CAFTA Gains One More Member

Now that Guatemala has become the fourth country to join the Central American Free Trade Agreement, that leaves only Costa Rica and the Dominican Republic left to sign on.

Guatemala officially became a member of CAFTA on July 1, after its congress made all the necessary changes to the country’s laws and regulations on May 18 to comply with the free trade agreement.

“Our constructive engagement has had positive results, and we’re pleased that Guatemala is now ready to join El Salvador, Honduras and Nicaragua in full implementation of this agreement,” U.S. Trade Representative Susan C. Schwab said in a statement.

CAFTA membership was good news for Guatemala’s apparel industry, which is a major contributor to that country’s economy.

Under the previous trade pact, known as the Caribbean Basin Trade Partnership Act, only 37 percent of Guatemala’s apparel exports qualified for duty-free treatment by using the required U.S. yarns and fabrics or regionally knit fabrics made of U.S. yarns.

With CAFTA’s more liberal rules, Guatemala will be able to use Guatemalan or regional yarns and fabrics for its apparel to enter the United States duty- and quota-free.

Nearly 60 percent of Guatemala’s apparel exports to the United States are cotton knit shirts. Another 23 percent are cotton and synthetic pants and shorts. For the 12 months ending April 20, Guatemala exported $1.73 billion of apparel to the United States.

CAFTA was signed in 2004 by the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. All but Costa Rica have ratified the agreement. The Dominican Republic is working on becoming a member in the upcoming months. —Deborah Belgum