The American Insurance Association is asking the insurance industry and members of Congress to support House passage of the Central American Free Trade Agreement (CAFTA), arguing that the trade deal "represents the latest step in opening the world's insurance markets."
"CAFTA involves the Dominican Republic and several Central American countries, but Costa Rica is noteworthy for having one of the world's last government-owned insurance monopolies," said David Snyder, AIA vice president and assistant general counsel.
"CAFTA does away with the state-run monopoly in favor of gradually opening a private insurance market in Costa Rica," Mr. Snyder continued. "There is no doubt that CAFTA's provisions on insurance will open new markets for U.S. insurers, but it will also help the CAFTA countries develop economically, reduce unnecessary loss of life and property, and assist in providing critical public infrastructure such as roads, bridges, libraries and hospitals."
He said the AIA worked hand-in-hand with the U.S. Trade Representative's Office to craft the deal. The American Council of Life Insurers was also involved in the talks.
Particular interest was paid to Costa Rica, Mr. Snyder said. The regulatory transparency provision requires a notice-and-comment process of rules governing insurance underwriting and sales with that nation. "Without that you can regulate all the treaties you want just to have them nullified through day-to-day regulation," he said.
The trade deal would establish a free-trade zone similar to NAFTA between the U.S. and six countries. The bill has passed the Senate and the House Ways and Means Committee.
But it faces big trouble in the House because a number of Democrats want to see Republicans from districts that would be hurt by the deal–those representing textile and insurance interests–take a politically-difficult vote, according to the Washington Post. Without 50 Democrats supporting the bill, the legislation faces an uphill battle in the House.
The trade agreement is between the U.S. and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. It would wipe out most of the quotas and tariffs on imported goods and services from those countries. Economic power for those countries is tiny (their combined gross domestic products are still smaller than the Czech Republic's) but the deal has provoked big claims from both sides, the Post said.
"We feel [the battle in the House] is winnable," Mr. Snyder said. "We are optimistic Congress will agree to it for two reasons: It opens markets for U.S. goods and services, and it ties together mutually- beneficial trade agreements that strengthen democracy among our neighbors."
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