What is CAFTA?

CAFTA stands for the Dominican Republic-Central America Free Trade Agreement. CAFTA is a trade agreement with the United States which has two central tenets: regulation establishment and market access creation for each of the signatory countries. With respect to regulations, the objective is to establish common rules that will regulate trade between participating countries. With respect to market access, the objective is to establish a procedure and timeframe by which the gradual elimination of tariffs and trade restrictions will occur.
 
Full implementation among all signatory countries went into effect after Costa Rica approved CAFTA by popular referendum on October 7, 2007.

The role of CABEI at each phase

Negotiation and Ratification of the Agreement:

CABEI granted a US$ 2.5 million ‘non-reimbursable strategic financing’ to support Central American countries in the negotiation process. This grant was also used for training, popular studies, and debates/exchanges. During this phase, CABEI maintained a strategic vision for the necessary socialization and ratification of CAFTA.

Preparation and Implementation of the Agreement:


CABEI is studying a series of strategic initiatives that would favor business generation, cost mitigation, investment attraction, and technology dissemination in Central America. To reach these aims, CABEI is looking into the following: a center for International Business Management, a center for Project Identification and Formulation, an Exportation-Importation Agency, the strengthening and integration of the financial sector, initiatives oriented towards Industrial Restructuring, an Investment Insurance Agency, E-commerce and E-government promotion, and a program for Cost Mitigation Compensation. These initiatives would complement CABEI financial programs already operating.

Maturation of the Agreement:

CABEI will look to foster strategic initiatives oriented towards increasing Central American competitiveness and improving the regional investment climate. CABEI contemplates the following: supporting development institutionalism, creating an Innovation Program, supporting an information system for Market Monitoring, and establishing a Quality Improvement and Certification Program. Internally, CABEI looks for greater decentralization of its operations and to redesign country-specific assistant strategies. This will be accompanied by a greater attraction and channeling of funds (primarily for production, human capital, and infrastructure), greater operational efficiency, and a stronger push towards regional market integration. CABEI proposes the creation of the Central American Millennium Development Fund (Spanish acronym FCDM). This fund would have three strategic axes: support regional countries so that they can meet millennium goals, support Central America in economic liberalization and competitiveness, and strengthen the institutional framework and governance of each country in order to achieve the first two axes.

The Commitment of CABEI


The opportunity CAFTA offers Central America will be maximized by successfully addressing the associated challenges. CABEI reaffirms its commitment to the process as it is pivotal to the future of the region. CABEI’s strategic intention is to intelligently align its activities and resources so that Central American countries will have efficient, effective, and timely support.

Please click here to read more about CAFTA