DR: Requiem for CAFTA

Federico Cuello, a professor at the PUCMM School of Economics of the PUCMM and the DR's former trade negotiator and ambassador before the World Trade Organization, writes today in El Caribe newspaper that a majority of legislators of two Central American countries will reject the Central American Free Trade Agreement (CAFTA). Likewise, he speculates that the US Congress has said it would be difficult to authorize in an electoral year. Furthermore, he points out that US negotiators said in Central America the deal would not go into effect before 2006. Cuello states that from now until then, the US should move ahead with the passage of the Free Trade Agreement of the Americas (FTAA). "Thus, no advantage will have been obtained, and lots given up for having reached FTAA and having given it all in CAFTA," he concludes.

In his opinion, the deal would only serve to open regional markets to US exports. "The barriers that impede us from exporting are still there. The apparel manufacturers will still have to solely purchase US materials, losing out to China. The pharmaceutical companies will not be able to compete and will disappear. Farmers will be flooded by subsidized US products. Dominican suppliers will have to compete with Canada, Central America, US and Mexicans for any contract of more than US$58,500. Builders will have to compete for contracts more than US$6.7 million."

The rush to sign the agreement this week is strange, he reports, especially when he says it would have made more sense to wait for the negotiations surrounding the Free Trade Agreement of the Americas, which is due to be ratified on approximately same timeline. Cuello explains that the DR had nothing to lose because the Caribbean Basin Initiative preferences continue to be in effect until 2008.