USTR Releases Draft Text of CAFTA
The Office of the U.S. Trade Representative (USTR) has posted to its Web site the draft text of the U.S.-Central America Free Trade Agreement (CAFTA), which is dated January 28, 2004.
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The USTR states that the U.S. concluded CAFTA negotiations with El Salvador, Guatemala, Honduras, and Nicaragua in December 2003. The USTR concluded CAFTA negotiations with Costa Rica in January 2004. The USTR adds that it began negotiations with the Dominican Republic in January 2004 which are aimed at bringing that country fully into CAFTA by March.
(See ITT's Online Archives or 12/18/03 news, 03121805, for BP summary of the conclusion of negotiations with El Salvador, Guatemala, Honduras, and Nicaragua. See ITT's Online Archives or 01/28/04 news, 04012810, for BP summary of the conclusion of negotiations with Costa Rica.)
Highlights of CAFTA Provisions and Draft Text
According to the USTR's press release and the draft text of CAFTA1, the provisions of CAFTA include the following (partial list):
Many U.S. exports of consumer and industrial goods will become duty-free. The USTR states that more than 80% of U.S. exports of consumer and industrial goods will become duty-free in Central America immediately, with remaining tariffs phased out over 10 years. Key U.S. export sectors that will benefit include information technology products, agricultural and construction equipment, paper products, chemicals, and medical and scientific equipment.
More than half of U.S. farm exports will be duty-free. The USTR states that more than half of current U.S. farm exports to Central America will become duty-free immediately, including high quality cuts of beef, cotton, wheat, soybeans, key fruits and vegetables, processed food products, wine, etc. The USTR adds that tariffs on most remaining U.S. farm products will be phased out within 15 years.
Textile and apparel benefits will be retroactive to January 1, 2004. The USTR's press release states that textiles and apparel will be duty-free and quota-free immediately if they meet CAFTA rules of origin and notes that the agreement's benefits for textiles and apparel will be retroactive to January 1, 2004.
The USTR adds that CAFTA will give duty-free benefits to some apparel made in Central America that contains certain fabrics from North American Free Trade Agreement (NAFTA) partners Mexico and Canada.
Digital products and property protections. The USTR states that state-of-the-art protections and non-discriminatory treatment are provided for digital products such as U.S. software, music, text, and videos. In addition, protections for U.S. patents, trademarks, and trade secrets are strengthened.
Customs administration and trade facilitation. The draft text of CAFTA includes a chapter on customs administration and trade facilitation. This chapter calls for each party to establish and maintain simplified customs procedures for efficient release of goods in order to facilitate trade between the parties. Among other procedures that the draft text states will be adopted in this regard, each party is to provide for the release of goods within a period of time no greater than that required to ensure compliance with its customs laws and, to the extent possible, allow goods to be released within 48 hours of arrival.
This chapter also sets forth a provision that customs administrations will endeavor to use information technology that expedites procedures for the release of goods. The provision calls for electronic systems to be made accessible to the trading community, electronic submission and processing of information and data prior to arrival of the shipment to allow for release of goods upon arrival, etc.
This chapter also addresses express shipments by stating that each party will adopt procedures that will expedite express shipments while maintaining appropriate customs control and selection.
In addition, the chapter contains a timetable detailing when these and other customs administration and trade facilitation-related obligations of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua will enter into force. See draft text for complete details.
( 1The USTR notes that the draft text of CAFTA is subject to legal review for accuracy, clarity, and consistency.)
Draft Text of CAFTA (dated 01/28/04) available at http://www.ustr.gov/new/fta/Cafta/text/index.htm
USTR Press Release on Costa Rica and details of CAFTA (Press Release 04-03, dated 01/25/04) available at http://www.ustr.gov/releases/2004/01/04-04.pdf
USTR Webpage on CAFTA available at http://www.ustr.gov/new/fta/cafta.htm