An Analysis of the Central American Free Trade Agreement

Since 2004, the United States' trade policy towards Central America has been dictated by CAFTA-DR, more formally known as the Central American - Dominican Republic - United States Free Trade Agreement. As one of several bilateral trade agreements that the United States holds with other nations, including Singapore, Bahrain, Morocco, Israel, Jordan, and Chile, CAFTA-DR removes most tariffs on United States goods in Central America and the Dominican Republic. As of October 7, 2007, seven nations, namely the United States, the Dominican Republic, El Salvador, Guatemala, Nicaragua, Honduras and Costa Rica, have accepted and ratified the agreement.

The document holds seven primary objectives, two of which are focused on the promotion and implementation of the agreement itself, and five of which that are directly related to trade policy between members. The agreement, which aims to establish an area of free trade, claims that it serves primarily to

"encourage expansion and diversification of trade between the Parties[, ] eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties[, ] promote conditions of fair competition in the free trade area[, ] substantially increase investment opportunities in the territories of the Parties[, and] provide adequate and effective protection and enforcement of intellectual property rights in each Party's territory[.]"