the proposed Central American Free Trade Agreement (Cafta) is under attack
President George W. Bush is leading a brand-new "coalition of the willing." Once again, its troops are under fire and, once again, they deserve our unconditional support.
The president has opened negotiations to ink a free-trade agreement with five Central American countries, the next step in a carefully plotted campaign to create a free-trade zone throughout the Western Hemisphere by 2006.
When the deal is struck by yearend, as U.S. Trade Representative Robert B. Zoellick and his counterparts in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua expect, U.S. investment should rush to the Central American countries, whose economies have been plagued by social problems, natural disasters and protracted civil wars. As economic development is stimulated, the fragile region will inevitably regenerate. Eliminating tariffs and other trade barriers would be good for the United States and good for its neighbors.
Yet, the proposed Central American Free Trade Agreement (Cafta) is under attack.
Critics point to the experience of independent farmers in Mexico and Canada, who saw their prices plummet and their land taken over by mega-companies after the North American Free Trade Agreement (Nafta) was signed.
Cafta's detractors also argue that free traders in Central America aren't the populists they profess to be, but instead are fostering the rollback of labor protections, environmental standards and human rights.
But long-term economic development depends on freedom, and Cafta promises to elevate the region's economic, political and social condition. The president's initiative would guarantee property rights, lower trade barriers, open markets to foreign investment and reduce government regulation.
And Cafta wouldn't stand alone; it would be buttressed by the resources of the federal government.
The U.S. Department of Labor has committed to fund programs to improve the lives of workers. The U.S. Agency for International Development and the U.S. Department of Agriculture intend to provide training to improve food safety and animal health inspection systems. The Inter-American Development Bank has agreed to finance small businesses and involve them in international trade. And the U.S. Environmental Protection Agency is eager to train environmental compliance inspectors. All told, the president's 2003 budget request, still subject to negotiation, included $47 million in U.S. trade-capacity-building assistance to Central America, a 74% increase over 2002.
Cafta and related reforms in Central America would help raise personal incomes and help build nascent democracies. It would also benefit U.S. businesses. High tariffs on U.S. agricultural and industrial goods would be slashed. Restrictive licensing practices would be scrapped. Intellectual property would be protected. And markets would be opened to U.S. service providers.
Central America is a large and growing market, and the U.S. is its main supplier of goods and services. Promoting prosperity in the region is both good government and good business.
About the Author
Marc Lane is a business and tax attorney, a Master Registered Financial Planner, a Registered Financial Consultant, and a Certified Investment Specialist. Marc is the author of 30 books on business organization, taxation, and personal finance. His newest book, "Advising Entrepreneurs: Dynamic Strategies for Financial Growth" draws from his experience working with those who have successfully built their businesses. Marc is an Adjunct Professor of Law at Northwestern University and an Adjunct Professor of Business at the University of Illinois. His practice areas include Individual Taxation, Corporate Tax Planning, Business Tax Planning, Estate Planning, Investments, Retirement Planning,Elder Law, International Trade, Business Law, and Wills, Trusts and Estates. Additional articles, case studies, and a free email newsletter are available at www.marcjlane.com.
