To help Central America stay stable, the US has to provide more significant trade incentives.


Even though the area has repeatedly thrust itself into our radar screen, most Americans and US officials do not give Ipass title loan department Central America much thought. We saw the impact of Central America’s volatility on our well-being last year, and it was one of those moments. The pandemic’s ramifications, political upheaval, and a lack of economic opportunities prompted a widespread departure from the area. Consequently, the United States has received a record number of migrants and has seen the most significant number of loan unlawful border crossings in history, posing a severe threat to our southern border.

There is no easy answer to the present dilemma since many reasons are long-standing. Better border security, support for democratic institutions, combating organized crime throughout the region, and prosecuting corrupt officials are all part of the practical solutions in US government initiatives. However, US policy continues to fall short in one critical area, such as measures to promote economic development via regional trade and employment creation.

Economic incentives combine unique push-and-pull aspects among the various causes driving Central American migration to the United States. People are compelled to migrate due to a lack of possibilities at home while also being drawn by the promise of a thriving economy in the United States.

Recognizing that Central America is essentially part of a broader North American economic zone that attracts people and investment to the locations where demand is highest is essential to reducing these forces. Attempts to erect barriers to people, money, and commerce have never worked and are unlikely to now.

Expanding economic prospects in Central America is necessary to reduce migration incentives in the long run. This will not be accomplished primarily by government development aid or a few high-profile investments by several global corporations. Instead, it needs comprehensive trade and investment incentives to encourage the private sector across the Western Hemisphere to expand its operations in Central America.

It becomes easier to rationalize such incentives if we acknowledge Central America as part of our more extensive economic zone. And they usually only need minor policy adjustments. One such example is trade. The Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), which now exists between the US and partner nations in the area, was meant to decrease tariffs and other trade obstacles that stifle industrial expansion and job creation. Unfortunately, significant weaknesses in CAFTA-DR, such as the “rules of origin” restrictions, have resulted in an anti-competitive marketplace that stifles investment and slows economic development in various industries.

Take the textiles and garment business, for example, which can promote significant economic development in Central America, resulting in affluent and stable communities for future generations. While the rules of origin criteria provide partner nations preferential access to the US market, items must be wholly sourced or manufactured in a partner country to qualify for the agreement’s advantages. The rules of origin for the textile and apparel industries are mostly “yarn-forward,” which means that the yarn in textiles used to make garments or other textile goods must come from one of the participating partner countries.

This strategy severely harms the competitiveness of garment exporters in the area. Many textiles manufacturers need simply not be manufactured in Central America, making this yarn-forward criterion impossible to achieve. As a result, many textile and clothing firms continue to produce their products in Asia rather than establishing a presence in Central America and investing.

The repair may be simple. A few textiles not usually seen in CAFTA-DR nations currently fall under less stringent “cut and sew” requirements, under which items are deemed originating if the fabric is cut and sewed in a participating country. Producers might make a more excellent range of garment goods at a lesser cost if these were extended across additional apparel categories, encouraging investment in the area.

Given the importance of long-term economic stability in Central America, authorities in the United States should prioritize updating provisions like these. President Biden, Vice President Kamala Harris, US Trade Representative Katherine Tai, and members of Congress might minimize the economic incentives that drive mass migration by stimulating trade and investment. This might help Americans by encouraging manufacturers, investors, and merchants to deepen their participation with CAFTA-DR partner nations, resulting in a regional engine for long-term growth.


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