Dominican Republic–Central America Free Trade Agreement

Note: Within this article, "CAFTA" refers to the agreement as it stood before January 2004, and "CAFTA-DR" is used after that.
Presidents Abel Pacheco, Enrique Bolaños and Alfonso Portillo

The Dominican Republic – Central America Free Trade Agreement, commonly called CAFTA-DR, is a free trade agreement (legally a treaty under international law, but not under U.S. law). Originally, the agreement encompassed the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, and was called CAFTA. In 2004, the Dominican Republic joined the negotiations, and the agreement was renamed CAFTA-DR.

CAFTA-DR, the North American Free Trade Agreement (NAFTA), and active bilateral free trade agreements such as the Canada-Costa Rica Free Trade Agreement are seen as bloc agreements instead of a Free Trade Area of the Americas (FTAA) agreement. Panama has completed negotiations with the United States for a bilateral free trade agreement known as the Panama–U.S. Trade Promotion Agreement, and has been in effect since October 2012.

The CAFTA-DR constitutes the first free trade agreement between the United States and a small group of developing countries. It was created with the purpose of creating new and better economic opportunities by opening markets, eliminating tariffs, reducing barriers to services, and more. In 2009, it was estimated that the total two-way trade resulted in $37.9 billion.[1] Nearly all Central American exports to the United States were already tariff-free since the Caribbean Basin Initiative was first enacted in 1984.

Contents

  • Ratification 1
  • Aims 2
  • Support 3
  • Opposition 4
  • Provisions 5
    • Cross-border trade in services 5.1
    • Financial services 5.2
    • Investment 5.3
    • Government procurement 5.4
    • Agriculture 5.5
    • Intellectual property rights 5.6
    • Dispute resolution 5.7
    • Political standards 5.8
  • See also 6
  • References 7
  • External links 8

Ratification

CAFTA-DR has been approved by the Dominican Republic, El Salvador, Costa Rica, Guatemala, Honduras, Nicaragua, and the United States.

The agreement is a treaty under international law, but not under the U.S. Constitution because in the United States laws require majority approval in both houses, while treaties require two-thirds approval in the Senate only. Under U.S. law, CAFTA-DR is a congressional-executive agreement.

The George W. Bush on August 2, 2005.

The Dominican Republic, Costa Rica, El Salvador, Guatemala, Nicaragua and Honduras have also approved the agreement. They are all the current members of CAFTA-DR.

On March 1, 2006, El Salvador led the way as CAFTA went into effect for that country, following completion of all necessary steps, including delivery of signed Treaty copies to the [6]

Aims

The goal of the agreement is the creation of a free trade area similar to NAFTA, which currently encompasses the United States, Canada, and Mexico. CAFTA-DR is also seen as a stepping stone towards the FTAA, another (more ambitious) free trade agreement that would encompass all the South American and Caribbean nations as well as those of North and Central America except Cuba. Canada is negotiating a similar treaty called the Canada–Central American Free Trade Agreement.

If passed by the countries involved, tariffs on about 80 percent of U.S. exports to the participating countries will be eliminated immediately and the rest will be phased out over the subsequent decade. As a result, CAFTA-DR does not require substantial reductions in U.S. import duties with respect to the other countries, as the vast majority of goods produced in the participating countries already enter the United States duty-free due to the U.S. government's Caribbean Basin Initiative.

With the addition of the Dominican Republic, the trade group's largest economy, the region covered by CAFTA-DR is the second-largest Latin American export market for U.S. producers, behind only Mexico, buying $15 billion of goods a year. Two-way trade amounts to about $32 billion annually.

While not necessarily a part of Plan Puebla Panama, CAFTA is a necessary precursor to the execution of Plan Puebla Panama by the Inter-American Development Bank. The plan includes construction of highways linking Panama City to Mexico City, Texas, and the rest of the United States.

CAFTA-DR reduces tariffs, but every CAFTA country may set its overall tax level as it sees fit.

Support

On May 28, 2004, Dominican Republic Minister of Industry and Commerce Sonia Guzmán was held on August 5, 2004.

Opposition

Anti-CAFTA graffiti in San José, Costa Rica

In May 2004 the [7]

While manufacturing costs of generic drugs are relatively cheap, the costs of human tests are relatively expensive, and tests take months or years. If generic manufacturers had to redo the tests, the generic drug would be more expensive, and generic manufacturers might not be able to do the tests at all. Furthermore, if generic manufacturers had to redo the tests, they would have to compare the new, effective drugs to less-effective drugs, which according to Doctors Without Borders, would be unethical. In the United States, drug manufacturers must make test data public for generic manufacturers. Under CAFTA's test data exclusivity, drug manufacturers could keep test data secret, which would make it more difficult for local companies to produce generic drugs, and enable multinational pharmaceutical companies to keep a monopoly on branded drugs, including those used to treat AIDS, malaria, and tuberculosis.[8]

Provisions

To remove trade barriers and create a free trade area, governments pledge to grant market access to foreign firms by reducing and eventually eliminating tariffs and other measures that protect domestic products. To do so, the CAFTA-DR treaty stipulates national treatment and includes a most-favored nation clause. It also includes the protection of international property rights and requires from their signatoris certain measures in the realm of transparency (e.g., parties are obligated to make it a criminal offense to offer or accept a bribe in exchange for favorable government action in matters affecting international trade or investment).[9] Moreover, the agreement includes i.a. chapters on investment, public procurement procedures, and financial services.

Antidumping and countervailing duty measures may not be challenged under the CAFTA-DR.[9]

Cross-border trade in services

Each member country must treat service suppliers of another member country no less favorably than its own suppliers or those of any other member country. The Agreement requires firms to establish a local presence as a condition for supplying a service on a cross-border basis.[9]

Financial services

CAFTA-DR imposes rules requiring member countries to treat service suppliers of another member country no less favorably than its own suppliers or those of any other country, prohibits certain quantitative restrictions on market access of financial institutions, and bars restrictions on the nationality of senior management.[9]

Investment

CAFTA-DR establishes rules to protect investors from one member country against unfair or discriminatory government actions when they make or attempt to make investments in another member country's territory. Investors enjoy six basic protections:

  1. Non-discriminatory treatment relative to domestic investors as well as investors of non-parties;
  2. Limits on “performance requirements”;
  3. Free transfer of funds related to an investment;
  4. Protection from expropriation other than in conformity with customary international law;
  5. A “minimum standard of treatment” in conformity with customary international law;
  6. The ability to hire key managerial personnel without regard to nationality.[9]

Government procurement

Each member country must apply fair and transparent procurement procedures and rules and prohibiting each government and its procuring entities from discriminating in purchasing practices against goods, services, and suppliers from the other member countries.[9]

Agriculture

CAFTA-DR requires that tariffs and quotas be administered in a manner that is transparent, nondiscriminatory, responsive to market conditions and minimally burdensome on trade and allows importers to fully utilize import quotas. Each member country will eliminate export subsidies on agricultural goods destined for another CAFTA-DR country.[9]

Intellectual property rights

Member countries are obligated to ratify or accede to several international agreements on intellectual property rights such as the WIPO Copyright Treaty.[9]

Each member country must provide:

  • Protection for marks and geographical indications, including protecting preexisting trademarks against infringement by later geographical indications.
  • Efficient and transparent procedures governing the application for protection of marks and geographical indications.[9]
  • Copyright protection for the life of the author plus 70 years (for works measured by a person's life), or 70 years (for corporate works).

The Agreement also includes provisions on anticircumvention, under which member countries commit to prohibit tampering with technology used to protect copyrighted works.[9] Member countries agree to make patents available for any invention, subject to limited exclusions, and confirm the availability of patents for new uses or methods of using a known product. To guard against arbitrary revocation of patents, each member country must limit the grounds for revoking a patent to the grounds that would have justified a refusal to grant the patent.[9]

CAFTA-DR also ensures test data exclusivity for pharmaceutical corporations. It protects test data that a company submits in seeking marketing approval for such products by precluding other firms from relying on the data.[9]

Dispute resolution

If a dispute over an actual or proposed national rule cannot be resolved after a 30-day consultation, the matter may be referred to a panel comprising independent experts that the parties select. Once the procedure before the panel is concluded, the panel will issue a report. The parties will attempt to resolve the dispute based on the panel's report. If no amicable resolution is possible, the complaining party may suspend trade benefits equivalent in effect to those it considers were impaired, or may be impaired, as a result of the disputed measure. If a dispute arises under both CAFTA-DR and the WTO Agreement, the complaining party may choose either forum.[9]

Political standards

CAFTA-DR contains certain provisions that do not have the quality of mere technical liberalization, but are rather a commitment to political standards. The treaty obligates governments to the enforcement of environmental laws and labor standards.

See also

References

  1. ^ "CAFTA-DR (Dominican Republic-Central America FTA)". OFFICE OF THE US TRADE REPRESENTATIVE. Retrieved 29 September 2014. 
  2. ^ 30 June 2005 Senate Roll Call Vote on Passage of S. 1307
  3. ^ 27 July 2005 House Roll Call Vote on Passage of H.R. 3045
  4. ^ articleSt. Petersburg TimesWith push from Bush, CAFTA is approved" 28 July 2005
  5. ^ 28 July 2005 Senate Roll Call Vote on Passage of H.R. 3045
  6. ^ Latinamerica Press: Article
  7. ^ Central American Immigrant Organizations Oppose CAFTA
  8. ^ whitepaperMédecins Sans Frontières"Data exclusivity in international trade agreements: What consequences for access to medicines?"
  9. ^ a b c d e f g h i j k l m with amendments"The Dominican Republic - Central America - United States Free Trade Agreement". U.S. Trade Representative. 2004–2011. Retrieved 27 October 2011. 

External links

  • Official U.S. Government CAFTA-DR website
  • CAFTA-DR Environmental Cooperation Website includes links to CAFTA-DR Environmental Cooperation Agreement
  • "The Case for CAFTA: Consolidating Central America's Freedom Revolution" 2004 CATO Institute whitepaper
  • Costa Rica CAFTA protest report, 24 October 2006
  • "Vivir la lucha como una fiesta" - Video about the cultural movement against CAFTA-DR in Costa Rica(Spanish)
  • CAFTA-DR: Can Free Trade Hold Up to Special Interest Siege? (CEI, 2005) by Frances B. Smith
  • Global Trade Watch anti-CAFTA website
  • Citizens' Trade Campaign anti-CAFTA website
  • "CAFTA: Last Nail in the Coffin?" by Pat Buchanan, The American Conservative, May 9, 2005.
  • "CAFTA-DR, Textiles, and Apparel" 2005 Congressional Research Service Report
  • "Central America and the Dominican Republic in the Context of the Free Trade Agreement (CAFTA-DR) with the U.S." 2005 Congressional Research Service Report
  • "CAFTA-DR Labor Rights Issues" 2006 Congressional Research Service Report
  • "The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)" 2009 Congressional Research Service Report
  • TradeRoots U.S. Chamber of Commerce FTA advocacy website
  • CAFTA-US TEXTILE AND COTTON TRADE PROSPECTS: THE CHINA EFFECT (2006 study)
  • House approves CAFTA, Michigan and Ohio Democrats blast it as bad deal (2005 Associated Press news report)
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