DR-CAFTA, the free trade agreement signed among the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic represents an important opportunity for the United States to do good and do well. This free trade agreement puts U.S. small businesses on a level playing field, while encouraging economic and democratic integration and reform in our hemisphere.
The five Central American countries and the Dominican Republic are small countries, but they are big markets for U.S. goods and services. With the exception of Mexico, these countries together consume more U.S. goods and services than any other country in Latin America, including Brazil.
It is important to remember that an FTA is a two-way agreement. Today, about 80% of DR-CAFTA imports enter the U.S. duty free through a unilateral trade preference program, like the Caribbean Basin Initiative or the Generalized System of Preferences. U.S. products, on the other hand, face high tariffs and other non-tariff barriers in Central America. This agreement will grant a level-playing field for U.S. small businesses. Upon implementation, more than 80% of U.S. exports of consumer and industrial goods will become duty-free immediately. The DR-CAFTA will also accord substantial market access for U.S. service providers across entire services regimes in the region.
Some opponents of DR-CAFTA have claimed that these countries’ labor laws are not strong enough. Yet the International Labor Organization (ILO) was invited by the DR-CAFTA countries to study their laws, and found that the laws on the books in the region were generally in line with international core labor standards. In fact, labor laws in the region are substantially similar to, or better than, the labor laws of Morocco, a country with which we now have a free trade agreement that passed through Congress with broad bipartisan support.
Just twenty years ago, the story of Central America was of war and despair. Weapons, violence and fear dominated the region. Today, the story is of progress, prosperity, and hope. The DR-CAFTA is a unique opportunity to support democracy; improve commercial ties; and promote trade in goods, not guns.