. . . Today, dollarized El Salvador is the most economically liberal Cafta country and may be in a position to benefit the most from the trade accord. Its total exports to the U.S. actually went down in the past year but that seems to be explained largely by the end of the WTO multifiber agreement. Without Cafta, the contraction could have been worse.

Offsetting the pain is an increase in imports, which are helping diversify the economy. According to the Economy Ministry, 60% of non-maquiladora imports from the U.S. last year were in six sectors and accounted for 88% of the growth in imports over 2005. Most were intermediate and capital goods for manufacturing and services. This includes yellow corn and wheat for the agroindustry, polyethylene for plastics, electronic equipment such as telephones and computers, fuels, and paper and cardboard for packaging.

El Salvador is also shifting away from traditional low-wage, garment-assembly operations toward the delivery of value-added, high-end apparel that includes all services bundled in the production process. According to Ricardo Sagrera, president of the textile group Hilasal, enhanced two-way trade is helping El Salvador capitalize on its comparative advantages -- notably its legendary work force and its proximity to the U.S. -- and compete with China. . . .

In Guatemala, which joined Cafta in July, the government says total trade grew by 17% in the second half of last year, compared with 5% in the first half. It also says that foreign direct investment tripled last year. A Guatemalan official I talked to said that the agreement has been good for his country because it has made doing business easier. For example, customs and photosanitary regulations have to be standardized and streamlined in order to comply with Cafta. This is leading to more efficient trading within the region.

That's important for companies like Wal-Mart, which has a substantial presence in Central America and is driving competitiveness in the retail sector. The retail giant taps suppliers in Central America for the perishables it sells. Greens come from Guatemala, El Salvador and Honduras, meat and pork from El Salvador. With Cafta, the distribution process has become more efficient.

Wal-Mart's need for perishables has also helped small and medium-sized farms in the region because the company has a program to develop suppliers. "They get a reliable marketplace and we get reliable suppliers," says a company representative. Wal-Mart's requirement that suppliers must be part of the formal economy could partly explain why business startups jumped by 20% last year. The company says that Cafta has been important also because the region is its largest supplier of apparel for its Western Hemisphere operations.

Nicaragua also is enjoying Cafta benefits. Total trade with the U.S. between last April, when it joined Cafta, and December was up by more than 20% over the same period in 2005. . . .