To the surprise of many, the Trump Administration has signaled its intent to renegotiate the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). Why is the possible renegotiation of CAFTA-DR a surprise? CAFTA-DR has been largely favorable to the United States (U.S.)—the U.S. has enjoyed significant trade surpluses with CAFTA-DR countries since its ratification. CAFTA-DR has also promoted regional integration and co-production in Central America.Trade flows in and out of Central America have increased significantly. On balance, CAFTA-DR has benefitted all signatory nations from a trade standpoint, though it has left unaddressed a myriad of social, humanitarian, and governance issues. Consequently, as CAFTA-DR is renegotiated, U.S. policymakers can build upon these successes and also make sure to take particular care to shore up certain aspects that CAFTA-DR, in its current form, has fallen short. Of note, CAFTA-DR does not incentivize or mandate efforts to improve labor conditions in Central America, leaving millions of Central Americans facing sub-par working conditions and low pay. CAFTA-DR has also been inept to address environmental externalities associated with increased economic development, particularly in the manufacturing and natural resources sectors, which often pollute or cause environmental harms as part of their operations. Further, CAFTA-DR, like other regional trade agreements, has not fostered coalitions that were previously associated with multilateral trade agreements—preventing unification on key issues affecting trade flows, and preventing a cohesive response to social and environmental concerns.
Recommended CitationJulia E. Johnson, Towards A New Generation in Central American Trade: Proposals for Modernizing CAFTA-DR, 32 Pace Int'l L. Rev. 103 (2019)
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