In trying to reach this $200 billion import level, political economists believe that China will shift its purchases from other countries to the Benefit of the United States. Achieving this goal could benefit the U.S. trade deficit, but it will cause some harm to developing countries. Angola, the Republic of Congo and Mongolia – about 50% of their exports to China – are most at risk and are expected to be damaged by the Phase One agreement. The Central American Common Market (CMAC) was established in December 1960 by Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, with the signing of the General Treaty on Central American Economic Integration. Costa Rica joined the integration agreement in July 1962. The 1960 Treaty provided for the creation of a common market that enters into force after the treaty enters into force. Although integration was very promising in the first decade, political and economic challenges in the region prevented the region from creating the common market that was previously planned. The process was renewed in 1993 with the Guatemalan Protocol, which provided a new basis for Central American economic integration. Member States had hoped to establish a customs union by the end of 2003, but this process was also delayed. With the signing of CAFTA-DR, it is not certain that the Central American region will establish a customs union or when. Currently, most intra-regional trade is tariff-free, but some exceptions remain, including coffee and sugar.
Member States have agreed on a four-step common external tariff. About 80% of the common external tariff plan has been implemented. (53) At the ACA Ministerial Meeting in Miami in November 2003, participating countries reached a compromise on the scope and ambitions of a free trade agreement. As the United States and Brazil have done, the compromise would create a two-stage free trade structure by January 1, 2005. The first step would be a common set of rights and obligations for the nine negotiating groups for the 34 FTA countries. The second level would consist of a series of multilateral agreements in which countries would voluntarily commit to deeper disciplines and greater liberalization in the nine groups. Although no negotiating space was excluded from the agreement because of the possibility for countries to assume different obligations within the ESTV structure, this was a very different view from the general principle of “single enterprise” originally envisaged. Regional integration also has political implications for the United States. Some observers consider the impetus for trade liberalization to be political and economic.
There are a number of questions that politics might ask. To what extent do trade agreements promote political stability in a country? Is it a useful tool for building a more democratic, secure and prosperous region? The agreement certainly sounds like an improvement in the current state of trade tensions between China and the United States, especially as the stock market reached record levels at the end of 2019. However, analysts are skeptical about the long-term feasibility of the agreement. Many believe that the $200 billion promise of a U.S. import to China – which Trump considered one of the most important victories in the deal when launching his re-election campaign – is extremely unrealistic. The Phase One agreement also has a “snap back” regime for U.S. agricultural imports, which means that while China is not left behind in purchasing the agreed-upon level of agricultural imports, the United States.