This distribution is not uniform throughout the region. Honduras, for example, exports 67% of its goods to the United States, compared to 44% for Costa Rica. Honduras also has the highest import percentage in the United States at 53 percent compared to 25 percent in Nicaragua, which is the lowest. Overall trade (exports plus imports) with the United States is also somewhat uneven across countries. Costa Rica accounts for 30 per cent of Central America`s total trade with the United States, while Nicaragua accounts for only 5 per cent of total trade. Guatemala, Honduras and El Salvador account for 25 per cent, 22 per cent and 18 per cent, respectively. With the proliferation of regional agreements around the world, trade negotiations have also become a tactical problem, where profits are made where they are perceived compared to what other countries are doing. For example, the U.S. economy has repeatedly argued that the U.S.-Chile agreement, NAFTA`s first free trade agreement, is necessary to improve equal treatment between the United States. Companies that compete with Canadian companies that have already received preferential treatment compared to Chile. The case was also raised for Central America, which has trade agreements with Canada and Mexico, each with companies competing with U.S. companies in the region. Delays in the WTO and Free Trade Area of the Americas (FTAA) negotiations have only reinforced this position.
Despite the long transition to freer trade under CAFTA-DR, there are still concerns about the potentially harmful effects of further opening its markets to U.S. agriculture in Central America, particularly on small traders and subsistence farmers. [41] However, three recent studies agree that, overall, increased agricultural trade can also be a source of rural development in Central America. In addition to the increase in agricultural exports from Central America, most households are net consumers of agricultural products and therefore benefit from lower prices, which corresponds to an increase in family income. Since the products of subsistence farmers do not usually enter the market, they are unlikely to be strongly influenced by changes in market prices.42 The role of trade is well summarized in: Rodrik, Dani. The new global economy and developing countries: making openness work. The Overseas Development Council, Washington, DC. 1999. p. 137, and Bouzas, Roberto and Saul Keifman. Make trade liberalization work.
After the Washington Consensus: revive growth and reform in Latin America. Kuczynski, Pedro-Pablo and [author`s name erased], ed. Institution für Internationale Wirtschaft. Washington, D.C March 2003, pp. 158, 165-67. The U.S. Senate approved CAFTA-DR on June 30, 2005 by 54 votes to 45[2] and the United States. The House of Representatives approved the pact on 28 July 2005 by a vote of 217 to 215, with two deputies not voting. [3] Controversy arose over this vote because it was kept open for 1 hour and 45 minutes longer than the normal 15 minutes to get some MPs to change their votes. [4] For procedural reasons, the Senate, on 28. A second vote on the CAFTA took place in July, and the pact received an additional vote from Senator Joe Lieberman — who had been absent on June 30 — in favor of the deal.
[5] Implementing Act became Public Law 109-053 when it was signed into law by President George W. Bush on August 2, 2005. USTR and Central American trade ministers sign CAFTA in Washington, D.C. It is important to note that if a staple food such as underwear is produced abroad and sold in the United States as a cheaper import compared to a domestically produced good, this equates to an increase in real income for the American consumer. This can be important for low-wage workers in the United States. The same idea applies to industrial products and commercial consumers. There is therefore a “trade-off” in the trade policy decision between preserving certain jobs through the protection and loss of income gains, or maintaining income gains and the loss of certain jobs. One policy response of public policy has been to adopt legislation to support trade in order to adjust trade to facilitate the faster transition to new opportunities for businesses and workers. DCFTA-DR countries also benefit from foreign direct investment (FDI) as part of their trade relations with the United States, which is the largest foreign investor in all six countries. To the extent that a free trade agreement can be seen as a stabilizing factor in economic relations, it should encourage more foreign direct investment, thus promoting long-term economic growth and development. U.S. foreign direct investment in DCFTA countries is presented in Table 4.
For an excellent economic history of the region, see Woodward, Ralph Lee Jr. Central America: A Nation Divided. New York: Oxford University Press, third edition, 1999. Finally, there were two major negotiating challenges. The first was the need for better integration of Central America under the CAFTA-DR, which has historically been hampered. Several trade rules and rules of origin in a small subregion would complicate the trade situation. For DCFTA-DR to work well, the United States needed certainty that goods would move efficiently in the region, which will be an important benefit of the agreement. Second, there was a difference in the negotiating capacity between Central America and the United States.
U.S. and multilateral offers to help these countries develop such capabilities were seen as generous, but also somewhat selfish, which required sensitivity in the negotiation process. CAFTA-DR also improves customs administration and removes technical barriers to trade. It deals with public procurement, investment, telecommunications, e-commerce, intellectual property rights, transparency, occupational safety and environmental protection. Supporters of the Labor chapter argued that the agreement encourages countries to improve their laws, making “enforcing your own laws” a reasonable standard, that the CBI option for trade sanctions is less attractive in a reciprocal free trade agreement in which the US is also subject to discipline, and that trade sanctions are a “brutal” tool. Punish all exporting workers whose products would fall under the sanctions, which could worsen their situation rather than improve it. It has also been argued that sanctions have not been a widely used tool over the lifetime of the CBI and APS programs and that, on the contrary, an annual fine of $15 million per violation is a potentially important deterrent for DCFTA-DR countries. Finally, technical assistance, cooperation and transparency have been touted as more effective long-term tools for bringing about change in Central America.66 Economic growth in El Salvador, Honduras and Guatemala is lower than in the rest of Latin America. This economic instability contributes to the stimulation of drug trafficking. This pushes many residents, including children, to emigrate to the United States. If a dispute concerning an actual or proposed national provision cannot be resolved after a 30-day consultation, the matter may be referred to a panel composed of independent experts selected by the parties. Once the proceedings before the panel have been completed, the panel will prepare a report.
The parties will attempt to resolve the dispute on the basis of the panel report. In the absence of an amicable settlement, the complaining party may suspend commercial advantages equivalent in force to those which it considers to have been or be affected by the contested act. If a dispute arises under both the DR-CAFTA and the WTO Agreement, the complaining Party may choose one of the two procedures. [9] The USITC anticipates that THE DCFTA-DR is likely to have little impact on services imports into the United States, as the market is already largely open. He sees opportunities for U.S. companies to expand into Central America. In particular, Costa Rica has accepted the possible opening of its state-owned telecommunications and insurance industries, where there was strong political opposition to privatization and deregulation.47 Unlike other countries, this represents a major structural adjustment for the Costa Rican economy, has implications for Costa Rican social policy, and requires a change in national laws, all of which are difficult for its legislator to support. if they have not made concrete compromises. in other areas such as agriculture and textiles.
Negotiators resolved these issues during two-week talks in January 2004 and their detailed commitments are set out in the relevant chapters of the DCFTA-DR. However, due to this persistent sensitivity, the DCFTA-DR was postponed until a national referendum supported the continuation of the agreement. Nearly three-quarters of U.S. imports from Central America fall into three main categories: fruit (mainly bananas) and coffee; clothing; and integrated circuits. .
