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CAFTAlaw.net seeks to facilitate and promote business and economic
development between Central America Free Trade Agreement (CAFTA) member
countries by providing businesses with expert counsel and advice on the
development of business relationships between the United States and countries
in Central America.
Site Map
The Home Page
contains a brief overview of CAFTA—a little background on the agreement
and a brief outlook on the future of business between the CAFTA countries.
The History
Page contains
a general overview of the negotiation process, which concluded mid 2005.
The Investment
Page provides
valuable information for potential investors and businesses looking to do
business in one of the CAFTA countries. Investors doing business between CAFTA
member countries gained investment protection under the 2005 agreement.
The Investment
Claims Page will
contain summaries of all claims brought under the agreement.
The CAFTA
News Page provides the most recent developments under the DR-CAFTA
Agreement.
The Partner
Links Page a
short description of and links to the sites of CAFTAlaw.net's friends and
business partners. Our partners assist investors and businesses with specific
business problems and investment needs. Furthermore, these partners have
consultants and attornies who specialize in CAFTA business development.
Overview
The CAFTA, signed by the member nations mid 2005, eliminates tariffs on
US goods exported to Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua,
and the Dominican Republic. Additionally, CAFTA locks in and expands the duty
free access those countries have to the US market.
CAFTA positions many industries to benefit from the reduction and
elimination of trade barriers and tariffs. Of these industries, US farmers
will see the largest increase. Preliminary research shows that corn, feeder
corn, dairy products including cheese, whey, and lactose are going to see the
most significant growth this year. In sum, these estimates put the net trade
gained to be $900 million during the first year of the agreement.
CAFTA is not, however, without opposition. The majority of the
opposition has been from labor unions and environmental groups, who have
lobbied strongly against CAFTA. This concern should be addressed by the
CAFTA’s strong labor and environmental protection provisions. The CAFTA
members boast that the agreement has the strongest labor protection provisions
of any trade pact the US has entered into thus far. Additionally, to ensure
the longevity and durability of the environmental protection provision, the US
has pledged $160 million in aid to directly support CAFTA labor support and
environmental protection programs.
Looking at the CAFTA from a global perspective shows that the agreement
has the ability to impact world trade significantly. This is because there are
many free trade agreements (and most importantly large regional integration
agreements) currently under negotiation in every region of the world. And, the
ability of the US to pass CAFTA at this time is paramount to the future of
expanding free trade because negotiators are currently negotiating the
world-trade agreement. World trade has been under attack over the past few
years, particularly by larger economies. What is significant is that the US
Congress was able to overcome a great deal of opposition in 2005 from the many
labor unions and protectionists. CAFTA's passage shows that the US supports
free trade. As such, the CAFTA will serve as stepping stones to both a FTAA,
which has been discussed for several years, and a world-trade agreement.
CAFTA is likely the most significant regional integration agreement
entered into by the US because it will serve as a role model for agreements
between super powers and developing countries. By allowing trade to benefit
both superpowers and developing countries CAFTA will serve as the template
used for the foreseeable future.
Finally, CAFTA will serve as a precursor to the now expanding body of
Appellate review of investment arbitration hearings. Previous agreements like
the NAFTA, CUSFTA, and the AUSFTA do not have an appellate process. As a
result, any perceived injustice or error in the arbitration process has always
been left to the local courts to resolve. (Justice Tysoe has been repeatedly
criticized for his decision in Metalclad). CAFTA has a provision requiring the
countries to work toward an appellate body. These negotiations will have to
consider different appellate process of other trade relationships, of which
the WTO’s appellate body to date has been most significant.
Outlook
Experts say that the net effect of the CAFTA will be similar to NAFTA,
which led to a gain in both exports and imports from each country. In fact,
trade between the US and Mexico has more than tripled since NAFTA was signed.
United States based businesses are poised to benefit significantly from
the present business climate within CAFTA. Of the many factors influencing
this growth the most significant are: the growing use of English in business,
Visas are not required for U.S. citizens seeking to enter Central American
countries, and CAFTA based businesses are actively seeking partners and
investment from the United States.
Similarly, Central American based businesses are positioned to receive a
significant increase in investment from the United States. The most notable
reason for the increase in investment are the many protections granted to
United States businesses and investors found in the CAFTA. Protections now
granted to all CAFTA investors include the notable protections found in NAFTA
and the US-Chile FTAs--Most Favored Nation Treatment, National Treatment, and
a Minimum Standard of Treatment. These different levels of protection are
discussed in detail on the Investment page.
Disclaimer
This site only broadly addresses issues faced by companies seeking to do
business within CAFTA. The information provided on this site is intended to
provide a general guideline, and is not specific legal advice. If you are in
need of advice on specific issues, we are happy to refer you the appropriate
contact. CAFTAlaw.net works with a network of attorneys, consultants, and
business contacts throughout the region provide you with the most up-to-date
information and solutions. Please submit any specific questions or issues
through our Contacts Page and we will be happy to work with you toward a
solution.
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