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« NY Times' inquiry reveals John Roberts' children bought from Air America Radio child slavery ring; Reports "nothing irregular" about adoptions. | Main | Peter Jennings »

August 7, 2005

Free Trade Area of the Americas, or Bust!

Free trade is good. Barriers to free trade are bad.

CAFTA has become law in the USA, El Salvador, Honduras and Guatemala, and it is expected to be adopted by the three remaining nations it would affect (Costa Rica, Nicaragua, Dominican Republic). The Bush administration has been taking a lot of heat for this from protectionists and socialists... and conspiracy theorists, of course.

But CAFTA may have a lot less economic impact than you thought. According to the Economist, the USA accounts for most of the exports for each of these six nations. And 80% of the exports from the affected region to the USA are already duty-free under pre-existing trade agreements. That's roughly half of each economy.
As for the other 20% of their exports to the USA, CAFTA scales tariffs to zero only gradually over the next two decades. In other words, don't expect to lose your job to El Salvador any time soon.

The biggest impact will be in the way investors see the six Central American CAFTA signees. It will also encourage intra-regional trade between those six - probably in a greater proportion than it will encourage trade to the USA.

The long term goal for free-trade supporters is a Free Trade Area of the Americas (FTAA). Support it. Now that CAFTA has been signed into law by President Bush, the next step is to get Panama on board (PAFTA could be a reality by 2006), and then the Andean countries, who are well into negotiations and could finish before Bush leaves office.

I notice that the Andean countries are starting to use AFTA as their acronymic identifier, which is probably smarter than the more grandiose-sounding Latin America Free Trade Agreement that we would really like to see. Who would support LAFTA?

Well, I would. But Scott Ott took the name for a parody article last week, so it is just as well the Andeans locked on to the more accurate AFTA.

Wulf Posted by Wulf on August 7, 2005 at 09:49 AM

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Comments

I am very, very sad that nobody has commented on this article. :(

Posted by: Wulf at August 19, 2005 3:34 AM