1. DR-CAFTA By Jessie Pina and Christopher Ruiz

2. Agenda CAFTA CAFTA Benefits Benefits Regionalization Regionalization Central American Region Central American Region Imports and Exports Imports and Exports Agriculture Industry Agriculture Industry Textile Industry Textile Industry Telecommunication Industry Telecommunication Industry Pros and Cons Pros and Cons Conclusion Conclusion

3. CAFTA Signed on August 2, 2005 Signed on August 2, 2005 Participating countries: Participating countries: GuatemalaGuatemala El SalvadorEl Salvador HondurasHonduras Costa RicaCosta Rica NicaraguaNicaragua Dominican RepublicDominican Republic United StatesUnited States

4. Benefits Reciprocal Trade Agreement Reciprocal Trade Agreement 80% of US exports will be duty-free 80% of US exports will be duty-free Access to service markets Access to service markets Better Business Environment Better Business Environment Better access to markets Better access to markets Consumers will be benefit Consumers will be benefit Labor rights Labor rights Environmental protection Environmental protection

5. Regionalization Both US and Central American firms are regionalizing Both US and Central American firms are regionalizing Highway integration throughout the region Highway integration throughout the region Central American Countries are working together Central American Countries are working together

6. CIA Factbook Central American Region 48 million population 48 million population 10 th largest market for US exports 10 th largest market for US exports 18 million labor force 18 million labor force Average GDP per capital $6,500 Average GDP per capital $6,500 GDP per capital: US vs. Central America GDP per capital: US vs. Central America $48,000 vs. $39,200$48,000 vs. $39,200

7. CIA Factbook GDP per capita Guatemala $5,400 Guatemala $5,400 El Salvador $6,400 El Salvador $6,400 Honduras $3,700 Honduras $3,700 Nicaragua $3,000 Nicaragua $3,000 Costa Rica $11,900 Costa Rica $11,900 Dominican Republic $8,800 Dominican Republic $8,800

8. Real GDP Growth Rate

9. CIA Factbook Imports USA- 2,190,000,000,000 USA- 2,190,000,000,000 Central America Central America Guatemala $ 15,420,000,000Guatemala $ 15,420,000,000 El Salvador $ 9,750,000,000El Salvador $ 9,750,000,000 Nicaragua $ 5,279,000,000Nicaragua $ 5,279,000,000 Honduras $10,200,000,000Honduras $10,200,000,000 Dominican Republic $ 16,020,000,000Dominican Republic $ 16,020,000,000 Costa Rica $ 15,370,000,000Costa Rica $ 15,370,000,000

10. CIA Factbook Exports USA- $ 1,377,000,000,000 USA- $ 1,377,000,000,000 Central America Central America Guatemala $ 8,028,000,000Guatemala $ 8,028,000,000 El Salvador $ 4,550,000,000El Salvador $ 4,550,000,000 Nicaragua $ 3,183,000,000Nicaragua $ 3,183,000,000 Honduras $ 6,236,000,000Honduras $ 6,236,000,000 Dominican Republic $ 7,170,000,000Dominican Republic $ 7,170,000,000 Costa Rica $ 9,675,000,000Costa Rica $ 9,675,000,000

11. Agriculture Tariffs on virtually all agricultural and food products are being eliminated Tariffs on virtually all agricultural and food products are being eliminated Change the "one-way-street" of duty-free access currently enjoyed by CAFTA countries on most of their exports into a "two-way-street" that provides U.S. Change the "one-way-street" of duty-free access currently enjoyed by CAFTA countries on most of their exports into a "two-way-street" that provides U.S.

12. Textile Competition Competition Protects US jobs Protects US jobs Protects US Exports Protects US Exports Illegal Transshipments Illegal Transshipments Low labor cost Low labor cost Close proximity to US Close proximity to US

13. Communication Telephone landlines (in use): Telephone landlines (in use): United States 163,200,000United States 163,200,000 Guatemala 1,355,000Guatemala 1,355,000 El Salvador 1,080,000El Salvador 1,080,000 Nicaragua 247,900Nicaragua 247,900 Honduras 821,200Honduras 821,200 Dominican Republic 907,000Dominican Republic 907,000 Costa Rica 1,437,000Costa Rica 1,437,000

14. Communication Cont- Mobile phones: Mobile phones: United States 255,000,000United States 255,000,000 Guatemala 10,150,000Guatemala 10,150,000 El Salvador 6,137,000El Salvador 6,137,000 Nicaragua 2,123,000Nicaragua 2,123,000 Honduras 4,185,000Honduras 4,185,000 Dominican Republic 5,513,000Dominican Republic 5,513,000 Costa Rica 1,503,000Costa Rica 1,503,000

15. Pros 40% of imports are from the US 40% of imports are from the US 2 nd largest Latin American economy 2 nd largest Latin American economy Stable, democratic governments Stable, democratic governments Close to the US Close to the US Increase Hispanic population in the US Increase Hispanic population in the US Increase Investment, economic growth, and trade Increase Investment, economic growth, and trade Ability to compete with China ex. Textile Ability to compete with China ex. Textile

16. Cons Threatens Agriculture sector Threatens Agriculture sector Globalization Globalization Promotes privatization and deregulation Promotes privatization and deregulation Environmental Concerns Environmental Concerns Inability to compete with economies of scale. Inability to compete with economies of scale. Test data exclusivity Test data exclusivity US Politics US Politics http://www.youtube.com/watch?v=jMa85 z9zxhg http://www.youtube.com/watch?v=jMa85 z9zxhg http://www.youtube.com/watch?v=jMa85 z9zxhg http://www.youtube.com/watch?v=jMa85 z9zxhg

17. Conclusion Important FTA Important FTA Can CAFTA be beneficial? Can CAFTA be beneficial? Efficiency Efficiency Legal system? Legal system?