Us Cafta Essay

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The United States-Central America Free Trade Agreement: Opportunities and Challenges Draft May 2, 2003 José M. Salazar-Xirinachs[1] Jaime Granados Introduction In a speech at the Organization of American States (OAS) on January 16, 2002 President Bush announced his administration’s objective to explore a Free Trade Agreement with the five countries member of the Central American Common Market in the following terms: “Today I announce that the United States will explore a free trade agreement with the countries of Central America. My administration will work closely with Congress toward this goal. Our purpose is to strengthen the economic ties we already have with these nations; to reinforce their progress toward economic and political and social reform; and to take another step toward completing the Free Trade Area of the Americas.” Prior to this, in April 2001, USTR Robert Zoellick had initiated dialogue with the Central Americans on this possibility, and following President Bush’s announcement, a number of technical meetings and consultations took place during 2002, leading to formal initiation of the negotiations on January, 8, 2003. The idea of a FTA between the U.S. and Central America, however, is not new. In fact, Central Americans had been making the case for a free trade agreement with the U.S. for a number of years but a window of opportunity had not opened before. Despite the broad access to the U.S market provided by the Caribbean Basin Economic Partnership Act since 1984, since the NAFTA negotiations began in 1992 Central Americans had been concerned about the possible trade and investment diversion effects of this agreement. After NAFTA entered into force in January, 1995 Central American and other CBI countries lobbied strongly for “NAFTA parity”, that is, for leveling the playing field with the conditions of

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