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.
The Dominican Republic–Central America–United States Free Trade Agreement | |
---|---|
Type | Free trade agreement |
Signed | 5 August 2004 |
Location | Washington, D.C. |
Effective | 1 March 2006 |
Ratifiers | |
Depositary | General Secretariat of the Organization of American States |
Languages |
The Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR;
CAFTA-DR, the
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 2015, it was estimated that the total two-way trade resulted in $53 billion (~$64.3 billion in 2023).[1] Nearly all Central American exports to the United States had already been tariff-free thanks to the 1984 Caribbean Basin Initiative.
Ratification
The agreement is a treaty under international law, but not under the
The U.S. Senate approved the CAFTA-DR on June 30, 2005, by a vote of 54–45,[2] and the U.S. House of Representatives approved the pact on July 28, 2005, by a vote of 217–215, with two representatives not voting.[3] Controversy arose over this vote because it was held open 1 hour and 45 minutes longer than the normal 15 minutes in order to get some members to change their votes.[4] For procedural reasons, the Senate took a second vote on CAFTA on July 28 and the pact garnered an additional vote from Senator Joe Lieberman—who had been absent on June 30—in favor of the agreement.[5] The implementing legislation became Public Law 109-053 when it was signed by President 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.
El Salvador became the first country to formally implement CAFTA, which went into effect on March 1, 2006, when the
Aims
The goal of the agreement is the creation of a
Once passed by the countries involved,
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 $29 billion (~$35.2 billion in 2023) of goods in 2015. Two-way trade amounted to about $50 billion in the same year.
While not necessarily a part of
CAFTA-DR reduces tariffs, but every CAFTA country sets its overall tax level.
Support
In January 2002 U.S. president George W. Bush declared CAFTA as a priority and received "fast track" authority from Congress to negotiate it. Negotiations began in January 2003, and agreement was reached with El Salvador, Guatemala, Honduras, and Nicaragua on December 17, 2003, and with Costa Rica on January 25, 2004. That same month, negotiations began with the Dominican Republic to join CAFTA.
On May 28, 2004, U.S. trade pepresentative Robert Zoellick, Costa Rican minister of trade Alberto Trejos, Salvadoran economy minister Miguel Lacayo, Guatemalan economy minister Marcio Cuevas, Honduran minister of industry and commerce Norman García, and Nicaraguan minister of development, industry and commerce Mario Arana signed the 2,400-page document at headquarters of the Organization of American States. Negotiations with the Dominican Republic concluded on March 15, 2004, and a second signing ceremony including Dominican minister of industry and commerce Sonia Guzmán was held on August 5, 2004.
Opposition
In May 2004 the
While manufacturing costs of
In Guatemala mass protests were violently repressed by the government and strikes occurred in Costa Rica in opposition to the trade agreement. Furthermore, many Catholic bishops in Central America and the United States opposed the treaty, just as many social movements in the region.[9]
Provisions
To create an FTA, governments pledge to grant
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. It requires firms to establish a local presence as a condition for supplying a service on a cross-border basis.[10]
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.[10]
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:
- Non-discriminatory treatment relative to domestic investors as well as investors of non-parties;
- Limits on "performance requirements";
- Free transfer of funds related to an investment;
- Protection from expropriation other than in conformity with customary international law;
- A "minimum standard of treatment" in conformity with customary international law;
- The ability to hire key managerial personnel without regard to nationality.[10]
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.[10]
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.[10]
Intellectual property rights
Member countries must ratify or accede to treaties governing
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.[10]
- 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).
It also includes provisions on anticircumvention, under which member countries commit to prohibit tampering with digital rights management technology.[10] 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, the grounds for revoking a patent must meet the high standard of not having merited the patent in the first place.[10]
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.[10]
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.[10]
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
See also
- General Agreement on Tariffs and Trade (GATT)
- List of free trade agreements
- World Trade Organization (WTO)
- OceanaGold - unsuccessful attempt to invoke CAFTA-DR against El Salvador
- Rules of origin
References
- ^ "CAFTA-DR (Dominican Republic-Central America FTA)". OFFICE OF THE US TRADE REPRESENTATIVE. Retrieved 6 February 2017.
- ^ 30 June 2005 Senate Roll Call Vote on Passage of S. 1307
- ^ 27 July 2005 House Roll Call Vote on Passage of H.R. 3045
- ^ "With push from Bush, CAFTA is approved" 28 July 2005 St. Petersburg Times article
- ^ 28 July 2005 Senate Roll Call Vote on Passage of H.R. 3045
- ^ Latinamerica Press: Article
- ^ Central American Immigrant Organizations Oppose CAFTA Archived April 10, 2005, at the Wayback Machine
- ^ "Data exclusivity in international trade agreements: What consequences for access to medicines?" Médecins Sans Frontières whitepaper
- ^ Comparative Politics of Latin America (page 469), Daniel C. Hellinger
- ^ a b c d e f g h i j k l m "The Dominican Republic - Central America - United States Free Trade Agreement with amendments". U.S. Trade Representative. 2004–2011. Retrieved 27 October 2011.