(August 4, 2005) The California Chamber of Commerce-supported U.S.-Dominican Republic/Central American Free Trade Agreement (DR-CAFTA) was signed into law Tuesday by President George W. Bush.

The House approved the DR-CAFTA with a two-vote margin of 217-215 on July 27.  The U.S. Senate approved the US-DR-CAFTA on June 30, 2005 by a vote of 54-45. The DR-CAFTA will create a seamless business environment between the economies, bringing measurable business benefits in all sectors.

What it Does
Once the DR-CAFTA is implemented, more than 80 percent of U.S. exports will be able to enter the DR-CAFTA countries duty-free, with all products having duty-free access in 10 years.

The United States and the six countries represented by the DR-CAFTA share more than $32 billion in total (two-way) trade in goods.  Leading U.S. exports to Central America include textiles, machinery, electrical machinery and equipment, and plastics.

Leading U.S. imports from Central America include apparel products and edible fruit.  The United States is the main supplier of goods and services to Central American economies.  California exports to the DR-CAFTA market totaled nearly $660 million in 2004, making it the state’s 25th largest export market. Forty percent of total goods imported by Central America come from the United States.

The DR-CAFTA is expected to contribute to stronger economies, the rule of law, sustainable development, and more accountable institutions of governance, complementing ongoing domestic, bilateral and multilateral efforts in the region.

A study by the U.S. International Trade Commission has indicated that the DR-CAFTA will increase U.S. exports worldwide by $1.9 billion upon implementation, more than any other recent free trade agreement.

What Happens Now
Now that President Bush has signed the DR-CAFTA into law it must approved by the Central American countries involved before it is executed.

As of July 2005, the governments of El Salvador, Honduras and Guatemala have all passed the agreement, winning approval from a variety of political parties. The Dominican Republic and Nicaragua are both currently considering CAFTA, and both are expected to approve the measure. Costa Rica is also expected to take CAFTA to a vote in the near future.

Free Trade
Since the Trade Act of 2002, President George W. Bush has negotiated free trade agreements with 12 countries; some are still awaiting congressional approval.  The DR-CAFTA is the sixth free trade agreement approved and signed into law since 2002.  Before President Bush was granted trade promotion authority, the United States had free trade agreements only with Mexico and Canada (NAFTA) and Israel.

The California Chamber, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.

The Chamber would like to thank everyone who took the time to write letters in support of the DR-CAFTA to California members of the U.S. Senate and the House of Representatives.