CAFTA CAFTA is a proposed international free trade agreement between the United States and numerous countries within Central America. Some of the nations who could potentially participate in this treaty are Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. This proposed agreement stems primarily from the fact the United States relies on Central America as a primary export market. In fact, it is believed this area of world is Americas 18 th largest export target.
Another contributing factor to the proposed agreement comes from what is believed to be an unfair trade policy. During the presidency of Ronald Reagan, Central American countries had many tariffs slashed under what is known as the Caribbean Basin Initiative. This initiative allowed around 74% of all exports to America to arrive duty free. Meanwhile, U.
S. goods entering their region faced of much deeper import duty of roughly 10%. All in all, the U. S. government believes this act will solidify democracy and level the playing field for future products produced by the United States.
From the very beginning, The United States has gone to great lengths to express the upside to altering this existing policy. The country takes the stand that this will benefit both parties by allowing greater access to the U. S. market.
The U. S. has also continually used the North American Free Trade Agreement (NAFTA) as a model for the policies potential success. Current government leaders contend CAFTA will benefit all American consumers buy opening up a broader spectrum of trade. They also believe putting this policy into action will promote a more modern concept of trade in Central America, allowing the region to continue in economic development and democratic governance.
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Perhaps the biggest benefit occurring from CAFTA would be the eventual promoting of U. S. exports. Opening this trade agreement would broaden the spectrum in which U.
S. goods are bought and sold. This of course would widen the market allowing for a stronger American economy as a result of a bigger consumer base. Furthermore, a bigger consumer base overseas creates a direct result of a need for more production here at home. In the simplest of terms, that means more jobs here there for creating a stronger economy.
Besides all the numbers and economic figures, America also benefits by spreading the philosophies of democracy. The United States has always been and always will be on a mission to spread democracy throughout the world. By having nations worldwide adopt such programs as free trade, they also are more likely to convert into a democratic government. The United States also takes the position that a free trade agreement will help introduce Central America into the modern world. Many countries south of the border still relay heavily on small farms and independent growers for much of the nations fiscal identity. The U.
S. stands firm in the belief CAFTA would allow Central America to adapt to a more modernized economic system, which would in turn create growth and prosperity for the countries and their respective people. It is our government’s belief CAFTA would create stability in an otherwise up and down area of the world. Going off the belief that our economic system is a cycle highly dependent on cooperation from other nations, this means nothing but positives for all involved. It is the solid belief of the U.
S. government that the key to economic growth and financial gain through world trade is open markets and transparency. According to the United States, a free trade agreement breaking down barriers and widening the trade field will allow for permanent gains and growth for all nations involved. Despite these points put forth by the U. S.
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, there still exist a strong and valid opposition to the proposed CAFTA agreement. It is a solid belief that a free trade agreement will swallow up and destroy the back bone of most agricultural nations. This of course is the countless farmers, laborers, and growers, which help to supply the countries widest varieties of exports. It is also argued it would have disastrous effects on small farmers and immigrant communities here in the United States. Contenders of CAFTA argue that free trade does nothing but destroy jobs and blue collar communities in the United States. They argue that huge corporations continually move factories and jobs over seas in order to create a larger, and more importantly, cheaper labor base.
Using NAFTA as an example, contenders argue that since liberalized trade rules came into effect in 1994, far too many farmers in the U. S. have lost their entire farms due to the fact the same general work can be industrialized and shipped over seas. Furthermore, these people explain how CAFTA will only destroy these small countries economic base. They argue that within the first three years of NAFTA, Mexico lost 28, 000 small businesses, and the national minimum wage dropped a whopping 25%. This they argue spells for nothing but disaster.
It is the opposition of CAFTA’s belief that giving international trade power to multi-million dollar corporations will not at all benefit society as a whole due to their own selfish motives. It is no secret large corporations operate under a law which will help to further its own financial gains, and not those of the community in which they exist. CAFTA opponents have done a great job documenting and exploiting this fact. Another point they bring up is the migration from Mexico into the U. S. They argue this is a direct result of their only way of income being destroyed by free trade and large corporations dissolving their life’s work.
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It is the opponent of CAFTA’s view that implementing a policy such as this will only benefit large and already rich corporations, and not the hard working people who depend on these goods as their lively hood. It is these people they say, who should be in the forefront of our decision making. Creating a position on CAFTA is a hard and complicated process. There are so many angles to be viewed that it makes a definitive stance almost impossible. When simply going over the general facts it is very apparent both sides create some excellent points. Hypothetically, the United States argument is correct in the fact creating worldwide trade does open the doors for growth and economic expansion.
Trade agreements no doubt break down barriers and provide a more cohesive policy. However, the possible side effects can not be ignored, especially in an area as delicate as Central America. In an economy that thin it is dangerous to say the least to alter their entire system and try to mold it after a huge and stable democracy. Just because it works for us does not necessarily mean it will create benefits for them. Furthermore, to throw this policy upon a country that is uneducated in its principles is down right ignorant, and reeks of a self serving motive. Due to this fact, I believe it is in Central America’s best interest to reject the CAFTA proposal, and perhaps wait for a more proven and solid trade philosophy..