http://dr1.com/trade en-us N/A robert@dr1.com Thu, 08 Jan 2009 19:14:27 EST 20 http://dr1.com/trade/articles/44/1/Central-America-Overview/Page1.html first free trade agreement with Central America on 16 April 1998 in a historic event held in Santo Domingo. This was the first attempt at regional relations of this scale between the DR and Central America.  Signatory countries were Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Implementation was delayed until much later. Countries that have implemented the treaty are El Salvador and Guatemala (3 October 2001), Honduras (19 December 2001), Costa Rica (7 March 2002), Nicaragua (3 September 2002).

The agreement called for the elimination of tariffs on most products that met rules of origin, with few exceptions, though Nicaragua was granted Temporary Tariff Protection status.

But in 2004 negotiations a more comprehensive free trade agreement between the Central American nations and the US was underway. The CAFTA included Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua and later in 2004 the Dominican Republic joined the negotiations. After agreeing in principle to the CAFTA nations ratified and implemented the agreements accordingly: El Salvador on March 1, 2006, Guatemala on June 1, 2006, Honduras on April 1, 2006, Nicaragua on April 1, 2006 and the Dominican Republic on March 1, 2007.

However, through 2007 Costa Rica was still hesitant in implementing the agreement and the only country that hadn’t ratified the agreement. The delay in Costa Rica’s implementation had been rooted in ongoing opposition from civil society groups. More importantly the DR-CAFTA became a nation-wide debate during the 2006 Costa Rican presidential elections between current President Óscar Arias and opposition candidate Ottón Solís. Though Arias won the election and Costa Ricans narrowly voted in favor of the agreement the opposition to DR-CAFTA has remained strong. But finally in an October 2007 referendum vote Costa Ricans narrowly voted in favor of the CAFTA.

It is still much too early to determine the effects, whether they be positive or negative, the CAFTA will have on the Central American and Dominican economies. The DR has shown some lift after the implementation of the CAFTA with the Central Bank reporting that foreign direct investment in 2007 increased significantly. The period in question represents the date after DR-CAFTA came into effect and according to the report, FDI reached US$1.7 billion in 2007. This figure represents a 16.3% increase from 2006 and an absolute value increase of US$238.7 million in comparison to 2006 when FDI was US$1.5 billion. FDI was directed specifically into the real estate sector (US$723.3 million) for a relative growth of 120% and absolute growth of US$394.8 million. Tourism experienced a growth of US$163.5 million, or 58.1% for a total FDI of US$445 million. Telecommunications also experienced an FDI boost of 22.2% or 75.8 million. Total FDI in telecommunications equaled US$417 million.

Updated 26 March 2008
]]> no@spam.com (Lu Olivero) Wed, 26 Mar 2008 14:24:53 EDT http://dr1.com/trade/articles/44/1/Central-America-Overview/Page1.html