USAID LAC Trade Update - September 2004
A. Trade Negotiation Updates
CAFTA -- Dominican Republic Joins Other Central
America Countries
The Dominican Republic joined with the United States and
five Central American countries into CAFTA (Central America
Free Trade Agreement ), creating the second largest free trade
zone for the United States. Costa Rica, El Salvador, Guatemala,
Honduras, and Nicaragua comprise the other members.
The Dominican Republic and Central America are key export
markets for U.S. manufacturing sectors that include information
technology products, agricultural and construction equipment,
paper products, chemicals and medical and scientific equipment.
The U.S. exported $15 billion in goods to the Dominican Republic
and Central American countries in 2003. The addition of the
Dominican Republic in CAFTA represents an additional $8.7
billion in annual two-way trade, and raises the combined total
trade relationship of the six countries from $23.6 billion
to an estimated $32 billion.
More than half of current U.S. farm exports to the CAFTA
countries will become duty-free if the treaty is ratified.
These exports include beef, cotton, wheat, soybeans, key fruits
and vegetables, processed food products, and wine. Each of
the 50 U.S. states and the District of Columbia export to
the CAFTA region.
Panama Meeting on Free Trade Delayed
Hurricane Charley interrupted recent free trade talks between
the U.S. and Panama last month in Tampa, FL. Before the interruption,
progress was reported in market access for industrial goods
and banking services. The negations also established technical
regulations for several key areas including customs administration,
intellectual property rights, open government transactions,
labor, environment, and dispute settlement.
The two countries were to have met in September after the
inaugural of President Martin Torrijos earlier this month
with a fifth round scheduled for October 18 in Panama.
Minister of Trade and Industry Joaquin Jacome from Panama
and Assistant US Trade Representative for the Americas Regina
Vargo led the discussions.
B. Trade Capacity Building Resources
Trade Not ‘Cure All” for Least Developed
Countries, Study Reports
A study by the United Nations Conference on Trade and Development
reported that international trade is vital for poverty reduction
in developing countries but that it is not a cure-all.
The report documented that links between international trade
and poverty reduction vary between countries but that the
benefits were not sufficiently strong to lift them out of
extreme poverty. It argued that fundamental changes are needed
to make international trade work for the poor.
The report is Least
Developed Countries: Linking International Trade with Poverty
Reduction. United Nations Conference on Trade. Geneva:
2004. (pdf, 4.77MB)
Foreign Investment in Latin America and the Caribbean.
Foreign investment in the LAC region fell 19 percent between
2002 and 2003 as a result primarily of declines in Brazil
and Mexico, according to a study from the United Nations Economic
Commission for Latin America and the Caribbean..
Total investment in 2003 amounted to an estimated $36.5 billion.
The Latin America and Caribbean region is the only region
in the world where investment fell, dropping to well under
the $88 billion in inflows posted in 1999, an historic peak.
The United States is the main investor in the region, comprising
32 percent of investment, followed by Spain (19 percent),
the Netherlands (8 percent), France (4.5 percent) and the
United Kingdom (3 percent). The report is available from ECLAC.
Three Economic Models In Effect in LAC Region
The economic structure in the countries of Latin America
and the Caribbean is today more varied than it was in the
past and is based on three primary groups which requires different
types of public policy to develop, according to a study by
the United Nations Economic Commission for Latin America and
the Caribbean.
The study identified the three groups as follows:
- Informal micro-businesses – Due to local business’
structures and levels of expertise, this group is less productive
and operates in an environment that frequently lacks opportunities
for development and learning;
- Small and medium-sized companies -- This group finds
it difficult to access resources, especially financing,
as well as other tools that would develop the companies
abilities to compete, and
- Large domestic and foreign firms -- These firms often
have near international productivity levels, but produce
few links with the rest of the country’s economy and,
in some cases, do not generate innovation.
The study is available in English and Spanish from ECLAC.
C. Upcoming Events
September 29-30, 2004 - International Trade
Conference & Trade Show – The Border Trade Alliance
will sponsor a two-day international trade conference and
trade show on ten years of NAFTA at the Four Seasons Hotel
in Mexico City, Mexico. For more information contact BTA at
1-800-333-5523.
October 18-22, 2004 - Fifth round of U.S.
- Panama Free Trade Agreement negotiations will be held in
Panama City, Panama.
October 25-29 – Fifth Round of U.S.-Andean
Free Trade Agreement Negotiation will be held in Guayaquil,
Ecuador.
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