ICI Supports Trade Agreement with Central America

Washington, DC, May 2, 2005 - The Institute has urged Members of Congress to support approval of CAFTA, the Central American Free Trade Agreement, recently negotiated by the U.S. with certain Central American trading partners.

Background
In 1997, the GATS Financial Services Agreement was negotiated between the U.S. and many South and Central American governments. GATS created a framework for increased international competition in financial services, however, certain nations, such as Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua did not take commitments in asset management under GATS.

CAFTA goes beyond the progress made in GATS and provides legal certainty for the first time that U.S. firms will be afforded national treatment, non-discrimination, and the right of establishment in those countries. CAFTA also includes a commitment to permit the cross-border supply of portfolio management services to mutual funds.

ICI Position
In a recent letter to Congressional leaders, the Institute states that CAFTA "is of great importance to the U.S. industry" and that "the financial services transparency commitments in CAFTA also represent an important achievement that we hope will be a precedent for all trade agreements." CAFTA helps assure that mutual funds will be able to do business in Central America without encountering discrimination or barriers to market entry.

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