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Footwear made in Nicaragua has beneficial trade preferences
When operating in Nicaragua, exporter-manufacturers do not only benefit from the country’s strategic location to provide a quick response to the United States and European markets, but also obtain duty-free access to introduce their products.
Nicaragua has subscribed free trade agreements with important trade partners around the world. One particularly relevant for footwear exports is the Free Trade Agreement between Central America, the United States and the Dominican Republic (DR-CAFTA). This agreement, which came in force on April 1st 2006, stipulates that products assembled in the DR-CAFTA region can benefit from the tax-free access to the United States.
In the same way, Nicaragua has free trade agreements with Mexico, Panama and Chile, as well as an Association Agreement with Central America and the European Union. Therefore, footwear made in Nicaragua has duty-free access in each of these countries.
Although Nicaragua has a long tradition of artisan footwear manufacturing, 2010 marked the beginning of industrial production and high-volume exports of fine leather footwear towards the United States and the European Union markets, as a result of the beneficial trade preferences that exist. Currently, the main export destinations are the United States, Costa Rica and Panama.
In 2012, the country reached its highest historical figure in terms of footwear exports with the amount of US$37.5 million, considering both the traditional fiscal regime and the special free zone regime. The main products in Nicaragua’s footwear industry are cattle and goat leather footwear (loafers and high heels), synthetic sandals, rubber boots and safety boots for construction.