First, the ability to identify priorities, including the highest (losing) adjustment costs and how to address them. Second, the ability to develop resources for the implementation of the agreement, including institutional, financial and analytical resources. Third, the ability to benefit from CAFTA-DR.72 The agreement established a Standing Committee for Trade Capacity Building to continue the work begun in the negotiation process and the recommendations of the agreement require that one of its top priorities be the customs administration. Nearly three-quarters of U.S. imports from Central America can be divided into three main categories: fruit (mainly bananas) and coffee; clothing; and integrated circuits. These three different categories are not negotiated uniformly by the five countries for various reasons (see Table 1). First, Central America has traditionally exported bananas and coffee dominated by Costa Rica and Guatemala. In fact, coffee has declined for all countries except Costa Rica and accounts for only 3.8% of U.S. imports from the region.
This reflects the competitive nature of the coffee trade, which is grown in large quantities by Brazil, Colombia and African countries. The banana trade has also lost its importance and accounts for only 5.0% of US imports from Central America. For 2004, although trade growth varied between the five countries, growth in U.S. exports to Central America doubled average growth in exports to the world, with all five countries experiencing solid growth. In contrast, U.S. imports from Central America increased by less than half of the average growth in imports from the world. As these trends suggest, the United States tends to have small trade deficits with all Central American countries and the Dominican Republic. This is partly the nature of a production-sharing business relationship, in which parts and materials are sent abroad for value processing and then sent back to the United States. If trade in services is added to the trade balance, the United States tends to have trade surpluses with all these countries. This trend is also indicative of the fundamental relationship between the United States, a service-oriented economy, and developing countries.21 Increasing grain exports has been another important objective for the United States. Wheat is not grown in CAFTA-DR countries and there is already ample free trade in this raw material. However, staple foods for CAFTA-DR countries, such as rice and white corn, remain protected and there is a complex system for phasing out QTs for U.S.
exports over a period of 15 to 20 years. As with U.S. sugar imports, U.S. corn and rice exports will increase slowly due to very restrictive customs regulations and special safeguard measures….