Central America Free Trade Agreement - 1242 Words

Central America Free Trade Agreement and Its Economic Impact Overview Negotiations started in early 2004 on the Central America Free Trade Agreement, later on in the negotiation process the Dominican Republic joined to make CAFTA-DR. The original countries that made up CAFTA were Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua with the Dominican Republic joining forces later on. CAFTA was coupled together with NAFTA and the Canada-Costa Rica Trade Agreement separating them from the Free Trade of the Americas Agreement otherwise known as, FTAA. (WIKI) While separating from other trade agreements the main goal of CAFTA was to create not just a trade agreement with lower tariffs, but to create a free trade area. CAFTA has been†¦show more content†¦It inevitably is the first trade agreement between the United States and a group of smaller developing countries. (wiki) While the agreement was signed in 2004 it was not until 2005 that it was passed in the US Senate. It did not go into force in the US until 2006 with El Salvador, Hondura s, Nicaragua, and Guatemala following suit the same year. The Dominican Republic put the agreement into full force shortly after in early 2007 while it took Costa Rica a half decade to get the agreement put to force, in early 2009, after signing in 2004. (ustr.gov) Economic Impact The effects of globalization were minimal in Central American countries until the passing of the CAFTA-DR. It raised issues in the US and with anti-globalization groups. With that being said the positive impact the agreement had in these areas was substantial. It allowed foreign capital to flow into the smaller developing country markets allowing the economies to grow and advancing investment and the generation of emerging businesses all the while raising the standards of living in the countries. Though not all the positives benefit the Central American Countries. By signing this agreement this opens up import markets for the US that they never thought would be open and without tariffs nonetheless. (wccn) As the negatives usually over shadow the positives there are always some. The big negative for example of the Nicaraguan poor is that most of them are employed by the agriculture sector, and with