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	MARKET ALERT: Central American Trade Opportunities Abound! The Central America Free Trade Agreement (CAFTA), the proposed Free Trade Agreement with Panama, and Plan Puebla-Panama (PPP)… Need we say more? Remember when you first heard that Canada and Mexico must be viewed as extensions of your domestic market? Well, Central America is the latest expansion and Virginia will lead a Trade Mission to Costa Rica and Panama this fall. CAFTA In 2003, U.S. exports to Central America reached an estimated $11.5 billion. In May 2004, the U.S., Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, signed the Central American Free Trade Agreement (CAFTA). When CAFTA is ratified by the U.S. Congress later this year or early in 2005, more than 80 % of U.S. exports will become duty free immediately and exports from the U.S. to the region are expected to rise significantly. Key U.S. export sectors will benefit, such as information technology products, agricultural and construction equipment, paper products, chemicals, and medical and scientific equipment. CAFTA represents a blueprint for a massive economic integration of the Western hemisphere and will create key export opportunities in the region for U.S. and Virginia companies! Panama Free Trade Agreement CAFTA goes hand in hand with a proposed U.S. - Panamanian Free Trade Agreement that is currently in negotiation phase and scheduled to be completed later this fall. Panama and the U.S. already enjoy strong bilateral ties partly due to the Canal. With some 2 million containers passing through its ports each year, Panama is the largest trans-shipment location in Latin America. There are also similarities in our economies. Panama's economy is based primarily on a well-developed services sector that accounts for about 80 percent of GDP. Services include operating the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism The U.S. is Panama's most important trading partner. Nearly half of Panama's total imports come from the U.S. and U.S. products enjoy a high degree of acceptance in Panama. Between 2002 and 2003, U.S. exports to Panama grew over 30%. In 2003, Panama imported $1.4 billion in U.S. goods and services giving the U.S. a 40 % share of all imports. Meanwhile Panama exported $350 million of products to the U.S. giving the U.S. a 45% share of all exports. This makes the U.S. Panama’s main trading partner and gives us our only trade surplus in the region. Plan Puebla-Panama A massive project called Plan Puebla-Panama (PPP) is also underway, which literally paves the way for current and future hemispheric trade agreements by creating the physical infrastructure required for expanded trade. The PPP is a 25-year, $20 billion program that consists of gigantic infrastructure investments in nine southern states of Mexico—Puebla, Oaxaca, Guerrero, Veracruz, Tabasco, Chiapas, Campeche, Quintana Roo, and Yucatan—and all seven Central American nations. The PPP will build the infrastructure to link energy and resource extraction and special development zones (“maquiladora’s” and other processing facilities), with a transportation network of north-south superhighways, and Atlantic-Pacific land routes. These routes will serve as alternatives to the overburdened Panama Canal. The PPP has become the Inter-American Development Bank's highest priority for the region. The first phase, well underway, consists of spending $3.5 billion for massive road construction from Mexico to Panama. The Inter-American Development Bank is funding the following PPP projects: Expanded highways: 5,565 miles of new or improved highways, Upgraded electrical grids: 1,130 miles of new electrical lines to distribute power generated by gas and dams Development of six massive "development zones" for maquiladora plants and processing facilities New airports Railroads Bridges 25 new dams A fiber-optic network This year, the U.S. Trade Development Agency will continue to support trade capacity-building activities related to CAFTA in the areas of information technology and telecommunications, port modernization and security, and energy policy development. In addition, USTDA is supporting a regional geographic information systems land transportation project, as part of the PPP initiative, sponsored jointly by the Inter-American Development Bank and Inter-American Investment Corporation. Because of the PPP, Panama has potential for substantial growth in the areas of electric power generation, health care services, mining exploration and operations, port services, land development, road construction, telecommunications, and tourism. Help for Virginia Business Interested in Expanding in Central America Virginia will be one of the first states to lead a Trade Mission to the region this fall. The VEDP will pre-arrange business appointments in two of the most promising markets in the region-Costa Rica and Panama. Virginia businesses that participate in the Trade Mission this fall, will already be well positioned in these key markets as trade negotiations are ratified. Why Panama? Due to its strategic location, Panama, from the time of the conquistadors, has served as the crossroad of trade for the Americas. Today, Panama is an international trading, banking, and services center. Panama's dollar-based economy offers low inflation and zero foreign exchange risk. Panama's government has been stable for some time, actively seeks foreign investment and has no restrictions on the outflow of capital or outward direct investment. Virginia exports to Panama were valued at U.S. $11.32 million in 2003. There were dramatic increases in certain product categories from 2002 to 2003 including machinery exports, which rose 177.75%, and pharmaceutical products up 131.31%. Key Export Prospects Include: Building Products Transportation Service: Port and Maritime Services Telecommunications Equipment Automotive Parts and Service Equipment Management Consulting Services Computer Software Water and Wastewater Treatment Equipment Franchising General Services: Warehousing and Wholesaling Security and Safety Equipment Why Costa Rica? Costa Rica offers a long history of political stability and tranquility. Costa Rica has a market economy that is supported by one of the most stable democracies in Latin America. Although it is still considered an agricultural country, the economy has expanded to include strong technology and tourism sectors. Costa Rica is among the top 30 leading exporters of high-tech products. Virginia exports to Costa Rica were valued at U.S. $10.39 million in 2003. Pharmaceutical product exports were up 575% over 2002, and paper/paperboard products, textile products and glass and glassware exports also rose significantly. Key Export Prospects Include: Paper & Paperboard Computers & Peripherals Plastic Materials and Resins Telecommunications Equipment Automotive Parts Agricultural Chemicals Construction Equipment Medical Equipment Companies interested in developing sales in Central America should consider joining the VEDP’s first ever Trade Mission to the region November 15 – 19, 2004. The VEDP will pre-arrange business appointments in Costa Rica and Panama. This mission is open to all industries. For more information, please contact Joe Adam at: 757- 314-2358 or e-mail JAdams@YesVirginia.org. Sources: CIA World Factbooks: Panama and Costa Rica: http://www.odci.gov/cia/publications/factbook/ Country Commercial Guides: Panama and Costa Rica: http://www.export.gov World Trade Atlas®: http://www.gtis.com/state/ U.S. Trade Representative: http://www.ustr.gov/new/fta/cafta.htm US Trade Development Agency: http://www.ustda.gov Global Exchange: http://www.globalexchange.org/countries/mexico/2090.html DISCLAIMER – The contents of this article are intended to provide pertinent inform-ation for Beyond Virginia subscribers interested or already involved in international trade. While every effort is made to convey accurate and timely information, the contents of this article are not intended as specific advice to its readers. Our intent is solely to convey information.