What is CAFTA?
The proposed U.S.-Central America Free Trade Agreement (CAFTA) promotes trade liberalization between the United States and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. It is modeled after the ten-year old North American Free Trade Agreement (NAFTA). CAFTA must be approved by the U.S. Congress and by National Assemblies in the Central American countries before it becomes law.

Fast Track Negotiations
The Bush Administration has aggressively pursued the CAFTA negotiations on a very short timeline. It was completed in one calendar year, with limited civil society or Congressional participation. Congress is limited to an up or down vote and cannot amend a trade agreement. CAFTA would require market liberalization for the majority of goods and services in Central AmericaÑincluding agriculture, manufacturing, public services and government procurement. In return, the U.S. has promised increased market access for certain sectors in Central America, including textiles and a limited increase in sugar quotas.

Opposition to CAFTA
Opponents to CAFTA have cited worries over potential U.S. job losses, with labor unions, development organizations, religious groups, and private sector lobbies joining to speak out against the agreement. Free trade policies have become a topic of renewed debate in the U.S., as the country experiences jobless growth and the outsourcing of manufacturing jobs. Textile manufacturers and the sugar industry are actively lobbying Congress against CAFTA. Other industries and states that lost jobs or suffered under NAFTA have also expressed their skepticism about CAFTA.

TAA for Firms and CAFTA
Clearly, the Trade Adjustment Assistance for Firms program has a more than 30 year track record as an effective remedy for many of the concerns being expressed in relation to the impact of CAFTA on U.S. manufacturers. The guiding belief of TAA for Firms is that by increasing the competitiveness and efficiency of the domestic companies, the companies can focus on the types of manufacturing more suited to higher wage U.S workers. The lower wage commodity-type of manufacturing can then be shifted to countries, such as those in Central America, where the wage and related expense requirements are competitive on a world wide basis.

Thus, the TAA for Firms program may be presented as a program to address some of the domestic concerns expressed relating to the impact of increased free trade with the Central American countries.