U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA)

DR-CAFTA Passed Congress. Congress has passed the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), the largest free trade agreement in over a decade.  This agreement will immediately eliminate 80% of tariffs on U.S. goods exported to the region and phase out the rest over 10 years, giving American businesses, workers, and farmers greater access to 44 million Central American consumers.

The U.S., the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua have all ratified the agreement. Costa Rica has not yet ratified the agreement although Costa Rican President Oscar Arias has promised to make it a priority in 2007. In March 2006, DR-CAFTA entered into force for El Salvador, followed by Honduras and Nicaragua one month later, and Guatemala in July. The Dominican Republic Senate has already approved the agreement and is expected to pass it soon after the Dominican administration adopts the implementation requirements from Washington for its entering into force.

Here are just some of the reasons why DR-CAFTA is in the economic, foreign policy, and national interests of the United States:

DR-CAFTA supports American jobs.  American workers already export $15.7 billion in U.S. products to Central America and the Dominican Republic — more than we sell to India, Indonesia, and Russia combined.  Two-way trade surpassed $33 billion in 2004.  A U.S. Chamber study of DR-CAFTA's impact on a dozen states projects it will create over 25,000 new jobs in its first year — and over 130,000 new jobs in a decade.

The agreement levels the playing field for U.S. workers.  Today, 80% of Central American and Dominican products enter the U.S. market duty free, while our merchandise exports to the six countries face tariffs that average between 30% and 100% higher.   In other words, these countries are enjoying nearly free access to our marketplace while our access to theirs remains limited.  DR-CAFTA will fix this imbalance by immediately eliminating all tariffs on 80% of U.S. manufactured goods, with the remainder phased out over a few years.

Farmers will get a big boost from DR-CAFTA.  The American Farm Bureau Federation projects that DR-CAFTA will boost U.S. agricultural exports by $1.5 billion annually.  Farmers and ranchers can expect an upsurge in exports of corn ($58 million in increased exports), wheat ($62 million), rice ($92 million), soybean meal and oil ($85 million), poultry ($178 million), pork ($108 million) and beef ($47 million).

Beyond tariff cuts, DR-CAFTA will give U.S. companies and workers new opportunities in the region.  DR-CAFTA will open services markets such as telecoms, insurance, and express shipments; provide new legal protections for copyrights, patents, and trademarks; and foster transparency in government procurement.

DR-CAFTA is a helping hand for our friends, allies, and neighbors.  The agreement will lock in democratic reforms, improve labor law enforcement, and boost economic growth throughout the region.  A stronger economy will provide governments with additional resources for education, health care, and infrastructure projects.


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