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General Economics
Myth: DR-CAFTA is commercially insignificant
FACT: The nations of DR-CAFTA represent the second
largest market in Latin America for U.S. products after Mexico.
The Agreement will render 80 percent of U.S. exports to the
region permanently duty free upon implementation, with all
tariffs being removed within 10 years. As a result of the
Agreement, all of the countries will be signatories to the
WTO Information Technology Agreement, opening duty free exports
for a host of U.S. technology products and setting high standards
for future trade liberalization in the region.
DR-CAFTA will build upon the existing trade relationship
in the region, creating tremendous opportunities for U.S.
exporters. The value of continuing this relationship becomes
apparent when one considers the current U.S. trade relationship
with the Dominican Republic. In 2003, U.S. exports to the
Dominican Republic were 73% higher than those to Argentina,
and 55% higher than those to Chile, which currently has a
free-trade Agreement with the U.S. Exports to the Dominican
Republic were also 900% higher than to Morocco and 750% higher
than to Jordan both of which currently have Free Trade Agreements
with the U.S.
Myth: There is not widespread support for DR-CAFTA in
the business community
FACT: The benefits of DR-CAFTA will spread to sectors
across the U.S. economy as tariffs are reduced and U.S. products
become more affordable. This includes a wide array of U.S.
industries including manufacturing, consumer goods, agriculture,
processed foods, chemicals, medical products, high technology
and financial services - all of whom are supportive of the
agreement.
Myth: Cheap imports from Central America will cause American
workers to lose jobs
FACT: As a result of trade preference programs like
the Caribbean Basin Initiative, the majority of imports from
Central America currently enter the U.S. duty free and have
done so for many years. If anything, the increased economic
linkages with DR-CAFTA countries will create jobs throughout
the region.
Myth: DR-CAFTA will be a death knell for the remaining
U.S. textile industry jobs
FACT: The survival of the U.S. textile industry depends
on the passage of DR-CAFTA. For instance, the largest customers
for North Carolina-produced fabric and yarn are the apparel
plants in the DR-CAFTA countries. Without DR-CAFTA, which
will help secure the U.S. market, many of these Central American
plants will not survive the fierce competition they are getting
from Chinese apparel manufacturers. It's important to note
that the Chinese purchase very little from North Carolina
textile manufacturers - they therefore stand to lose a significant
share of their customer base.
Agriculture
Myth: U.S. Agriculture does not support DR-CAFTA
FACT: U.S. agriculture has shown overwhelming support
for DR-CAFTA. It will expand markets for U.S. farmers. More
than 50 leading agriculture and commodity groups have expressed
strong support for DR-CAFTA and are committed to ensuring
its passage.
Myth: The benefit for U.S. agriculture is commercially
insignificant
FACT: The elimination of barriers will mean growth
for U.S. agriculture. The United States is the region's single
largest source of agricultural products. However, the U.S.
share has declined due in large part to preferential trade
agreements between the Central American countries and other
trade partners.
DR-CAFTA will repair this imbalance by reducing to zero -
immediately or over transition periods - tariffs affecting
key U.S. exports to the six partner countries. This will allow
U.S. exports to build upon the existing $1.5 billion in exports
to the region. For example, under the terms of the Agreement,
meat exports will increase by more than 41 percent, dairy
exports by more than 25 percent, grain exports by more than
21 percent and vegetable, fruit and nut exports by more than
14 percent.
Myth: DR-CAFTA will kill the U.S. sugar industry
FACT: There could be nothing further from the truth.
According to USTR, under the terms of the agreement, the additional
market access for sugar producers in the region amounts to
only about one and a half teaspoons per week per American,
hardly enough to kill the industry. Furthermore, increased
sugar imports from the DR-CAFTA countries would amount to
less than one-quarter of one percent of total trade with the
region.
Labor
Myth: DR-CAFTA countries will lower their labor standards
to attract U.S. investment
FACT: There are stiff penalties in the Agreement that
will prevent countries from lowering labor and environmental
standards to attract investment.
Without question, leaders in all of the countries are committed
to improving labor conditions and the enforcement on labor
laws. Moreover, efforts by developing countries to use weak
labor standards as a competitive advantage have been associated
with low productivity; have undermined the rule of law; and
have discouraged, not attracted foreign direct investment.
The best way to do it is to energize the struggling economies
of Central America. Raising living standards - which DR-CAFTA
will do - will improve working conditions as well.
Myth: Without trade sanctions, DR-CAFTA's enforcement
provisions will not be effective
FACT: There are enforceable labor provisions
in DR-CAFTA. The Agreement is backed up by monetary penalties
for violations. These monetary assessments will be used to
help DR-CAFTA countries improve the capacity to enforce their
labor and environmental laws.
Myth: DR-CAFTA does not live up to the standard set in
the U.S.-Jordan FTA
FACT: The text of the labor chapter regarding the
enforcement of labor laws is identical to the U.S.-Jordan
FTA.
Article 6.4 (a) of Jordan and Article 16.2.1 (a) of DR-CAFTA
both include:
"A Party shall not fail to effectively enforce its labor
laws, through a sustained or recurring course of action or
inaction, in a manner affecting trade between the Parties,
after the date of entry into force of the agreement"
Myth: DR-CAFTA countries have made little progress improving
the domestic labor laws and conditions
FACT: Prior to and during the negotiation of the Agreement,
all countries have demonstrated a remarkable commitment to
improving their labor laws. In many cases, passing significant
domestic labor reforms and ratifying ILO conventions. A recent
ILO assessment found these laws to be in close compliance
with international core labor standards. Costa Rica, Guatemala,
Honduras, and Nicaragua have ratified all eight ILO core labor
conventions, and El Salvador has ratified six of the eight
ILO core labor conventions. The U.S. has only ratified two
conventions.
Recently, the Vice Ministers for Labor from the DR-CAFTA
countries have begun working with the Inter-American Development
Bank (IADB) and the International Labor Organization (ILO)
to identify specific challenges faced by each country and
by the region as a whole on the implementation of the CAFTA
labor chapter. They will be developing concrete steps to improve
the labor conditions in the region and identify possible capacity
building opportunities that will strengthen labor laws and
conditions.
Environment
Myth: DR-CAFTA will not improve environmental conditions
in the region
FACT: The environmental provisions in the Agreement
go far beyond previous trade agreements by ensuring the enforcement
of environmental laws through an innovative public submission
process and establishing a procedure for fines and sanctions
of countries that fail to enforce their laws.
DR-CAFTA creates a citizen submission process that allows
any citizen of a DR-CAFTA country to file a complaint that
a country is not enforcing its laws. The procedure requires
parties to respond to citizen allegation and provides for
an environmental secretariat to develop a factual record of
the allegation. These provisions are similar to those found
in the North American Free Trade Agreement environmental side
agreement, and this is the first time they have been included
in the text of the agreement.
The Agreement also contains a section designed to enhance
environmental performance by requiring parties to encourage
voluntary performance guidelines; information sharing and
the development of incentives, such as market-based programs,
to encourage conservation and protection of the environment.
DR-CAFTA also goes beyond previous trade agreements in creating
innovative capacity building, cooperation and information
sharing frameworks, including the establishment of an Environmental
Cooperation Commission, designed to strengthen the ability
of the parties to improve environmental conditions. In addition,
the Agreement contains explicit recognition of multilateral
environmental agreements and requires parties to enhance the
mutual supportiveness of trade agreements and environmental
agreements.
Myth: There is very little support for DR-CAFTA in the
environmental community
FACT: Numerous non-governmental environmental organizations
in the region have endorsed this Agreement and have urged
the parties to ratify the strong provisions in DR-CAFTA's
Environment Chapter and Environmental Cooperation Agreement.
They believe that the Agreement will help strenthen current
environmental laws and promote mutually supportive trade and
environmental policies.
These organizations include the Global Alliance for Humane
Sustainable Development (Costa Rica), SalvaNATURA (El Salvador),
Association for Rescue and Conservation of Wildlife (Guatemala),
Zoological Foundation of Nicaraga (Nicaragua), the Honduran
Ecologist Network for Sustainable Development (Honduras),
the Caribbean Conservation Corporation (Costa Rica), Zoological
Foundation of El Salvador (El Salvador), Regional Program
for the Preservation of Wildlife in Mesoamerica and the Carribean
(Costa Rica), and the Center for Environmental Rights and
Natural Resources (Costa Rica).
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