cafta overview
TRANSCRIPT
CAFTA OVERVIEW
James McCarthy
Central America at a Glance
The CAFTA-DR Region at a Glance
• 13th Largest Market for U.S. Exports
• U.S. Exports = $19.6 Billion (2006)
• Larger Market Than India, Russia, and Indonesia combined
• Overall Population: 49 million
Why Export to Central America?
Why Export to theCAFTA Region?
• 40% of Region’s Imports Are From the U.S.
• On-going Market Liberalization • Growing U.S. Hispanic Population• Proximity and Receptivity to U.S.• Stable Democratic Governments
Central America Trade Data
U.S. Exports toCAFTA-DR Countries
2.8
0.6
3.6
1.9
3.3
4.7
0.7
4.1
2.2
3.53.7
5.3
0123456
Cost
a R
ica
El
Sal
vador
Guat
emal
a
Hon
dura
s
Nic
arag
ua
DR
$ Millions
2005
2006
CAFTA Region at a Glance
Gross Domestic Product 28
2018
9
5
29
0
5
10
15
20
25
30
2006$ Millions
DRGuatemalaCosta RicaEl SalvadorHondurasNicaragua
Source: Summa Magazine. Sep. 2006
4.6
5.5
4.2
3.7
6.8
10.7
0 5 10
2006
% GDP
DRCosta RicaNicaraguaEl SalvadorHondurasGuatemala
CAFTA Region at a Glance
Growth Rates 2006
Source: Country Central Banks
U.S. Exports to CAFTA-DR Countries
Apparel, Computers Apparel, Computers and Electronics, and and Electronics, and Fabric Mill Products Fabric Mill Products Account for Nearly Half Account for Nearly Half of the Total U.S. of the Total U.S. Manufactured Exports Manufactured Exports to DR-CAFTA Markets. to DR-CAFTA Markets.
All Other Products
31%
Apparel Products
12%
Computers &
Electronic Products
16%
Petroleum & Coal
Products7%
Fabric Mill Products
19%
Chemical Products
9%
Machinery Products
6%
Challenges
• Financial Reform• Respect for
Contracts• Investment
Protection• Judicial Reform• Export Promotion
• Corruption• Education• IPR Protection• Security• Start-ups; SMEs• Leadership
CAFTA Countries Highlights
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
• 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%
El Salvador Highlights
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%
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.
• 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%
Nicaragua Highlights
Nicaragua Highlights
Democratically-elected Government
President Daniel Ortega – January 07 – Policies?
Constitutional Government
Formal Independent Court System
• 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
Nicaragua Highlights
Honduras Highlights
Competitive Labor CostsU.S. Accounts for 50% of All Foreign TradeMaquiladora Industry Accounts for 15% of GDP and 11% of ExportsLargest Port in CAU.S. Has 40% of FDI in Honduras
• % increase in U.S. exports since CAFTA entry into force: 15.5%
Costa Rica Highlights
19,652 square miles 19,652 square miles (size of West Virginia)(size of West Virginia)
95% literacy rate95% literacy rate Spanish Language Spanish Language
(English Widely Spoken)(English Widely Spoken) Democratic RepublicDemocratic Republic Life Expectancy: 76 yearsLife Expectancy: 76 years
Costa Rica Highlights
President: Oscar Arias, May 2006President: Oscar Arias, May 2006 Tourism is key for its economyTourism is key for its economy Poor infrastructurePoor infrastructure 70% of FDI comes from the United States. 70% of FDI comes from the United States.
(CINDE)(CINDE) High-tech companies and call centers/large High-tech companies and call centers/large
employersemployers
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
CAFTA-DR DatesApproval/Implementation
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