FREE TRADE AGREEMENTS

Whom to Contact:

Neil Pratt
Senior Director, International Trade and Trade Counsel
(202) 974-5333
npratt@plasticsindustry.org

The U.S.–Central America-Dominican Republic Free Trade Agreement

On May 28, 2004, the United States signed the agreement with Costa Rica, El Salvador, Honduras, Guatemala, and Nicaragua. The Dominican Republic joined the agreement on August 5, 2005. This agreement, known as "CAFTA-DR," expands market access for U.S. goods, services, and agricultural products in the six markets, which in 2004, purchased nearly $16 billion of U.S. manufactured goods - making the region the 13th largest export market for the United States. Consistent with SPI's International Trade Policy, approved by the Board in January 2004, SPI supports CAFTA-DR because the free trade agreement lowers tariffs and non-tariff barriers on plastic industry products, and therefore, creates opportunities to expand plastics exports to these markets.

CAFTA-DR Benefits for the U.S. Plastics Industry

• CAFTA-DR levels the playing field for plastics industry products. For several decades, plastics imports from the six countries have benefited from duty-free access to the U.S. market. CAFTA-DR will restore fairness to the trading relationship. Tariffs on resins, plastics machinery, and molds will be eliminated immediately. Tariffs on processed products will be substantially reduced and eliminated over a 5-10 year time-frame.



• CAFTA-DR makes it easier to do business in the region. The agreement strengthens protection of U.S. intellectual property rights and eliminates restrictions, such as exclusive dealer requirements, which have impeded the ability of U.S. firms to import into the region. It also provides for enhanced transparency, including publication on the Internet, of customs rules and regulations and mechanisms to help safeguard against the use of sanitary and phytosanitary measures and technical standards as barriers to U.S. exports.



• CAFTA-DR can help stimulate industry growth via expansion into six neighboring markets where demand for plastics is growing. The CAFTA-DR markets already purchase U.S. plastics industry products in significant quantities. In 2004, U.S. plastics exports (resins, products, machinery, and molds) totaled nearly $900 million. (View a summary of U.S. plastics industry trade with the CAFTA-DR markets in 2004). Market research by the U.S. Commerce Department projects strong and growing demand in the region in the automotive, food processing, medical equipment, and packaging sectors – important key markets for the plastics industry.



• There is little risk that CAFTA-DR will result in a large flood of plastics imports into the U.S. market. The six countries have had duty-free access to the U.S. market for decades. Despite this free access, plastics imports from the region are relatively small. In 2004, plastics imports were worth $179 million, only 1% of total imports into the U.S. market.



• The CAFTA-DR markets are too small to adversely impact U.S. manufacturing. The economies of the six markets combined are the size of Sacramento, California.



• CAFTA-DR can help reduce the U.S. trade deficit. The U.S. International Trade Commission has estimated that the effect of the agreement would be to reduce the overall trade deficit by $756 million.

CAFTA-DR offers concrete benefits to U.S. plastics businesses.

Other Sources of Information on CAFTA-DR

• Office of the U.S. Trade Representative – CAFTA Briefing Book



• U.S. Department of Commerce



• House Ways and Means Committee Resource Kit



• U.S. Chamber of Commerce



• National Association of Manufacturers

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