Regional Trade Agreements

Regional Trade Agreements

Regional Trade Agreements (RTA) refers to the treaties that are signed between two or more nations or regions. The conventions define the transaction guidelines for all the involved signatories. In contemporary engagements, regional trade agreements are changing the way they operate as they increase in number. About fifty trade agreements were operational by 1990. In 2017, over 280 treaties were enforced. In modern society, trade agreements are premises used by countries or the involved states to push for lower trade tariffs (Reyes & Hansen, 2019).  The modern-day treaties impact on investments of services and goods, hence affecting trade. All these include the behind-the-border regulations touching on government procurement rules, competition policy, and intellectual property rights. The paper analyzes regional trade agreement and its benefit to the nations and parties involved by examining the Dominican Republic-Central America Free Trade Area (CAFTA-DR)

The Dominican Republic-Central America Free Trade Area (CAFTA-DR)

CAFTA-DR was the first trade agreement in America.  It includes other smaller economies, especially the American neighbors such as Costa Rica, Guatemala, Nicaragua, Honduras and the Dominican Republic (Reyes & Hansen, 2019). The purpose of the trading agreement was to increase investment ties, national and regional stability, and foster prosperity throughout America and across the Southern border.

How the CAFTA-DR Benefits Members States

The existence of the Free Trade Area in the continent has led to the establishment of a single market. The development of individual markets has come up with the availability of standardized laws and systems that apply to the member states. The single market registers a capital of about $60 billion. In 2018, exports accounted for $32.2 billion, while imports recorded $25.2 billion (Reyes & Hansen, 2019). CAFTA-DR fights and promotes the rights of workers in the region by enforcing labor protection laws. For example, the trade agreement leadership has been forcing Guatemala to exercise worker's protection rights, to an internationally recognized status.

CAFTA-DR has actively engaged in the creation of opportunities for prosperity and economic stability for the citizens of the home countries. The essence is to create an enabling environment for business and investment. It aims at providing the youths with an opportunity to exploit their potentials.

The Dominican Republic-Central America Free Trade Area also supports the development and growth of manufacturing industries across the member states. CAFTA-DR developed an initiative for supporting Made-in-America jobs (Reyes & Hansen, 2019). The initiative aims at uplifting local manufacturing industries and fostering economic growth among the member countries.

Political and Legal Status of the CAFTA-DR

The Dominican Republic-Central America Free Trade Area operates solely within the set legal competencies, which get conferred in its agreement. The trade agreement is based on the principle of the subsidiary that postulates that action upon the Union should only be taken in situations where an objective cannot be achieved sufficiently. The partner negotiates new trade rules impacting on the trade, which may affect the member states (Reyes & Hansen, 2019). A negotiating mandate is usually undertaken to oversee the functioning of the subscriber members. Member states have a representative in the summit leadership that negotiates for new changes.

Conclusion

The Dominican Republic-Central America Free Trade Area (CAFTA-DR) is one of the largest trade partners in America. It serves as a useful tool in promoting economic and social progress in America and affiliated democracies. The trade partner is a principal contributor to the American GDP, having a favorable balance of trade of about $7 billion annually.  

References

Reyes, M. I., & Hansen, A. (2019). Did the DR-CAFTA Trade Agreement Affect the Exports of the Dominican Republic to the United States?