San Francisco Business Times - August 1, 2005

Business News - Local News
From the July 29, 2005 print edition
Guest opinion

CAFTA pact with Central America a good trade for U.S.

Franca Gargiulo

It is no overstatement to say that Congress has the fate of Central America in its hands.

For years, critics of U.S. policy in the region have complained that we rely too much on heavy-handed military aid or outright intervention, propping up corrupt dictatorships at the expense of democratic values, human rights and the poor.

But times have changed, and so has Central America. Democratic rule and multiparty elections have taken root, old antagonists on the left and the right have made peace and foreign investment has helped create badly needed jobs.

The Bush administration has rightly sought to recognize this progress by negotiating the Central American Free Trade Agreement, or CAFTA, with all the governments of the region, plus the Dominican Republic. Now Congress needs to ensure swift ratification. Failure to do so would be a major step backward.

A boost to trade

CAFTA is important for our economy. While small geographically, these six countries together represent the 13th largest export market for the United States and our second-largest market in Latin America, after Mexico.

Moreover, CAFTA will make our commercial relationship reciprocal, creating new opportunities for every sector of our economy. Ever since the 1980s, as the result of President Reagan's Caribbean Basin Initiative, the U.S. has unilaterally opened its market to most goods from Central America and the Dominican Republic. About four-fifths of the region's exports already enter the U.S. duty-free.

When implemented, CAFTA will remove duties on 80 percent of U.S. consumer and industrial exports -- and more than half our agricultural exports -- to Central America and the Dominican Republic.

CAFTA is about much more than trade. The United States and its CAFTA partners have agreed on strict rules to ensure respect for labor rights and the environment, promote respect for government transparency, fight corruption and protect intellectual property.

Through these rules and the economic opportunities they will create, CAFTA will help strengthen democracy and the rule of law in a region once wracked by civil war. This is important for all Americans - including the approximately 2 million Central American and Dominican immigrants living here who have families in the region.

Breaking the status quo

Trade can't cure all ills, but it can be a force for positive change by generating new economic opportunities, new investment and new hope for Central America.

Rejecting the agreement would mean that the status quo -- perpetuating poverty in a region where millions live on less than $2 a day -- is acceptable.

It's not. Congress needs to ratify CAFTA, to help keep Central America on the path to peace and prosperity.

Franca Gargiulo is the Western Region representative for the New York-based United States Council for International Business.

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