The Benefits of NAFTA and CAFTA - Essay Example

Farmers, workers and manufacturers benefit from the reduction of arbitrary and discriminatory trade rules, while consumers enjoy lower prices and more choices. By strengthening the rules and procedures governing trade and investment on this continent, the NAFTA has allowed trade and investment flows in North America to skyrocket. According to figures of the International Monetary Fund, total trade among the three NAFTA countries has more than doubled, passing from US$306 billion in 1993 to almost US$621 billion in 2002.

That's US$1.2 million every minute. NAFTA has been a huge success for the U.S. and its NAFTA partners. It has helped Americans work smarter, earn more and increase purchasing power. It has contributed to more trade, higher productivity, better jobs, and higher wages. In ten years of NAFTA, total trade among the three countries has more than doubled, from $306 billion to $621 billion in 2003. That's $1.7 billion in trade every day. U.S. exports to Canada and Mexico grew from $142 billion to $263 billion in NAFTA's first ten years.

And Mexican exports to the U.S. grew 242 percent, improving lives and reducing poverty in Mexico. The DR-CAFTA, the treaty originally encompassed the United States and the Central American countries Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Then in 2005, the Dominican Republic joined the negotiations, and treaty became known as DR-CAFTA. The CAFTA-DR is the second largest U.S. export market in Latin America, behind only Mexico, buying more than $16 billion in U.S. exports. Successful CAFTA-DR implementation is critical to the broader U.S. policy goals for the Americas of strengthening democratic governance, expanding economic opportunity, and investing in people.

CAFTA would require market liberalization for the majority of goods and services in Central America. 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. To add, CAFTA is important to the DR-CAFTA countries' own businesses, enabling them to increase productivity and increasing the skills of millions of workers as new foreign businesses and new technologies enter their economies. With higher skills, workers will be more valuable and earn more money, increasing their living standards.

As living standards rise and people enjoy better lives, their interest in preserving these benefits also increases. Because they have more to lose from a crisis, they strive to preserve peace and stability. As a result, the likelihood of civil conflict decreases. At the same time, the improved domestic situation reduces the incentives to leave home in search of a better life elsewhere. According to the Organization for Economic Cooperation and Development (1997) more workers in more firms in more countries derive their livelihood from cross-border trade and investment activity.

Trade and investment have become major engines of growth in developed and developing countries alike. The volume of world merchandise trade is today about sixteen times what it was in 1950, a period during which the value of world output increased by a factor of 5.5. The period since 1950 saw a near doubling, from 8 to 15 per cent, of the ratio of world merchandise exports to global production. Most remarkable has been the