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CAFTA OVERVIEW

CAFTA OVERVIEW. James McCarthy. Central America 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. The CAFTA-DR Region at a Glance. Why Export to Central America?.

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CAFTA OVERVIEW

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  1. CAFTA OVERVIEW James McCarthy

  2. Central America at a Glance

  3. 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 The CAFTA-DR Region at a Glance

  4. Why Export to Central America?

  5. 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

  6. Central America Trade Data

  7. U.S. Exports toCAFTA-DR Countries

  8. CAFTA Region at a GlanceGross Domestic Product Source: Summa Magazine. Sep. 2006

  9. CAFTA Region at a GlanceGrowth 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. Financial Reform Respect for Contracts Investment Protection Judicial Reform Export Promotion Corruption Education IPR Protection Security Start-ups; SMEs Leadership Challenges

  12. CAFTA Countries Highlights

  13. 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

  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 DatesApproval/Implementation • Legislatures: Approval Implementation • El Salvador: 12/17/2004 3/1/2006 • Honduras:03/04/2005 4/1/2006 • Guatemala: 03/11/20057/1/2006 • 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

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