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CAFTA-DR Free Trade Commission To Assist SMEs

by Mike Godfrey, Tax-News.com, Washington

28 February 2011


Trade ministers representing Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua recently met with Miriam E. Sapiro, Deputy Trade Representative for the United States at the first meeting in San Salvador of the Dominican Republic-Central America-United States (CAFTA-DR) Free Trade Commission.

The CAFTA-DR will, on March 1 this year, complete its 5th year since first implementation. It was the first free trade agreement between the US and a group of smaller developing economies, and eliminates tariffs, opens markets, reduces barriers to services, and facilitates trade and investment among the seven trading countries.

It has yielded positive results and has contributed to significant increases in trade and investment among the countries. Despite the recent economic recession, total trade between the US and the Central American partners and the Dominican Republic grew from USD35bn in 2005, prior to the implementation of the agreement, to USD48bn in 2010.

In addition, the average annual investment inflows into the Central American countries and the Dominican Republic in the first four years of the agreement were USD6.3bn, or 123% higher than the USD2.8bn annual average during 2000-2005 before implementation.

The parties reviewed the trade and economic impact of the agreement and underscored the importance of ensuring its effective implementation among signatory countries. To expand and broaden its benefits, and support jobs in these countries, it was agreed to cooperate on several new initiatives. For example, regional trade facilitation initiatives were endorsed to foster greater regional integration, enhance competitiveness and expand the benefits of the trade agreement, with special attention to promoting greater participation by small and medium-sized enterprises (SMEs).

“Recognizing the essential role that SMEs play in creating jobs in all of our countries, we discussed ways to help SMEs take advantage of the export opportunities that the agreement provides,” it was emphasized. “One of the challenges that SMEs face is access to relevant information on the opportunities that the agreement offers and how to pursue these opportunities.”

The Commission has issued a brochure, designed to answer basic questions for firms that are considering exporting for the first time, and it endorsed sharing country best-practices for supporting small businesses which seek to engage in trade. The establishment of small business development centres (SBDC) in the region was also discussed, with the goal of linking to an online trade assistance and information portal for SBDC centers and small businesses in the US.

Sapiro said that she was “particularly pleased that we agreed to move forward with a work plan that recognizes the essential role that SMEs play in fostering job creation and that will help these businesses take advantage of the export opportunities provided by the CAFTA-DR Agreement. SMEs are a critical part of our economies and are essential to economic growth across the United States and throughout the CAFTA-DR region.”

TAGS: tax | business | free trade agreement (FTA) | Nicaragua | tariffs | agreements | small and medium-sized enterprises (SME) | Costa Rica | Dominica | Dominican Republic | Guatemala | United States | trade | El Salvador | Honduras

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