Delays in Central American trade pact

Automotive Industries, July, 2005

A TRADE AGREEMENT designed in part to help South American and US companies compete against cheap Chinese Imports has failed to meet its January 1 target for implementation.

The Central American Free Trade Agreement (CAFTA) has been delayed by a number of factors, including opposition both within the US and South American countries.

Many of the six smaller states--the Dominican Republic, Guatemala, Nicaragua, El Salvador, Honduras and Costa Rica--failed to come into full compliance with CAFTA's requirements on the treatment of foreign companies, customs laws, telecommunications services, public-health services and other matters by the January 1 deadline. In addition, Costa Rica has yet to approve the deal, and the Dominican Republic has announced that it will hold off on entering into the trade pact until July.

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Other potential CAFTA trade-partner states are facing similar situations, with El Salvador, the nation closest to compliance, recently stating that it will not be ready to join CAFTA until February at the earliest, according to the Quixote Center, a non-denominational humanitarian organization.

There are two strong groups for and against the agreement. "CAFTA represents a milestone in U.S. trade and foreign policy. It will eliminate most trade barriers between the United States and six countries--Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, and the Dominican Republic--that together represent our second-largest export market in Latin America, behind only Mexico," says Daniel Griswold, a trade expert at the free-market-oriented Cato Institute in Washington.

"A broad swath of U.S. industry has endorsed CAFTA because it will open new export opportunities for U.S. companies and workers. More than 50 farm groups representing poultry, pork, dairy, fruit and other producers have endorsed CAFTA, along with America's most competitive manufacturing and service-sector producers."

"On imports, the U.S. market is already largely open because of the existing Caribbean Basin Initiative and other preferential programs. CAFTA would guarantee that access, to the benefit of Central American producers and American consumers, while guaranteeing reciprocal access for U.S. exports," says Griswold.

Opponents are not convinced. "The problems associated with implementing CAFTA demonstrate what we've been saying all along: this agreement goes beyond trade in requiring dramatic changes in domestic laws that grant new rights to transnational corporations at the expense of working people," says the Quixote Center's Tom Ricker. "The fact that legislatures throughout Central America and in the Dominican Republic are now struggling to change laws governing intellectual property, services, and investment in order to receive US certification for joining CAFTA makes clear the undemocratic nature of this agreement."

In light of the news of CAFTA's delay, a broad coalition of domestic and international groups is mobilizing to undo the trade deal once and for all. In statements and notices posted to its website, the Stop CAFTA Coalition calls for demonstrations against the pact throughout January and provides links and information for interested parties. Planned activities include pickets, petition signings, teach-ins and workshops.

However, trade experts are confident that the deal isn't in serious danger. "CAFTA is going to become a reality; it's just going to happen a little bit more incrementally than originally planned," Griswold told the Los Angeles Times.

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Delays in Central American trade pact

Automotive Industries, July, 2005

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