Central American Free Trade Agreement

CAFTA stands for Central American Free Trade Agreement. This agreement was originally set up between the United States and International countries such as Honduras, El Salvador, Nicaragua, Costa Rica, and recently joined Dominican Republic. CAFTA brings great opportunities for all parties involved. Eighty percent of U.S. exports of consumer, industrial goods will become duty-free in Central American, and the Dominican Republic immediately, with remaining tariffs phased out over 10 years (CAFTA Policy Brief). Key U.S. exports sectors will benefit from immediate duty elimination such as information technology products, agricultural and construction equipment, paper products, pharmaceuticals, and medical and scientific equipment. Tariffs on U.S. autos and auto parts will be phased out within 5 years (CAFTA Policy Brief).

CAFTA has expanded markets for U.S. Agricultural businesses. Many of the U.S. agriculture exports to Central America will be duty-free immediately, including high-quality cuts of beef, soybeans, cotton, wheat, many fruits and vegetables, and processed food products (CAFTA Policy Brief). Tariffs on most U.S. farm products will be phased out within 15 years, with all tariffs eliminated in 20years. The U.S. will work with Ventral America and the Dominican Republic to resolve any phytosanitary barriers to agricultural trade, especially problems in food inspection procedures for meat and poultry (CAFTA Policy Brief).

Governments are typically the single largest purchasing entity in any market. Government procurement is generally ten to fifteen percent of a country's