The Central American Free Trade Agreement

Along with the Dominican Republic, the largest economy of the trade group, the region covered by CAFTA-DR is the second largest Latin American export market for U.S. producers, after Mexico, which purchased $29 billion worth of goods in 2015. In the same year, two-way trade was about $50 billion. The goal of the agreement is to create a NAFTA-like free trade area, which currently includes the United States, Canada and Mexico. CAFTA-DR is also seen as a stepping stone to the free trade agreement, another (more ambitious) free trade agreement that would encompass all South American and Caribbean states, as well as North and Central American countries except Cuba. Canada is negotiating a similar agreement, the Canada-Central America Free Trade Agreement. Total merchandise trade between the seven countries was about $57.9 billion in 2018, according to figures from the U.S. Census Bureau. As of October 2019, the figure was about $58.5 billion. In May 2004, the Salvadoran American National Network, the largest national federation of Central American community organizations in the United States, spoke out against CAFTA, which they said was not ideologically motivated: "As immigrants, we deeply understand the potential benefits of better transnational cooperation. We would support an agreement that would increase economic opportunities, protect our common environment, guarantee workers` rights and recognise the role of human mobility in deepening already deep relations between our countries.

However, the cafta agreement falls well short of this vision. [7] CAFTA-DR also improves customs administration and removes technical barriers to trade. It covers public procurement, investment, telecommunications, e-commerce, rights, transparency, labour and environmental protection. Prior to CAFTA-DR, Honduras had a trade surplus in agricultural products. Years after CAFTA-DR, it had run a trade deficit. Many farmers have taken jobs in U.S. garment factories who have moved to CAFTA-DR in their country. However, many other factories have moved to China, Vietnam and other low-wage countries. As a result, apparel exports from CAFTA-DR countries to the United States in 2013 were lower than before the signing of the trade agreement. "CAFTA has benefits for all parties. For the new democracies of Central America, CAFTA would bring new investments that will represent good jobs and higher labour standards for their workers. Central American consumer centers would have better access to more U.S.

products at better prices. And by adopting this agreement, we would signal that the world`s first trading nation is committed to a closer partnership with the countries of our own backyard, countries that share our values. Once adopted by the countries concerned, tariffs on about 80% of U.S. exports to participating countries were immediately eliminated and the rest was phased out over the next decade. As a result, CAFTA-DR does not require a substantial reduction in U.S. import duties relative to other countries, as the vast majority of products produced in participating countries have already entered the United States duty-free as a result of the U.S. government`s Caribbean Basin initiative. The parties recognize that economic development, social development and environmental protection are interdependent. In Chapter 9, they reaffirm their commitment to multilateral environmental and labour contracts and principles and commit to imposing their level of protection. There is a separate provision for trade in forest products.

Arbitration procedures do not apply to this chapter. As a large-scale agreement, the free trade agreement covers trade in goods, trade in services, investment, competitive competition, protection of intellectual property rights, public procurement, trade and sustainable development, as well as

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