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The Greater Caribbean This Week

CAFTA: A gray area for Central America

by Luis Noriega


The opinions of diverse sectors in Central America with respect to the Central America-United States of America Free Trade Agreement (CAFTA) have provoked various reactions during the negotiation period. Now that it has been signed, there still exists a mixture of opinions between black and white, which differ on the scope and potential of the agreement, giving rise to a gray area that does not help the image of CAFTA.

It is understandable that there exist these somewhat radical positions, which have their logic in sectoral appreciations and perceptions. In addition, in some cases, they respond to a lack of clear understanding of the content of the agreement and the rules it establishes.

It does not help that the negotiation process was very accelerated. Hence there exist doubts, some genuine and others not, about the future of some productive sectors, especially agriculture. There are therefore fears that some of these will disappear because of a lack of competitiveness. There are also doubts as to whether a trade agreement is a suitable instrument for the economic and social development of countries, which contrasts with the theory that this type of instrument promotes growth, but it does not mean that it will solve the development problems of a country or a region.

The development problématique is very complex and the Central American countries still need to carry out important reforms to solve their biggest problems. It is clear that the responsibility, ultimately, belongs to each one of them. But even if the political will exists, if they do not have the resources for those reforms, the region will have to assume the costs without maximizing the benefits.

CAFTA should be regarded in a positive light and it is hoped that it will afford all its members maximum benefits in the most equitable manner possible. However, it is evident that there exist abysmal disparities between the United States and each one of the Central American countries. Although CAFTA contemplates in some way special and differential treatment, some areas having been bilaterally negotiated with the United States, there is no clarity as to whether this will be sufficient to promote effectively the transformation required by each Central American country to advance and resolve significantly their most sensitive problems.

It would be very sad if, after a while, it is proven that CAFTA has widened even more the trade gap favoring the partner to the north. CAFTA definitively provides the entrepreneurial sectors with an agreement with clear rules and defense mechanisms for export trade to be developed with all the certainty required, but it must also be recognized that the structure of the Central American economies is different to that of the United States. These are more oriented towards the production and export of goods rather than services. There is no doubt that the United States has all the potential to export goods and services, and consequently, that country is likely to win. It is necessary to clarify that there are some cases of exports of services in a Central American country, but this does not reflect the general situation in the whole region.

The gray side of CAFTA is a reality. Curiously, some analysts have just carried out a review of NAFTA after 10 years in force and they have concluded that the results, although positive, are not altogether acceptable, since they have not fulfilled the expectations set at the beginning. This case is relevant when the scope of CAFTA is analyzed, even if Mexico's case is not comparable to that of the Central American countries. What is certain is that the results can only be measured in time and hence the importance of undertaking good negotiations and keeping all sectors of society duly informed.


Luis Noriega is the Trade Director of the Association of Caribbean States. The views expressed are not necessarily the official views of the ACS. Feedback can be sent to mail@acs-aec.org.




Also in this section:
US State Department, Human rights in Panama
Jackson, Ashura and Super Tuesday
Weisbrot, Call it a coup
Bernal, Impunity and modernity
Noriega, Doubts about CAFTA
ICFTU, Don't associate the Olympics with sweatshops
Fisher, Scarlet Letters



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