06 April 2005
U.S. Officials List Benefits of Trade Pact with Central America
CAFTA-DR would promote growth, structural changes, U.S. officials predict
Washington -- The ratification of the U.S. free-trade agreement with Central America and the Dominican Republic (CAFTA-DR) would be a major step forward in deepening U.S. ties with the region, and would stimulate broad-based economic growth as well as positive structural change in Central America and the Caribbean, according to Assistant Secretary of State for Western Hemisphere Affairs Roger Noriega.
The U.S. Congress is expected to consider ratification of the U.S. free-trade agreement with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic (CAFTA-DR) during April. On April 6, the U.S. State Department hosted representatives of Central American and Dominican Republic communities in the United States (CENDRUSA) at a dialogue on the potential benefits of the accord.
Noriega opened the session by noting that free trade is a key element in President Bush's economic philosophy and strategy for the Western Hemisphere.
"We see expanded trade as the engine for greater opportunity for all the region's citizens," he said. "CAFTA-DR will be a major force to help increase productivity and competitiveness, resulting in more growth and more jobs, and thus promoting long-term and self-sustaining prosperity."
Noriega said that the CAFTA-DR would provide opportunities for a better life to people from all walks of life in all participating countries. The State Department official pointed out that the accord could create opportunities for new entrepreneurs and small businesses, as well as help workers by creating new jobs.
Beyond economics, Noriega said that the United States envisions CAFTA-DR promoting social mobility, strengthening democratic institutions and encouraging government transparency. He added that CAFTA-DR would also encourage improved enforcement of labor standards and increasing cooperation to promote sound environmental management.
"We want the agreement to stimulate not just growth, but also positive structural change in Central America and the Caribbean," he said.
Noriega acknowledged that the broad benefits of CAFTA-DR would not convey automatically; rather, the governments and private sectors in each signatory country must work together constructively to prosper and strengthen democracy.
To these ends, the State Department official noted that, for the first time in any U.S. trade agreement, CAFTA-DR would establish a Committee on Trade Capacity Building (TCB) to address the needs of signatory nations. Noriega observed that the United States has budgeted $231 million in assistance to the CAFTA-DR countries in 2005, including almost $20 million specifically earmarked to strengthen related labor and environment programs.
In his remarks to the CENDRUSA conference, U.S. Congressman Henry Cuellar said that CAFTA-DR represents an opportunity to raise international labor standards.
Cuellar, a Democrat from Texas, noted that he has witnessed first-hand how free trade has transformed Texas. The North American Free Trade Agreement, he said, has given rise to "the greatest display of economic growth in the history of South Texas." That agreement, known as NAFTA, links the economies of the United States, Canada and Mexico.
Beyond its potential to similarly bolster growth in the CAFTA-DR signatory nations, the accord "provides us with a real opportunity to raise labor standards around the world," said Cuellar.
The congressman explained that CAFTA-DR is specifically designed to promote the enforcement of labor laws in the region, as it would employ monetary fines or the potential loss of trade benefits to promote enforcement.
"Saying no to CAFTA-DR is effectively closing a door on a critical, critical opportunity to raise labor standards," Cuellar said. "Through a combination of trade assistance and monetary fines, we have the ability to set a new precedent for global labor laws."
Apart from the potential to enhance the enforcement of labor laws in the region, Assistant U.S. Trade Representative for the Americas Regina Vargo said, increasing the integration and competitiveness of the participants' textile and apparel sectors is the "most demonstrable example of the mutual benefit we derive" from the CAFTA-DR.
Vargo pointed out that textile and apparel trade is a key component of U.S. trade with CAFTA-DR participants. She noted that the textile and apparel industry accounts for approximately a half-million jobs in Central America and the Dominican Republic, and well over 10 percent of these nations' gross domestic products.
The USTR official explained that with the expiration of World Trade Organization global quotas on textile and apparel at the end of 2004, the region's producers are facing new competitive challenges from Asian imports, particularly those from China.
Initial estimates, she said, suggest that already 7,000 textile and apparel jobs in the United States and over 10,000 such jobs in four Central American countries have already been lost due to increased Asian competition.
Passage of CAFTA-DR, Vargo said, would help participants collectively keep textile and apparel jobs in the Western Hemisphere.
Beyond enhancing the enforcement of labor laws and increasing the competitiveness of the region's textile and apparel sector, Vargo argued that investment is also an important part of the U.S. relationship with its CAFTA-DR partners. She said that the comprehensive nature of the CAFTA-DR agreement could help build confidence in Central America and the Dominican Republic as good places to do business through provisions that increase the transparency of societies and improve business environments.
Overall, Vargo said the United States expects that upon entry into force, "CAFTA-DR will propel the region forward on its path to economic development."
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
