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Issue #583 | Forest Products

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2014 Media Kit
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Nicaragua: The icing on the CAFTA cake

By: | at 07:00 PM | Channel(s): International Trade  

By Bernardo Callejas

Crowley Liner Services just began servicing the Port of EL RAMA in Nicaragua. Although this news probably went unnoticed by many, it was seen as reason for celebration by manufacturers in Nicaragua who now have an in-country option for shipping their goods into the Atlantic. Traditionally, Nicaraguan exports that needed to make their way to the Eastern United States have relied on the port systems of the neighboring countries- Honduras and Costa Rica. The reverse also holds truth. Imports into Nicaragua coming from the US East coast arrive through either Honduras or Costa Rica and subsequently are trucked approximately 450 miles into Nicaragua. With Crowley’s announcement it is expected that the trucking time and distance will be reduced by half. Hence the reason for the Nicaraguan jubilee.

Crowley’s decisi’n to expand their operations confirms the success of Nicaragua as a true democratic government. Since 1990, the country has focused on improving its governmental, economical , and physical infrastructures and its efforts have started paying off. The establishment of the Port of EL Rama was a complicated and multi-faceted project which involved the building of a modern highway, renovation of the existing port, and the dredging and signaling of the Escondido river which desembarks into the Caribean. Such advances will permit navegation on the Escondido past sun-set. This project is one of many which the government has spear-headed in an attempt to to improve its country’s competitiveness and attract foreign direct investment into the country. Others include the renovation and expansion of Managua’s International Airport, major improvements of the country’s road system, providing incentives for re-usable energy generation, and privatizing and thus modernizing telecommunications.

Today, Nicaragua is poised at the dawn of a new era of growth and development based on the mutual benefits the approval of the DR-CAFTA (Dominican Republic-Central American Free Trade Agreement) will bring to the signatory countries. This agreement is far more than a free trade agreement designed to open markets and stimulate investment. CAFTA will serve as the foundation for the strengthening of democracy, the rule of law, legal accountability, and the modernization of public institutions. This institutional transformation is essential to speed up the remarkable economic and political progress achieved by the country over the last fifteen years. The agreement will signify the close of a troubled past , and serve as the underpinning for closer economic ties with the United States.

Against the growing threat of Chinese manufactured goods being imported into the US, Nicaragua, in addtion to the other Central America countries, are fast becoming viable options for many manufacturers in this hemisphere to remain standing and compete directly with Chinese imports. Major infraestructure developments have occured throughout Central America to attend the growing needs of manufacturers not wishing to set up shop in the Far East. The region’s banana and coffee plantations are being replaced by manufacturing parks producing industrial products ranging from microchips and electronic switches to textiles and apparel. Nicaragua alone experienced a growth in its manufacturing exports of almost 35% during 2003, and as of October 2004 the same growth had surpassed the 20% mark for the year.

In 1995, Cupid Foundations, the intimate apparel manufacturer, recognized that it needed to expand in a new offshore location if it was to maintain its competitive edge. But they weren’t sure where to go. The 62-year old family-owned manufacturer already had a facility in Mexico, in addition to one in Blackwell, Oklahoma, and was interested in diversifying to a new location. They needed to cut costs to compete with Asian manufacturers, and required a location close enough to the United States to ensure quick delivery times. Looking at the map, Nicaragua’s location caught their eye.

Offering the most competiti