"I believe in free trade, but it is more important to foster fair trade," said Rep. Cliff Stearns (R-FL), Chairman of the Commerce, Trade & Consumer Protection Subcommittee.  "The laws of economic efficiency tell us that we should produce goods and services at which we are most efficient, and trade for the others.  However, the geopolitical and economic complexities surrounding the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) make it imperative that we carefully look at its provisions and their impact on American industries, businesses, and jobs.  Given the negative impact of certain past trade agreement, such as NAFTA, which I opposed, these agreements demand careful review."

The participants in DR-CAFTA include the United States, Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.  The agreement was signed in 2004, but has not been approved by Congress.  Last year, U.S. trade with the DR-CAFTA region represented 1.5 percent of total U.S. foreign trade, which amounted to $33 billion, including $16 billion in U.S. exports to the region.  This agreement is reciprocal that is designed to make over 80 percent of U.S. consumer and industrial exports and over 50 percent of U.S. farm exports to Central America duty free.  Likewise, DR-CAFTA countries would enjoy duty-free status on all non-textile and non-agricultural goods.  The agreement includes other provisions to expand protection of intellectual property, new trade rules for e-commerce, liberalization in the telecom sector, and improved labor standards in the region.

The chief negotiator of the agreement for the United States, Regina Vargo, Assistant U.S. Trade Representative for the Americas, emphasized the value of DR-CAFTA:  "CAFTA marks the successful culmination of a decades-long American policy of promoting economic reform and democracy in Central America.  But CAFTA is not an act of unilateral altruism on the part of the United States.  We have much to gain from this trade agreement:  access to a large and growing market of 45 million consumers close to our border, an opportunity to level the playing field for American workers and farmers who today must cope with one-way free trade from Central America and the Dominican Republic without a reciprocal chance to compete."

Thea M. Lee, Chief International Economist for the AFL-CIO, stated, "In our view, CAFTA provides precisely the wrong answers to the challenges faced in Central America and the United States.  CAFTA represents a failed model that will likely exacerbate poverty and inequality in Central America, while further eroding good jobs and wages at home."

Testifying on behalf of the National Association Manufacturers, Franklin J. Vargo, VP for International Economic Affairs, noted that, "Under CAFTA-DR, U.S. manufactured goods exports will become duty-free, while European and other competitors will continue to face CAFTA-DR's tariffs and other trade barriers.  As a direct result, U.S. manufacturers stand to gain $1 billion of additional manufactured goods exports, with approximately 12,000 related job opportunities for American workers."

"Today, we heard testimony outlining the benefits and costs of implementing this agreement.  This information is important to us as we consider whether or not to vote in support of DR-CAFTA when it comes up for consideration," concluded Stearns.