With the hard—fought U.S. passage of the Central American Free Trade Agreement, there are signs of a welcome new alliance beginning to blossom — the permanence of the treaty means that Japan is looking to invest in poor, but stable Central American countries. CAFTA makes this investment—friendly region a back door for Japan to send its goods, which can produced at lower cost, to the U.S. This in turn is a bonanza for U.S. consumers who seek excellent but often expensive Japanese electronics and automobiles. They will be cheaper.

For Japan, beset by a weak economy for many years (it's just beginning to recover), this is a terrific strategic move. The duty—free advantages of CAFTA and the favorable geography of Central America for the U.S. export market — plus the lack of anti—Japanese investor sentiment seen in China — are a winning formula for Japan.

For Central America, which has had to compete against China's ultra—low wage labor with its own merely low wage labor, it's even better. More jobs and investment in the region that was once engulfed in Marxist war will ensure that war and communist subversion from the likes of Hugo Chavez and Fidel Castro lose their foothold. Most of these countries have strengthened property rights and cut taxes already. El Salvador (and to a large extent Guatemala) use the U.S. dollar. All are led by leaders who care deeply about doing the right things to get their countries out of poverty and into prosperity.

And of course the U.S., led by the Bush Administration, which fought ferociously against the likes of anti—free—traders like Hillary Clinton to pass CAFTA, wins here, too. Everyone — the U.S., Japan and Central America — gives in this arrangement and everyone gets something valuable in return.

The world's bullies like China and Cuba are the big losers in this welcome new emerging alliance.

A.M. Mora y Leon   08 22 05