The Central America Free Trade Agreement became effective for El Salvador on March 1. In at least one sector of El Salvador's economy, textiles, the treaty has produced no benefits. In fact, textile exports from El Salvador to the US have dropped significantly in the past two months according to statistics from the US Commerce Department Office of Textiles and Apparel.
An article from the Gannet News Service explains some of the reasons why textile exports from Central America to the US have dropped since March 1:
"[CAFTA has] caused trade to be much harder to do in Central America," said Copland, president and chief executive officer of Copland Industries, near Burlington, N.C.
The primary problem is that only three of the countries - El Salvador, Honduras and Nicaragua - have ratified the agreement that allows them to ship textile and apparel goods duty-free to the United States. Duties or import taxes on textile goods from Costa Rica, the Dominican Republic and Guatemala - which haven't approved CAFTA - are now as high as 30 percent.
The duties also apply to goods shipped from the countries that have approved CAFTA if they include thread, buttons or other materials from the other three.
Prior to CAFTA, virtually all such goods came into the US duty free under the Caribbean Basin Initiative. CAFTA ended that regime for nations which do not ratify CAFTA and subjects them to a 30% tariff, and apparently that may even be hurting countries like El Salvador that implemented the treaty.