.
1501 Wilson Blvd., Suite 1225
Arlington, VA 22209
Tel: (703) 235-0103
U.S. Commercial Service in El Salvador:
Regional Commercial Specialist-Central America
U.S. Commercial Service-El Salvador
U.S. Embassy San Salvador
Tel: (503) 2501-3060
U.S. Commercial Service in Guatemala:
Senior Commercial Specialist
U.S. Commercial Service-Guatemala
U.S. Embassy Guatemala City
Tel: (502) 2326-4310/2326-4000
U.S. Commercial Service in Honduras:
U.S. Commercial Service-Honduras
U.S. Embassy Tegucigalpa
T: (504) 2236-9320, ext 4092
1 An SME is defined as a firm with 500 or fewer employees or that otherwise qualifies as a small business under
SBA regulations (see http://www.sba.gov/services/contracting opportunities/sizestandardstopics/index.html).
Parent companies, affiliates, and subsidiaries will be considered when determining business size. The
dual pricing reflects the Commercial Service’s user fee schedule that became effective May 1, 2008 (see http://www.export.gov/newsletter/march2008/initiatives.html for additional information).
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