At the turn of the 21st century, protectionist policies in Latin America were
largely abandoned for an agenda that promoted free trade and regional
integration. Central America especially experienced an increase in international,
interstate, and intraregional economic integration through trade
liberalization. In 2004, such integration was on the agenda of every Central
American administration, the U.S. Congress, and Mexico. The Plan
Puebla-Panama (PPP) and the Central America Integrated Electricity System
(SIEPAC), in particular, aimed to facilitate the success of free trade
by increasing energy production and transmission on a unifi ed regional
power grid (Mesoamerica, 2011). Meanwhile, for the United States, a free
trade agreement (FTA) with Central America would bring it a step closer
to realizing a hemispheric trade bloc while securing market access for its
products. Isthmus states considered the potential for a Central America
Free Trade Agreement (CAFTA) with the United States, their largest trading
partner, as an opportunity to enter the global market on a united front.
A decade and a half on, CAFTA, PPP, and SIEPAC are interwoven, complimentary
initiatives that exemplify a shift towards increased free trade
and development throughout the region. As such, to understand one, the
other must be examined.
Welfare Analysis of the Dominican Republic-Central America-United States Free Trade Agreement: The Cotton Textile and Apparel Industries