Impacts of the U.S.-Central America-Dominican Republic Free Trade Agreement - the Apple Case

The U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) levels the playing field of trade between the United States and the six CAFTA-DR partner countries. Half of U.S. farm products gain immediate tariff-free access to the markets of the CAFTA-DR region. All Tariffs will be eliminated in 20 years. Under CAFTA-DR, tariffs on an important U.S. fresh fruit export to the region, fresh apples, declined from an initial base of 15%-25% in CAFTA-DR countries to zero immediately upon enforcement. The specific objective of this research is to analyze the impact of tariff elimination under CAFTA-DR on the trade of U.S. fresh apples. Generalized Method of Moments (GMM) is used for the analysis involving an excess-supply-excess-demand model with monthly trade data from January 2000 to December 2010. The more telling empirical results indicate that for each of the six CAFTA-DR countries, tariff elimination positively promotes U.S. apple exports to this region.

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 Record created 2017-04-01, last modified 2018-01-22

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