CAFTACAFTA
A CLOSER LOOKA CLOSER LOOK
H.E. RenH.E. René A. Leóné A. LeónAmbassador of El Salvador to the United States of AmericaAmbassador of El Salvador to the United States of America
The Central American The Central American Free Trade AgreementFree Trade Agreement
Who are the CAFTA partners?Who are the CAFTA partners?
The United States of AmericaThe United States of America and Central America:and Central America:El SalvadorEl Salvador
GuatemalaGuatemala
HondurasHonduras
NicaraguaNicaragua
Costa RicaCosta Rica
An additional partner will be added: An additional partner will be added: Dominican RepublicDominican Republic
Why CAFTA makes sense?Why CAFTA makes sense?
Countries 2002 Exports 2003 Exports 2002 Imports 2003 ImportsCosta Rica 3,116.50 3,414.20 3,141.90 3,361.40El Salvador 1,664.10 1823.9 1,982.30 2019.2Guatemala 2,044.40 2,273.60 2,796.40 2,945.30Honduras 2,571.10 2,844.90 3,261.30 3,311.70Nicaragua 437 502.8 679.5 769.2
Dominican Republic 4,250.10 4,213.60 4,168.80 4,455.20TOTAL 14,083.20 15,073.00 16,030.20 16,862.00
• Because we are strong trade partnersBecause we are strong trade partners– The total trade between the US and Central America amounted $23.2
billion in 2003.– If we include Dominican Republic along with Central America, the total
trade amounted $31.9 billion in 2003.
US trade with CAFTA & DRUS trade with CAFTA & DR
CAFTA will increase North Carolina CAFTA will increase North Carolina exports to Central Americaexports to Central America
Figures in thousands of dollars$ Change $ Change % Change % Change
Years 1999 2000 2001 2002 2003 99- 03 02- 03 99- 03 02- 03
STATE TOTAL 506,853 848,478 1,073,239 1,268,887 1,431,212 924,359 162,325 182 13
Manufactures 497,511 837,019 1,068,710 1,266,305 1,428,557 931,047 162,252 187 13
Agricultural & Livestock 65 675 107 598 1,122 1,057 524 1,636 88
• Currently, without Duty Free access North Carolina Currently, without Duty Free access North Carolina exports $1.4 billion to Central America (CAFTA)exports $1.4 billion to Central America (CAFTA)
North Carolina is doing businessNorth Carolina is doing business in Central America! in Central America!
• Sample of successful businesses:Sample of successful businesses:– AMERICAN & FRID / HILOS A&E (Yarns and threads)– BLUE BELL – CONTINENTAL AFA DISPENSING CO.– MERRIMAC INDUSTRIES INC.– PRECISION CONCEPTS INC.– SARA LEE PROD. CORP. / INDUSTRIA TEXTILERA DEL ESTE, (Apparel)– VF CORPORATION– WESTSTAR MEDICAL CO.– PARKDALE (Yarns)– AVONDALE (Yarns)
CAFTA will increase North Carolina CAFTA will increase North Carolina exports to CAFTA & DRexports to CAFTA & DR
$ Change$ Change% Change% Change
Years 1999 2000 2001 2002 2003 99- 03 02- 03 99- 03 02- 03
STATE TOTAL 643,973 1,038,988 1,278,608 1,501,052 1,709,925 1,065,952 208,873 166 14
Manufactures 634,216 1,026,785 1,273,741 1,497,897 1,706,710 1,072,493 208,813 169 14
Agricultural & Livestock 112 712 107 598 1,196 1,084 599 967 100
Source: Origin of Movement Series, Census Bureau
Figures in thousands of dollars
• Currently, North Carolina exports $1.7 billion to Central Currently, North Carolina exports $1.7 billion to Central America and the Dominican Republic (D-CAFTA)America and the Dominican Republic (D-CAFTA)
CAFTA is strategic for theCAFTA is strategic for theUS textile industryUS textile industry
STATE EXPORTS 2002
EXPORTS2003
% CHANGE2002-2003
ALABAMA Fabric Mill Products $77.4 million $121 million 57%
CALIFORNIA Fabric Mill Products $57 million $80 million 42%
GEORGIA Fabric Mill Products $195 million $192 million -2%
NORTH CAROLINA Fabric Mill Products $475 million $620 million 30%
SOUTH CAROLINA Fabric Mill Products $123 million $132 million 7%
VIRGINIA Fabric Mill Products Apparel
$20 million$54 million
$17 million$62 million
-15%16%
• US textile exports to CAFTA countries are growingUS textile exports to CAFTA countries are growing
CAFTA will keep competitive the CAFTA will keep competitive the US Vrs. China in a quota-free worldUS Vrs. China in a quota-free world
– CAFTA’s apparel exports to the US are made with more than 90% of US inputs (yarns, fabrics, sewing threads, trims, packaging, linings), compared with apparel imports from China whose industries use none US components.
– In a world post 2005, CAFTA will help the US textile and apparel industry to be competitive vis a vis non-quota exports from China, India, Pakistan, Vietnam, and others. CAFTA provisions such as: Cumulation, De-minimis, Yarn forward, Short supply, Special provisions for woven fabrics, are critical to US industry competitiveness, and for US exports to the region.
1997 1998 1999 2000 2001 2002CHINA 2,094,944 1,943,215 2,035,487 2,217,897 2,210,674 4,963,269D-CAFTA (90% US inputs) 2,676,304 2,904,380 3,271,844 3,511,907 3,463,498 3,608,312Data: USTR/Department of Commerce
(1,000 square meters equivalent)
TEXTILES AND APPAREL: US IMPORTS
• D-CAFTA is the 2nd largest buyer of US D-CAFTA is the 2nd largest buyer of US textiles in the worldtextiles in the world
– 90 percent of apparel exports from CAFTA to the US are made with US yarns.
– 80 percent of apparel exports from CAFTA to the US uses US fabric.
– 90 percent of apparel exports from CAFTA to the US contains US sewing threads.
Why CAFTA is a good agreement Why CAFTA is a good agreement for the US textile industry?for the US textile industry?
Why CAFTA makes sense? Why CAFTA makes sense?
• Because we are strong trade partnersBecause we are strong trade partners
– The US is the most important trading partner for every Central American country, and for the region as a whole.
– US companies’ exports to Central America are higher than those to Spain, Israel, Eastern Europe or Egypt.
– US exports to Central America are equivalent to those to Russia and India combined.
– US imports from Central America are larger than those from Argentina, Chile or South Africa.
– 50% of Central American imports are originated in the US, while almost 50% of our region’s exports are destined to the US.
CAFTA is a great marketCAFTA is a great marketfor US exports for US exports
• A larger market than Australia:A larger market than Australia:
– Total U.S. exports to Central America and DR in 2003 were $15 billion, while total U.S. exports to Australia during the same year totaled only $12.5 billion
– For textile product exports, the DCAFTA countries are the 2nd largest buyer of US textile goods totaling $4.3 billion behind Mexico at $5.3 billion. Canada is in third place with $3.5 billion.
Why North Carolina textile industry Why North Carolina textile industry is a CAFTA winner?is a CAFTA winner?
• D-CAFTA is the 2nd largest buyer of US textilesD-CAFTA is the 2nd largest buyer of US textiles
– North Carolina exports of Fabric Mill Products to D-CAFTA are growing: $475 million (2002) and $620 million (2003).
– North Carolina exports of Fabric Mill Products grew 30% in one year (2002-2003)
– States like North Carolina will be able to increase their benefits in exporting to the D-CAFTA countries under a free trade agreement.
Who Benefits From CAFTA?Who Benefits From CAFTA?• U.S. Textile and Apparel IndustryU.S. Textile and Apparel Industry
– U.S. cotton growers and fiber producers– U.S. yarn spinners– U.S. fabric manufacturers– U.S. apparel manufacturers
• U.S. FarmersU.S. Farmers– Animal feed producers– Grain producers: wheat, corn, soybeans.– Poultry and pork producers– Fruit and nuts producers: apples, grapes, strawberries.
• U.S. High-tech and IT CompaniesU.S. High-tech and IT Companies
• U.S. Service ProvidersU.S. Service Providers– Banks, insurance companies, transportation
• U.S. InvestorsU.S. Investors– More business opportunities, better business climate, stronger IPR protection, predictability.
• U.S. Tourism IndustryU.S. Tourism Industry
• U.S. ConsumersU.S. Consumers
Who sees in CAFTA a good Who sees in CAFTA a good business opportunity?business opportunity?
• Industries supporting the agreement:Industries supporting the agreement:– Recording Industry Association of America
– Information Technology Industry Council
– Telecommunications Industry Association
– International Intellectual Property Alliance
– Distilled Spirits Council of the United States
– National Corn Growers Association
– U.S. Grains Council
– U.S. Apple Association
– California Table Grape Commission
– National Potato Council
– American Soybean Association
– Northwest Horticultural Council
– Grocery Manufacturers Association
– Pet Food Institute
– United States Chamber of Commerce
– National Association of Manufacturers
– Coalition of Service Industries
– National Cattlemen's Beef Association
– National Pork Producers Council
– National Chicken Council
– USA Rice Federation
– USA Poultry and Egg Export Council
– National Turkey Federation
– U.S. Dairy Export Council
– American Insurance Association
– American Council of Life Insurers
– Travel Goods Association
– The Air Courier Conference of America
– Motion Picture Association
US companies doing businessUS companies doing business in Central America in Central America
3 COM CENTROAMERICA, 3M, ABBOTT LABORATORIES, ACE INDUSTRIAL HARDWARE, CO., AEROPOST / AEROCASILLAS S.A., AES CORPORATION, AGROTEC ANALYTICAL LABORATORIES, ALCON LABORATORIES, AMERICAN & FRID / HILOS A&E DE C.R., AMERICAN AIRLINES, AMERICAN APPAREL CORP., AMERICAN HOME ASSURANCE CO., AMERICAN INTERNATIONAL GROUP, AMWAY CORP, ANIXTER INC., ARROW CO., ARTMARINA, ASSA INTERNATIONAL CORP., AT & T, ATENTO HOLDING, ATOM MFG. CO., INC., AVENT, AVENTIS PHARMA FRANKFURT / BRIDGEWATER, AVIS RENT A CAR, AVON PRODUCTS INC., BASF CORPORATION, BAXTER PRODUCTOS MEDICOS LTDA., BEARCOM USA, BELLSOUTH , BERLITZ LANGUAGE SERVIES, BLH ELECTRONICS / PHAROS DE C.R., BLUE BELL DE HONDURAS, BOLIVAR TRADING HONDURAS, BOURNS INC. / TRIMPOT ELECTRONICAS, S.A., BRIDGESTONE FIRESTONE, BRIGHTSTAR CORPORATION, BRISTOL-MYERS SQUIBB, BURGER KING, C & K COMPONENTS S.A., CARGILL COTTON, CARRINGTON LAB. / SABILA INDUSTRIAL, CARTER, WILLIAM, CO., THE CARTEX MANUFACTURERA, S.A., CATERPILLAR AMERICAS, CELTEL, CENTROAMERICANA CIGARS, CENTURY 21 REAL ESTATE CORP., CHALLENGE AIR CARGO, CHARTER TRADING CORPORATION / SERCOM TELECOM. SYSTEMS S.A., CHESTNUT HILL FARMS, CHIQUITA BRANDS INTERNATIONAL, CHUCKEE CHEESE PIZZA, CID GALLUP, CISCO SYSTEMAS, CITIBANK, N.A., COCA COLA COMPANY, COLGATE PALMOLIVE, COMIDAS ESPECIALIZADAS, COMPUTER ASSOCIATES/ DATANET, INTERNACIONAL, S.A., CONAIR / BABYLISS, CONTINENTAL AFA DISPENSING CO., CONTINENTAL AIRLINES, COOPERS ELECTRONIC TECH., COPHER BROTHERS INC., CROWLEY AMERICAN TRANSPORT, CROWN CORK & SEAL CO., CSI LATINA FINANCIAL, CUTLER HAMMER, DEL MONTE FRESH PRODUCE, DELOITTE & TOUCHE, DELTA AIR LINES, INC., DEVAN HOUSTON / CONFECCIONES IMPERIO, DHL, DIAL CORPORATION, DODONA S.R.L. / AMNET, DOLE FRESH FRUIT INTERNATIONAL, DOMINOS PIZZA, DUKE ENERGY, DUNKIN' DONUTS, ECOLAB, EDELMAN PUBLIC RELATIONS/ MULTIMEDIOS G.C., EL PASO TECHNOLOGY, ELI LILLY AND COMPANY, ENRON GLOBAL POWER, EQUIFAX, ERNST & YOUNG GLOBAL, EXPESCA, S.A., EXXON CO. (ESSO STANDARD), FEDERAL MOGUL DE FEDEX, FINE AIRLINES, FING’RS FOOTE CONE & BELDING, FRANKLIN COVEY TM, FRUIT OF THE LOOM, GBM / IBM, GENERAL ELECTRIC CENTROAMERICA, GENERAL NUTRITION, GEO J. BALL INC. / LINDA VISTA ,S.A., GILDAN ACTIVEWEAR, GLAXO SMITHKLINE, GLOBAL CROSSING, GOLDSMITH SEEDS, INC., GOOD YEAR TIRE & RUBBER CO., GTE DIRECTORIES CORP. / VERIZON, H.B. FULLER CO. - FULL PRODUCTS, H.J. HEINZ CO. / ALIMENTOS HEINZ DE C. R., S.A., HANNOVER FOODS, INC. / ALIMENTOS CONGELADOS MONTE BELLO, HERTZ, COMFORT HOTELS, HAMPTON INN,MARRIOTT…
Let’s do business!Let’s do business!
• Support North Carolina businessesSupport North Carolina businesses
• Support your partners in Central AmericaSupport your partners in Central America
• Support CAFTA!Support CAFTA!
Thank You!Thank You!
