CAFTA (Free Trade Agreement between the United States, Central America and the Dominican Republic) is the name of a bloc that aims to establish a free trade zone between Costa Rica, El Salvador, the United States, Guatemala, Honduras, Nicaragua and the Republic Dominican.
This international agreement aims to reduce and eliminate customs tariffs, providing greater flexibility in the imports and exports of products between member countries. Other CAFTA objectives are:
- Extinguish protectionist measures between member countries;
- Eliminate subsidies on agricultural production;
- Strengthen labor rules;
- Establish environmental laws.
With the implementation of CAFTA, products exported by the United States will have their tariffs reduced by 80%, reaching the 100% mark in 10 years. The formalization of this block will provide the expansion of US transnational companies, as they will be able to act in the countries of Central America paying lower taxes and using a lot of labor cockroach.
For the other member nations, the implementation of the bloc may even be positive, as industrial development, modernization of the economy and a greater number of jobs will occur. However, some experts claim that socio-environmental problems will intensify, in addition to possible waves of privatization. Another aspect highlighted by opponents of CAFTA refers to trade relations, as the countries of the Americas Central already export products to the United States at reduced rates, due to the ICB (Basin Initiative Caribbean).
CAFTA will be a fundamentally important step for the formation of the FTAA (Free Trade Area of the Americas), as its success may serve as an incentive for integration of the American countries into an economic bloc, forming the largest free trade zone on the planet (in number of members), even surpassing the Union European (EU).
By Wagner de Cerqueira and Francisco
Graduated in Geography
Brazil School Team
Economic blocks - geography - Brazil School