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Cafta Overview

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  • 1. CAFTA OVERVIEW James McCarthy
  • 2. Central America at a Glance
  • 3. 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
  • 4. Why Export to Central America?
  • 5. Why Export to the CAFTA 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
  • 6. Central America Trade Data
  • 7. U.S. Exports to CAFTA-DR Countries
  • 8. CAFTA Region at a Glance Gross Domestic Product Source: Summa Magazine. Sep. 2006
  • 9. CAFTA Region at a Glance Growth Rates 2006 Source: Country Central Banks
  • 10. U.S. Exports to CAFTA-DR Countries Apparel, Computers and Electronics, and Fabric Mill Products Account for Nearly Half of the Total U.S. Manufactured Exports to DR-CAFTA Markets.
  • 11. Challenges
    • Financial Reform
    • Respect for Contracts
    • Investment Protection
    • Judicial Reform
    • Export Promotion
    • Corruption
    • Education
    • IPR Protection
    • Security
    • Start-ups; SMEs
    • Leadership
  • 12. CAFTA Countries Highlights
  • 13. El Salvador Highlights
    • Slightly smaller than Massachusetts
    • Democratically-elected Government
    • President Elias Saca (2004)
    • Smallest country in Central
    • America
    • 3 rd largest economy
    • Remittances make up 15% of GDP
    • Largest airport in the region
  • 14. El Salvador Highlights
    • 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%
  • 15. 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%
  • 16. 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.
  • 17. Nicaragua Highlights
    • 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%
  • 18. Nicaragua Highlights
    • Democratically-elected Government
    • President Daniel Ortega – January 07 – Policies?
    • Constitutional Government
    • Formal Independent Court System
  • 19. Nicaragua Highlights
    • 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
  • 20. Honduras Highlights
    • Competitive Labor Costs
    • U.S. Accounts for 50% of All Foreign Trade
    • Maquiladora Industry Accounts for 15% of GDP and 11% of Exports
    • Largest Port in CA
    • U.S. Has 40% of FDI in Honduras
    • % increase in U.S. exports since CAFTA entry into force: 15.5%
  • 21. Costa Rica Highlights
    • 19,652 square miles (size of West Virginia)
    • 95% literacy rate
    • Spanish Language (English Widely Spoken)
    • Democratic Republic
    • Life Expectancy: 76 years
  • 22. Costa Rica Highlights
    • President: Oscar Arias, May 2006
    • Tourism is key for its economy
    • Poor infrastructure
    • 70% of FDI comes from the United States. (CINDE)
    • High-tech companies and call centers/large employers
  • 23. CAFTA-DR Dates Approval/Implementation
    • 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
  • 24. 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