Washington Office on Latin America: What is CAFTA and Why Is It Important?

By The Washington Office on Latin America

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The proposed U.S.-Central America Free Trade Agreement (CAFTA) promotes trade liberalization between the United States and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Modeled after the ten-year old North American Free Trade Agreement (NAFTA), CAFTA is widely considered to be a stepping stone to the larger Free Trade Area of the Americas (FTAA) that would encompass 34 economies. CAFTA must be approved by the U.S. Congress and by National Assemblies in the Central American countries before it becomes law.