Dominican Republic-Central America Free Trade Agreement

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Note: Within this article, "CAFTA" refers to the treaty as it stood before January 2004, and "DR-CAFTA" is used after that.

The Dominican Republic-Central America Free Trade Agreement, more commonly known as DR-CAFTA, is a free trade agreement being negotiated as of May 2005. As CAFTA, the treaty originally encompassed the United States and the Central American countries Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. In 2005, the Dominican Republic joined the negotations, and treaty became known as DR-CAFTA.

Bordering Central American nations not in the treaty include Belize and Panama on the mainland, Haiti, and with Cuba. Panama is currently in negotiations with the U. S. on a bilateral Free Trade Agreement, and Belize is a member of the Caribbean Community (CARICOM). Haiti was given certain trade preferences with the U. S. under the Haiti Economic Recovery Opportunity Act of 2003 (HERO Act).



The Central American Free Trade Agreement is a multilateral agreement to extend North American Free Trade Agreement (NAFTA) into Central America (El Salvador, Nicaragua, Guatemala, Honduras and the Dominican Republic). As of this writing (6/24/2005), CAFTA had been signed by the U.S. but as a treaty, still requires the approval of both houses of Congress.

The goal of the agreement is the creation of a free trade zone, similar to the NAFTA which currently encompasses the US, Canada, and Mexico. DR-CAFTA is also seen as a stepping stone towards the Free Trade Area of the Americas (FTAA), another, more ambitious free trade agreement which would encompass South American and Caribbean nations (with the exception of Cuba] as well. Canada is negotiating a similar treaty called the Canada Central American Free Trade Agreement.

If passed by the Congress of the United States and the countries involved, tariffs on about 80% of US imports to the participating countries will be eliminated immediately and the rest will be phased out over the subsequent decade.

With the addition of the Dominican Republic, the largest economy in the region, the region covered by DR-CAFTA is the US's second-largest Latin American export market, behind only Mexico, buying $15 billion of goods a year. Two-way trade amounts to about $32 billion.

While not necessarily a part of Plan Puebla Panama, CAFTA is a necessary precursor to the execution of Plan Puebla Panama by the Inter-American Development Bank. The plan includes construction of highways linking Panama City to Mexico City and on to Texas and the rest of the United States.

Support and backing

US President George W. Bush announced in January 2002 that CAFTA is a top priority for his administration, and Congress gave his administration "fast track" authority to negotiate it. Negotiations began in January 2003, and agreement was reached with El Salvador, Guatemala, Honduras, and Nicaragua on December 17, 2003, and with Costa Rica on January 25, 2004, and in that month, negotiations began with the Dominican Republic to join CAFTA. On February 20, 2004, President Bush informed Congress of his support for CAFTA. On May 28, 2004, United States Trade Representative Robert Zoellick, Costa Rican Minister of Trade Alberto Trejos