Discussion on CAFTA

In the middle of the night on July 27, 2005, the US Congress passed the Central American Free Trade Agreement (known as CAFTA) by just one vote. As an expansion for NAFTA, CAFTA-DR creates the second-largest U.S. export market in Latin America, behind only Mexico, and the 10th largest U.S. export market in the world. According to trade reports from 2000 to 2004, export shipments to CAFTA-DR destinations grew by almost 16 percent, compared with less than 5 percent for overall U.S. exports(US Government Export Portal, 2006).

Not everyone is happy with the promises made by CAFTA. The opponents say that the agreement in the long run will take away US jobs to Central America. A trend to near-sourcing will start, where American jobs will go to Central American nations like Honduras. Labor rights activists are worried that CAFTA will prompt large-scale privatization and deteriorate working conditions for laborers.

Concerns are also raised for people suffering from life-threatening diseases. Tough intellectual property laws proposed by CAFTA means high costs for drugs. For the economically disadvantaged populations of Central America, CAFTA is bad news.

President Bush and his administration, fully behind the agreement, are determined to spread the word about the positives of CAFTA. The White House website has presented the advantages of CAFTA as

It will open up large market for US products, with less tariffs and duties

It will aid the Central American nations development by opening the US market for their products

For the labor rights concerns raised by activists, the government says that the agreement provides sufficient provisions to stop any abuse of workers and provide proper working conditions.

CAFTA promotes democratic values and transparency among its member nations

What do the other member nations think about CAFTA? Are the people there supportive of the agreement? To answer this question we will now discuss a report published by the Christian Science Monitor. The report says that the opposition to the trade agreement is slowly losing ground in Nicaragua. The people see CAFTA as a way to economic development and credit the recent increase in foreign investment in the country to the agreement (Harman, 2005).

A Washington Post report says that in Honduras, people believe that in the long run, CAFTA will have a positive effect on the nation's poor and may also help in controlling corruption in the nation (Sanchez, 2005).

All trades agreements, from NAFTA to the WTO, have their positives and negatives. The WTO is credited with increasing intellectual property protection in China, but it is also blamed for the rising cost of medicine. Similarly, CAFTA also has its positives and shortcomings. We need open discussion to find ways to strengthen the positives and minimize the negatives so that Central America and the United States both will benefit from it.

We invite you, the readers to share you views on CAFTA, and how you feel it will affect the American economy.

Sources:

http://csmonitor.com/2005/0922/p04s01-woam.html

http://www.washingtonpost.com/wpdyn/content/article/2005/06/16/AR2005061601180.html

http://www.whitehouse.gov/infocus/cafta/

http://www.export.gov/fta/complete/CAFTA/index.asp?dName=CAFTA

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