What is CAFTA? (Central American Free Trade Agreement). Most people don’t even know that we signed a Free Trade Agreement in 2004 with several countries in Central America. To inquire further, click on link to the article below. I thought this article in the Financial Times was interesting and wanted to comment on it.

CAFTA has had a slow start for sure, as is anything in Central America that requires implementation. CAFTA is an import/export solution in regard to tariffs but is even better for foreign investors into these countries. Why? The investment provisions of CAFTA, like other trade deals such as the 1994 North American Free Trade Agreement, require Central American governments to comply with a long list of investor protections and grant private foreign investors the right to sue governments for damages if these obligations are violated.

But the author of this article has no concept of how things work in these countries, particularly in regard to his comments about the inability of these governments to tax businesses. Because of the out of control corruption amongst the government officials of these countries, taxing businesses would hurt the economy, not necessarily help it. Why? Because the government officials will just pocket these tax revenues NOT use them for the good of the economy. Business owners in these countries know this all too well.

What will come of CAFTA? Is it good for the U.S.? What about the Central American countries? Any comments?

Source  http://www.ft.com/cms/s/0/aa507bc0-8460-11dd-adc7-0000779fd18c.html