Reuters and the New York Times are reporting that the House of Representatives has just approved the Central American Free Trade Agreement (“CAFTA”) by a vote of 217 to 215. The Senate already approved the pact last month by a vote of 54 to 45. Once implemented, CAFTA will eliminate most barriers to trade and investment between the United States and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.
As the Washington Post pointed out on Monday, CAFTA is expected to increase the gross domestic products of both the United States and its Central American trading partners. The agreement will also have a positive impact on American exports:
Today, 80 percent of exports to the United States from CAFTA signatories (Costa Rica, Honduras, Nicaragua, Guatemala, El Salvador and the Dominican Republic) already enter duty-free. Most U.S. products imported by CAFTA nations, however, face relatively high tariffs; CAFTA would immediately eliminate these tariffs on 80 percent of U.S. exports to CAFTA partners. The American Farm Bureau enthusiastically embraces CAFTA, projecting an increase in farm exports (wheat, potatoes, corn, soybeans, pork, poultry, beef and produce) of $1.5 billion per year.
It may interest NLT readers to know that the U.S. Department of Commerce is predicting that CAFTA will specifically benefit Ohio exporters, including manufacturing industries. This would be consistent with Ohio’s overall post-NAFTA experience, whereby the State’s exports to Mexico and Canada more than doubled.