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Poverty impacts of trade liberalisation

Guatemala and Costa Rica: in and out of CAFTA

Has CAFTA helped or hindered Guatemala?

Authors: U. Mazzei
Publisher: Center for International Policy, 2007

Full text of document

In 2005 Guatemala signed onto the Central American Free Trade Agreement (CAFTA) with the US. This report assesses the impact CAFTA has had on the Guatemalan economy.

Key findings include:

  • expensive foreign pharmaceuticals as opposed to cheap, national generic drugs are being imposed on the counties’ economy
  • subsidized imports from the US are overwhelming the peasant farmer
  • growth in exports being celebrated by the Bank of Guatemala has nothing to do with CAFTA
  • non-traditional exports in have decreased
A comparison is made with Costa Rica, which remains outside CAFTA. Authors conclude that the privileged share in a trade agreement with the US is more a hindrance than a help for Guatemala.