CAFTA OVERVIEW

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CAFTA OVERVIEW

• James McCarthy

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Central America at a Glance
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(No Transcript)
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Why Export to Central America?
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Why Export to theCAFTA Region?

• 40 of Regions Imports Are From the U.S.
• On-going Market Liberalization
• Growing U.S. Hispanic Population
• Proximity and Receptivity to U.S.
• Stable Democratic Governments

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Central America Trade Data
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U.S. Exports toCAFTA-DR Countries
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CAFTA Region at a GlanceGross Domestic Product
Source Summa Magazine. Sep. 2006
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CAFTA Region at a GlanceGrowth Rates 2006
Source Country Central Banks
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U.S. Exports to CAFTA-DR Countries
Apparel, Computers and Electronics, and Fabric
Mill Products Account for Nearly Half of the
Total U.S. Manufactured Exports to DR-CAFTA
Markets.
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Challenges

• Corruption
• Education
• IPR Protection
• Security
• Start-ups SMEs
• Leadership

• Financial Reform
• Respect for Contracts
• Investment Protection
• Judicial Reform
• Export Promotion

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CAFTA Countries Highlights
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El Salvador Highlights

• Slightly smaller than Massachusetts
• Democratically-elected Government
• President Elias Saca (2004)
• Smallest country in Central
• America
• 3rd largest economy
• Remittances make up 15 of GDP
• Largest airport in the region

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El Salvador Highlights

• Smallest Country in CA Densely Populated
• Over 2 Million Salvadorans in U.S.
• Dollarized Economy
• U.S. is El Salvador's Leading Trading Partner
  (41 import market share)
  
• First country to implement CAFTA-DR (March 1,
  2006)
  
• increase in U.S. exports since CAFTA entry into
  force 16.3

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Guatemala Highlights

• Largest Economy in CA
• Economy Nearly Completely Privatized
• Relatively Low Tariffs (1-17) for Almost All
  Products
  
• Increase in U.S. exports since CAFTA entry into
  force 17.5
  

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Guatemala Highlights

• In 2006, remittances (US 3.6 Billion) accounted
  for 10 of the GDP
  
• Implemented DR-CAFTA on July 1, 2006
• Over 1.3 Million Guatemalans live in the U.S.

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Nicaragua Highlights

• Safest Country in Central America
• Price Controls Phased-Out
• Strong Privatization Program
• Rich in Natural Resources
• Lack of Diversity in Sector
• Development
• Post CAFTA increase in imports from the U.S.
  13.2
  

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Nicaragua Highlights

• Democratically-elected Government
• President Daniel Ortega January 07
  Policies?
  
• Constitutional Government
• Formal Independent Court System

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Nicaragua Highlights

• Lowest Wage Rates in CA
• Benefiting most from CAFTA... early days (13.2
  rise in imports from U.S. 17.3 percent increase
  in exports to U.S.)
  
• Economic Diversification Just Beginning
• Needs Infrastructure
• New Government Words and Deeds

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Honduras Highlights

• Competitive Labor Costs
• U.S. Accounts for 50 of All Foreign Trade
• Maquiladora Industry Accounts for 15 of GDP and
  11 of Exports
  
• Largest Port in CA
• U.S. Has 40 of FDI in Honduras
• increase in U.S. exports since CAFTA entry into
  force 15.5

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Costa Rica Highlights

• 19,652 square miles (size of West
  Virginia)
  
• 95 literacy rate
• Spanish Language (English Widely Spoken)
• Democratic Republic
• Life Expectancy 76 years

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Costa Rica Highlights

• President Oscar Arias, May 2006
• Tourism is key for its economy
• Poor infrastructure
• 70 of FDI comes from the United States. (CINDE)
• High-tech companies and call centers/large
  employers
  

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CAFTA-DR DatesApproval/Implementation

• Legislatures Approval Implementation
• El Salvador 12/17/2004 3/1/2006
• Honduras 03/04/2005 4/1/2006
• Guatemala 03/11/2005 7/1/2006
• U.S.A. 07/28/2005 8/2/2005
• Nicaragua 10/11/2005 4/1/2006
• DR 09/06/2005 31/1/2007
• Costa Rica Referendum

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Opportunities Best Prospect Industries

• Automotive Parts and Service Equipment
• Food Processing Packaging Equipment
• Electric Power Generation Distribution
• Equipment
• Hotel and Restaurant Equipment
• Franchising
• Security and Safety Equipment and Services
• Telecommunications Equipment and Services
• Construction Equipment