Independent Study

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CAFTA AS A “COSTUM- MADE SOLUTION” FOR AMERICAN SMEs

PRESENTED TO:
DR. ANDREW THOMAS

PRESENTED BY:
LAURA APARICIO

TABLE OF CONTENTS
CAFTA AS A “COSTUM- MADE SOLUTION” FOR AMERICAN SMEs 1
Introduction 4
STATISTICAL DEVELOPMENT 7
1.1. GUATEMALA 7
1.2. EL SALVADOR 8
1.3. HONDURAS 9
1.4. NICARAGUA 10
1.5. COSTA RICA 121.6. DOMINICAN REPUBLIC 13
1.7. THE UNITED STATES 13
3. CAFTA OPPORTUNITIES AND CHALLENGES 16
3.1. ADVANTAGES AND OPPORTUNITIES. 18
THE UNITED STATES 19
CENTRAL AMERICA AND THE DOMINICAN REPUBLIC 20
3.2. DISAVANTAGES AND CHALLENGES. 22
4. AREAS OF OPPORTUNITY 27
CONCLUSIONS AND RECOMMENDATIONS 31
REFERENCES
APPENDIXES

Introduction

The Dominican Republic-CentralAmerica-United States Free Trade Agreement (CAFTA-DR) is the most recent of the 15 Free Trade Agreements (FTAs) held by The United States of America. CAFTA-DR is the first free trade agreement between the United States and a group of smaller developing economies. The countries involved in the agreement are The United States of America, Guatemala, Honduras, Nicaragua, Costa Rica, Panama and Dominican Republic.CAFTA-DR entered into force between the United States and Costa Rica on January 1, 2009 (December 23, 2008 Presidential Proclamation), between the United States and the Dominican Republic on March 1, 2007 (February 28, 2007 Presidential Proclamation), between the United States and Guatemala on July 1, 2006 (June 30, 2006 Presidential Proclamation), between the United States and Honduras andNicaragua on April 1, 2006 (March 31, 2006 Presidential proclamation), and between El Salvador and the United States on March 1, 2006 (February 28, 2006 Presidential Proclamation).
The CAFTA-DR region includes 6 of the 17 countries the United States has a free trade relationship with. The geographical area constitutes a potential market of 51.3 million of inhabitants. For 2009, the area represented10.76% of exports and 6.94% of imports between The United States and the whole Latin-American region. Additionally, the region represents the 12th largest goods trading partner for the United States.
For Central American countries, The United States is in most of the cases, the main commercial trade partner, ranging between 3% and 68% of the total exports, while varying between 18% and 43% oftotal imports. For 2009, exports to the United States reached an amount of US$19,144 million, which represents approximately 44% of the total exports of CAFTA-DR to the world. Also, for the same year, imports totaled US$24,237 million, which constitutes 37% of the total imports. In this sense, for countries of the CAFTA-DR region, this agreement represents a pact with the main trade partner.
Theobjectives of the agreement are the following: (a) encourage expansion and diversification of trade between the Parties; (b) eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties; (c) promote conditions of fair competition in the free trade area; (d) substantially increase investment opportunities in the territories ofthe Parties; (e) provide adequate and effective protection and enforcement of intellectual property rights in each Party’s territory; (f) create effective procedures for the implementation and application of the Agreement, for its joint administration, and for the resolution of disputes; and (g) establish a framework for further bilateral, regional, and multilateral cooperation to expand andenhance the benefits of the Agreement.
CAFTA creates new economic opportunities by eliminating tariffs, opening markets, reducing barriers to services, promoting transparency, and establishing state-of-the-art rules for commerce. It is facilitating trade and investment among the Parties and furthering regional integration.
Between 2004 and 2009, exports from the United States to the CAFTA-DR area...