Free Trade Agreements:
Economic, environmental and social implications
The Central American countries have decided on a future of growing integration and insertion in global trade. As part of this strategy, the region has been searching for new trade agreements as a necessary and integral part of its development strategy. These countries have begun (and in some cases, concluded) bilateral trade agreements with Mexico, Canada and the Dominican Republic, among others. Since 1994, the countries of the hemisphere have advanced towards the establishment of a Free Trade Area of the Americas (FTAA) and there are projections for conclusion of this multilateral agreement as soon as 2005.
At the beginning of 2002, the United States invited Central America to initiate the process of negotiating a free trade agreement, known as CAFTA. This possible agreement carries historical importance for the countries in the region. Among other things, it offers an enormous potential to increase foreign direct investment (FDI) received by these countries, and provides a clear direction for innovative changes in policies to improve the competitiveness of their private sectors and the sustainability of their integral development strategy.
Despite its great advantages, Central America's adaptations to the demands and requirements of free trade represent formidable challenges if they want to assure themselves that the resulting benefits from the transformation of their economies reach the majority of the population. Clear and transparent discussions of the economic, social, labor and environmental implications of free trade will maximize the possibilities for the region's success in free trade agreements and will be critical to gain political support, as much in the country, as for trade partners. CLACDS seeks to play a key role in assuring that the free trade agreements are developed taking into account the region's long-term interests, as well as supporting the economic sectors affected in the adaptation of changes resulting from this major trade opening, and strengthening the skills of the high potential sectors.
CLACDS has begun work on identifying the critical factors that need to be taken into account to assure success in the trade agreements. Currently, CLACDS is developing various work proposals together with governments, the private sector, civil society and international organizations. The experience developed in this area could also position CLACDS as an important participant in FTAA discussions and the new round of WTO negotiations.
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