CAFTA
The Central American Free Trade Agreement (CAFTA) is a free trade agreement currently being negotiated between the United States and the Central American countries of Guatemala, El Salvador, Honduras, and Nicaragua. The goal of the negotiations is the creation of a free trade zone, similar to the North American Free Trade Agreement (NAFTA) which currently encompasses the US, Canada, and Mexico. CAFTA is also seen as a stepping stone towards the Free Trade Area of the Americas (FTAA), another, more ambitious free trade agreement which would encompass South American and Caribbean nations as well.
Provisions
The ongoing CAFTA negotiations encompass the following components:
- Services: all public services are to be open to private investment.
- Investment: governments promise to grant ironclad guarantees to foreign investment.
- Government procurement: All government purchases must be open to transnational bids.
- Market access: governments pledge to reduce and to eventually eliminate tariffs and other measures that protect domestic products.
- Agriculture: duty-free import and elimination of subsidies on agricultural products.
- Intellectual property rights: privatization of and monopoly over technological know-how.
- Antidumping rules, subsidies and countervailing rights: governments commit to phase out protectionist barriers in all sectors.
- Competition policy: the dismantling of national monopolies.
- Dispute resolution: the right of transnationals to sue countries in private international courts.
Development
US President George W. Bush announced in January 2002 that CAFTA is a top priority for his administration, and Congress gave his administration "fast track" authority to negotiate it. CAFTA negotiations were officially launched in January 2003. Originally, a fifth Central American country, Costa Rica, participated, but it withdrew from negotiations at the last minute because it was reluctant to open its telecommunications and insurance sectors to US firms. The Bush administration hopes to conclude the negotiations by 2004.
Because of the many activist groups, left-wing political parties, and strong unions in Central America, CAFTA is seen as a critical step towards FTAA, since imported and exported goods passing to and from the rest of Latin America will have to travel through this region. Without the participation of these countries, FTAA will be next to impossible.
As the details of the agreements become known, CAFTA has been meeting with growing opposition, both in the US as well as in Central America.
The US advocacy group Public Citizen says CAFTA is based on the same "failed neoliberal model" as NAFTA and serves to "push ahead the corporate globalization model that has caused the 'race to the bottom' in labor and environmental standards and promotes privatization and deregulation of key public services." Independent farmers in America, Canada and Mexico have been particularly hardly hit by NAFTA, says Public Citizen, with thousands wiped out and farmland shifting into the hands of huge agrobusiness concerns such as Tyson and Cargill; the group fears CAFTA will have same effect in Central America.
In El Salvador, the leftist FMLN party is in a strong position to win the presidential elections in March, 2004, a development that may affect the country's participation in CAFTA.
External links
Referenced By
List of international trade topics
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