On January 16, 2002, President Bush announced that the United States would explore a free trade agreement with the countries of Central America. The President said his Administration would work closely with Congress towards this goal. The President added that the purpose of this initiative was to strengthen the economic ties the United States already had with these nations and to reinforce their progress toward economic, political, and social reform. The Central American Free Trade Agreement (CAFTA) is a proposed agreement betweenáthe United States and Guatemala, El Salvador, Honduras, Costa Rica and Nicaragua. Negotiations concluded in December 2003 and Congress is likely to vote on CAFTA in 2004.
The President believes that CAFTA will ensure that American workers and companies are not disadvantaged, build on the $4 billion of U.S. investment in the region, and avoid erosion of U.S. competitiveness. The Bush Administration also believes that trade negotiations will lead to close cooperation among the Central American countries, thereby advancing Central America's integration and contributing to greater peace, economic cooperation, and stability in the region. In an article in World Trade, the Administration has made these points in support of CAFTA:
CAFTA countries and many other developing countries already enjoy duty free access to the U.S. market for the majority of their exports through trade preference programs provided by Congress to promote economic development.
These same countries often have high tariff and non-tariff barriers for American exports and impose restrictions on U.S. businesses.
CAFTA will not only reduce barriers to U.S. trade, but also require reforms of the domestic legal and business environment that are key to encouraging business development and investment (2004, 12).
This new trade agreement would expand the North American Free Trade Agreement (NAFTA) into Central and South America. NAFTA ...