The Central American Free Trade Agreement

The Central American Free Trade Agreement

CAFTA is a proposed international free trade agreement between the United States and numerous countries within Central America. Some of the nations who could potentially participate in this treaty are Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. This proposed agreement stems primarily from the fact the United States relies on Central America as a primary export market. In fact, it is believed this area of world is Americas 18th largest export target. Another contributing factor to the proposed agreement comes from what is believed to be an unfair trade policy. During the presidency of Ronald Reagan, Central American countries had many tariffs slashed under what is known as the Caribbean Basin Initiative. This initiative allowed around 74% of all exports to America to arrive duty free. Meanwhile, U.S. goods entering their region faced of much deeper import duty of roughly 10%. All in all, the U.S. government believes this act will solidify democracy and level the playing field for future products produced by the United States.

From the very beginning, The United States has gone to great lengths to express the upside to altering this existing policy. The country takes the stand that this will benefit both parties by allowing greater access to the U.S. market. The U.S. has also continually used the North American Free Trade Agreement (NAFTA) as a model for the policies potential success. Current government leaders contend CAFTA will benefit all American consumers buy opening up a broader spectrum of trade. They also believe putting this policy into action will promote a more modern concept of trade in Central America, allowing the region to continue in economic development and democratic governance.

Perhaps the biggest benefit occurring from CAFTA would be the eventual promoting of U.S. exports. Opening this trade agreement would broaden the spectrum in which U.S. goods are bought and sold. This of course would widen the market allowing for a stronger American economy as a result of a bigger consumer base. Furthermore, a bigger consumer base overseas creates a direct result of a need for more production here at home. In the simplest of terms, that means more jobs here there for creating a stronger economy. Besides all the numbers and economic figures, America also benefits by spreading the philoso...

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...e they say, who should be in the forefront of our decision making.

Creating a position on CAFTA is a hard and complicated process. There are so many angles to be viewed that it makes a definitive stance almost impossible. When simply going over the general facts it is very apparent both sides create some excellent points. Hypothetically, the United States argument is correct in the fact creating worldwide trade does open the doors for growth and economic expansion. Trade agreements no doubt break down barriers and provide a more cohesive policy. However, the possible side effects can not be ignored, especially in an area as delicate as Central America. In an economy that thin it is dangerous to say the least to alter their entire system and try to mold it after a huge and stable democracy. Just because it works for us does not necessarily mean it will create benefits for them. Furthermore, to throw this policy upon a country that is uneducated in its principles is down right ignorant, and reeks of a self serving motive. Due to this fact, I believe it is in Central America’s best interest to reject the CAFTA proposal, and perhaps wait for a more proven and solid trade philosophy.