Why this is important to Wisconsin businesses: Pharmaceuticals, travel and tourism, automotive parts, packaging and food processing equipment, printing and graphics, safety and security equipment, and renewable energy are the most promising industries for this growing market.

In 2017, El Salvador’s GDP was an estimated $28.0 billion at current market exchange rates, real GDP was up by an estimated 2.4 percent, and the population was 6 million, according to the International Monetary Fund. The U.S. goods and services trade with El Salvador totaled an estimated $7.3 billion in 2016, the latest data available. Exports were $4.1 billion and imports were $3.2 billion.

The U.S. is El Salvador’s main trading partner. In 2017, U.S. goods exports to El Salvador were $3.1 billion, an increase of about $139 million from 2016. A partial list of U.S. companies with market presence includes:  AES Corp, American Airlines, Arrow Electronics, Caterpillar, Citi, Colite, Cisco, Coca-Cola, Crowley, Delta, FedEx, General Electric, General Motors, John Deere, Kimberly-Clark, Kraft, Microsoft, PriceSmart, United, Walmart, Xerox and 3M, as well as dozens of other U.S franchises.

El Salvador ranked 51st among U.S. export markets in 2017. U.S. goods exports to El Salvador that year were $3.1 billion, up 4.8 percent ($139 million) from 2016 and up 32.2 percent from 2007. U.S. exports to El Salvador are up 64.9 percent from 2005, prior to a free trade agreement being in place. The top export categories (by 2-digit HS code) in 2017 were mineral fuels ($662 million), special other (medicinal pharmaceutical products) ($248 million), machinery ($221 million), electrical machinery ($200 million) and cereals (corn) ($165 million). U.S. exports of agricultural products to El Salvador totaled $466 million in 2017. Leading domestic export categories include corn ($77 million), wheat ($69 million), soybean meal ($58 million), prepared food ($35 million) and cotton ($24 million). U.S. exports of services to El Salvador were an estimated $1.1 billion in 2016, 5.8 percent ($62 million) more than 2015. Leading services exports from the U.S. to El Salvador were in the travel, transportation and financial services sectors.

U.S. companies exporting to El Salvador benefit from the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), with zero percent duties on U.S. consumer and industrial goods. CAFTA-DR took effect 11 years ago and has contributed to dramatic increases in the U.S.’ bilateral trade with El Salvador and trade throughout the region. What’s more, El Salvador’s currency is pegged to the U.S. dollar, which eliminates foreign exchange risk and lowers transaction and financial costs. In addition, proximity to the U.S. gives El Salvador a strategic location and elevates its position as a regional hub for Central America. Lastly, El Salvador is a highly receptive market for U.S. products and services.

El Salvador's economy is predominantly service-based. Agriculture accounts for about 10 percent of GDP and employs 21 percent of the population. Manufacturing and industry account for 25 percent of GDP and employ 20 percent of the population. The service sector accounts for almost 65 percent of GDP and employs 58 percent of the population.

Best prospects for U.S. exports based on trade statistics, market analysis and interest from U.S. companies include pharmaceuticals, travel and tourism, automotive parts, packaging and food processing equipment, printing and graphics, safety and security equipment, and renewable energy.

Notable growth sectors include specialized textiles and apparel, offshore business services, tourism, aeronautics, agro-industry, medical devices, footwear manufacturing, logistics and infrastructure networks, and health care services.

Typical market entry strategies include:

  1. Agent or distributor
  2. Licensing or franchising
  3. Setting up an office

Personal relationships are key to a successful business partnership. U.S. companies must visit their potential partners and demonstrate long-term commitment to the market. Before signing any contracts, market research and due diligence are necessary steps.