On Monday, July 13th, the Salvadoran Industrial Association (ASI) criticized the lack of progress in the negotiations for a Free Trade Agreement (FTA) with the Chinese government, officially entering a state of “suspension.” The association condemned the unfair competition practices of Chinese companies, including improper government subsidies, labor exploitation, and the proliferation of counterfeit products.
According to a report from the local renowned media outlet El Diario de Hoy on the 13th, Jorge Arriaza, the president of the ASI, stated in a press conference that signing a treaty with the Chinese government is “extremely difficult” under current international trade conditions.
Since April 2024 when Salvador initiated trade agreement negotiations with China, only two rounds of talks have taken place, with discussions coming to a complete standstill since early 2025. The negotiations have now been confirmed to be suspended.
El Salvador is a country located in the northern part of Central America, being the only country in Central America that does not border the Atlantic Ocean. It shares borders with Guatemala to the northwest and Honduras to the northeast.
In addition to the halted negotiations, the Salvadoran industrial sector has denounced the long-standing systemic unfair competition by Chinese companies. Arriaza pointed out that the production practices of Chinese companies severely conflict with the regulations of the International Labor Organization (ILO), involving improper subsidies from the Chinese government, labor exploitation, infringement of intellectual property rights, smuggling, and the influx of a large number of counterfeit products, seriously hindering local Salvadoran businesses from competing on a level playing field.
He also noted that this competition not only comes from China but also from other Asian countries, with the issues from China being the most prominent.
China is the second largest supplier of goods to El Salvador. According to statistics from the Trading Economics economic data platform, in 2025, China’s exports to El Salvador reached as high as $3.57 billion, while El Salvador’s exports to China were only about $49.9 million, resulting in a trade deficit several times over. From January to May this year, El Salvador imported nearly $1.482 billion more worth of goods from China compared to its exports.
Similar predicaments have arisen in other Central American countries. Due to the influx of Chinese discount stores, numerous local businesses in Honduras have closed down in large numbers. The Honduran authorities have initiated investigative actions to examine the impact that these businesses have had on the local economy.
The ASI of El Salvador cautioned that any future treaty must include stringent regulations. Failure to address these issues and sign a trade agreement with the Chinese authorities will only lead to greater harm for domestic industries.