SAN JOS: While President Donald Trump is scrapping or revising major trade accords, Central America believes a pact it has with the United States will go on unscathed.
Government officials and businesses said that the Central America Free Trade Agreement, known as CAFTA, or CAFTA-DR with the later inclusion of the Dominican Republic, is so favorable to the US that it makes no sense to get rid of it.
But some apprehension has nevertheless clouded the prediction, given Trump's stated penchant to cut new deals, and to prefer bilateral trade accords to multilateral ones.
"All of us have to be ready to face the consequences in economic or other terms," Honduran President Juan Orlando Hernandez said.
"Where many see a crisis, those who are more optimistic should see opportunities," Guatemalan President Jimmy Morales said.
Trump's executive order on Tuesday formally withdrawing the United States from the yet-to-be-ratified Trans-Pacific Partnership (TPP), and his pledge to renegotiate the North American Free Trade Agreement (NAFTA) underline his intent to upend trade arrangements to win more advantages for his country.
He has made no mention of CAFTA so far. That deal, started a decade ago, was the first between the United States and small developing nations. The countries involved are: Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and the Dominican Republic.
- Watching Trump -
According to the Office of the US Trade Representative, there was $53 billion of trade under the pact in 2015, with the US exporting $4 billion more of its goods than it imported from Central America.
"It doesn't cause (the US) any trade distortion and it wouldn't be a good idea to renegotiate the terms of this accord," Sergio Alfaro, minister for Costa Rica's presidency, said.
However, he added, his government is "constantly monitoring what is happening in the United States."
An economic adviser to Nicaragua's government, Bayardo Arce, also said the region was following Trump's moves carefully.
"With the US president, he needs to be watched -- nobody knows where he might go with his measures," he said.
The head of the Union of Producers in Nicaragua, Michael Heally, noted that while NAFTA's renegotiation was a campaign promise by Trump, there was no mention that CAFTA might be in his sights.
"I don't believe that CAFTA will be affected like other treaties might," said Heally, whose association mostly represents farmers.
Yet the head of a similar Nicaragua organization, Alvaro Fiallos of Nicaragua's Union of Farmers and Livestock Producers, admitted there was "uncertainty."
"We just don't know what's going to happen. First we are made to sign CAFTA and then we might need to leave it."
- Migration a bigger issue -
Rafael Medina, president of the Chamber of Commerce in Honduras' capital Tegucigalpa, stressed that the difference between CAFTA and NAFTA "are enormous."
He said CAFTA was very favorable to the United States, which exports tariff-free, while Central America gained access to a huge market for its manufacturing, which in Honduras generated 135,000 jobs.
A bigger impact on US-Central American relations would instead likely come from Trump's vows to greatly limit migration and step up deportations, Medina said.
In 2016, Guatemala, Honduras and El Salvador -- major sources of undocumented migrants to the US -- received nearly $16 billion in remittances.
That money accounts for between 10 and 17 percent of the gross domestic product of the three poor Central American countries.
Comments
Comments are closed for this article.