An important trade agreement involving the U.S., Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua will be signed May 28th. The U.S.-Central American Free Trade Agreement, known as CAFTA, will eliminate many tariffs and promote investment, economic growth, and opportunity. CAFTA will open markets for services in areas including energy, tourism, engineering, transportation, financial services, and entertainment. And it will advance Central America's political development.
Negotiations have also concluded to include the Dominican Republic in the CAFTA trade agreement. When the Dominican Republic is added, CAFTA will be the second-largest U.S. export market in Latin America, behind only Mexico.
CAFTA is a key part of U.S. regional and global efforts to promote free trade. The positive impact of free trade is shown by the ten-year-old North American Free Trade Agreement, or NAFTA, which includes the U.S., Canada, and Mexico. As Jeffrey Schott, of Washington's Institute for International Economics, told the Voice of America, NAFTA has indeed been beneficial:
“NAFTA has contributed to a strong period of economic growth in all three countries. Without NAFTA, all three countries would not be as rich as they are today, employment would not be as high as it is today, and trade relations would not be as smooth.”
These trade agreements -- NAFTA and CAFTA -- are paving the way for a bigger goal: the Free Trade Area of the Americas. The F-T-A-A would bring together thirty-four Western Hemisphere nations with a combined gross domestic product of more than ten-trillion dollars and a market of over three-quarters of a billion people. President George W. Bush says that free trade “is not just an economic opportunity, it is a moral imperative”:
“A world that trades in freedom will grow in prosperity and in security. For developing nations, free trade tied to economic reform has helped to lift hundreds of millions of people out of poverty. The growth of economic freedom and ownership in developing countries creates the habits of liberty and creates the pressure for democracy and political reform. Economic integration through trade can also foster political cooperation by promoting peace between nations. As free trade expands across the earth, the realm of human freedom expands with it.”
The benefits of open trade, says Mr. Bush, “are measured not only in dollars and cents, but in human freedom, human dignity, human rights, and progress.”