Office of the United States Trade Representative


The Truth Regarding CAFTA
By: Gregory Walters Director of Small Business Affairs Office of the U.S. Trade Representative 06/23/2004

According to Trade Policy and Global Poverty by William R. Cline, the elimination of tariffs and other protective barriers globally would lift at least 500 million people out of poverty, create economic benefits to developing countries of $200 billion per year, and enable developed countries to convey about twice as much to developing countries as is presently transferred through foreign assistance.  

The Bush Administration believes that trade is an important tool for fostering democracy and development abroad, while providing economic growth at home.  Trade, especially with poorer developing nations, can be a “win-win” for both the United States and its trading partners.

Today, the US- Central America Free Trade Agreement (CAFTA) serves as a prime example of how free trade between developed and developing countries can improve conditions in both.  CAFTA, including the Dominican Republic, would be the second-largest U.S. export market in Latin America and would open new opportunities for U.S. exports of farm goods, manufactured products, and services.  It would level the playing field:  today more than three-quarters of Central American goods enter the U.S. duty-free under one of our preference programs.  CAFTA would provide duty-free treatment for U.S. goods being sold in Central America  

But much misinformation has been circulated about CAFTA, including misleading statements on labor laws in Central America.  Here are the facts.  A recent analysis by the International Labor Organization (ILO) found that the Central American nations have laws on the books that are generally in line with ILO core labor standards.  Indeed, the 5 Central American countries have ratified more ILO core conventions than the United States.  The ILO did note that enforcement needs improvement, and CAFTA addresses that concern by requiring that countries effectively enforce domestic labor and environmental laws.  In fact, in many ways CAFTA goes beyond our recently passed FTAs with Chile and Singapore, especially in the environmental area. 

CAFTA and trade agreements with other developing countries offer an important way to promote economic growth at home and abroad.  The Central American nations have built new democracies, reformed their economies, and made important progress in improving the lives of their people.  CAFTA will solidify those changes while creating new opportunities for American workers and companies.  It deserves support.

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