Cafta’s Benefits makes a case for the Central American Free Trade Agreement:
Start simply with the appeal of greater two-way trade: The vast majority of Cafta-made products already enter the U.S. duty-free under the Caribbean Basin Initiative. Cafta opens the way for more U.S. products going south. The agreement also boosts intellectual property protection in Cafta countries, as well as competition in financial and other services in which the U.S. excels. American farmers alone expect to increase exports to Central America by some $1.5 billion a year. All that goes away if Cafta fails.We are also told that Cafta can’t work because the North American Free Trade Agreement of 1994 didn’t work. And while it’s true that Nafta didn’t cure cancer or turn Mexico into Switzerland, those who argue that Nafta failed are ignoring the evidence.
In Nafta’s first decade, annual two-way trade between the U.S. and Mexico almost tripled, to $232 billion from $81 billion. During that same period the U.S. created 18 million net new jobs and, even after the dot-com implosion and the recession of 2001, the current U.S. jobless rate of 5% is lower than it was (6.4%) when Nafta became law. U.S. productivity and wages have all climbed steadily. Ross Perot’s prediction of a ‘giant sucking sound’ proved to be a fantasy.
But what about ‘the trade deficit’? Well, the National Association of Manufacturers (NAM) reported last week that, since the birth of Nafta, U.S. exports to Canada and Mexico have grown 55% faster than they have to the rest of the world, while imports from Mexico and Canada have only grown 20% faster. NAM says that Nafta partners make up just 10% of the U.S. trade deficit in manufactured goods.