Foreign trade has been extensively deregulated, but the returns associated with this policy have been at best low to date. The free trade agreement with the United States, Central America and the Dominican Republic (CAFTA) has neither brought more formal employment to Guatemala nor lowered its trade deficits with the United States. By October 2008, Guatemala had also signed free-trade agreements with Chile, Colombia and Panama, and was negotiating an association agreement with the European Union and free-trade agreements with CARICOM and Canada.
 

Liberalization of foreign trade

At the close of the review period, Guatemala’s banking system remained in crisis, and was under international pressure to open up. During the first months of 2008, the Banco Agromercantil (BAM, one of the most stable banks in the country) was the target of a “dirty campaign,” according to some observers, when rumors spread that BAM would soon run into financial difficulties and depositors grew increasingly nervous. The background of this event seemed to be attempts to eliminate a strong competitor and thus control the regional inflow of remittances. Recent reforms (after the crisis of 2006 – 2007, when two banks had to be closed) established minimal deposit requirements, improved monitoring of bank liquidity, and implemented risk-based supervision. New regulations were passed, including credit concentration limits, liquidity requirements for offshore banks and rules for the appointment of external auditors.