Dominican Republic-Central America Free Trade Agreement

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Note: Within this article, "CAFTA" refers to the treaty as it stood before January 2004, and "DR-CAFTA" is used after that.

The Dominican Republic-Central America Free Trade Agreement, more commonly known as DR-CAFTA, is a free trade agreement being negotiated as of May 2005. As CAFTA, the treaty originally encompassed the United States and the Central American countries Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. In 2005, the Dominican Republic joined the negotations, and treaty became known as DR-CAFTA.

Bordering Central American nations not in the treaty include Belize and Panama on the mainland, Haiti, and with Cuba. Panama is currently in negotiations with the U. S. on a bilateral Free Trade Agreement, and Belize is a member of the Caribbean Community (CARICOM). Haiti was given certain trade preferences with the U. S. under the Haiti Economic Recovery Opportunity Act of 2003 (HERO Act).



The Central American Free Trade Agreement is a multilateral agreement to extend North American Free Trade Agreement (NAFTA) into Central America (El Salvador, Nicaragua, Guatemala, Honduras and the Dominican Republic). As of this writing (6/24/2005), CAFTA had been signed by the U.S. but as a treaty, still requires the approval of both houses of Congress.

The goal of the agreement is the creation of a free trade zone, similar to the NAFTA which currently encompasses the US, Canada, and Mexico. DR-CAFTA is also seen as a stepping stone towards the Free Trade Area of the Americas (FTAA), another, more ambitious free trade agreement which would encompass South American and Caribbean nations (with the exception of Cuba] as well. Canada is negotiating a similar treaty called the Canada Central American Free Trade Agreement.

If passed by the Congress of the United States and the countries involved, tariffs on about 80% of US imports to the participating countries will be eliminated immediately and the rest will be phased out over the subsequent decade.

With the addition of the Dominican Republic, the largest economy in the region, the region covered by DR-CAFTA is the US's second-largest Latin American export market, behind only Mexico, buying $15 billion of goods a year. Two-way trade amounts to about $32 billion.

While not necessarily a part of Plan Puebla Panama, CAFTA is a necessary precursor to the execution of Plan Puebla Panama by the Inter-American Development Bank. The plan includes construction of highways linking Panama City to Mexico City and on to Texas and the rest of the United States.

Support and backing

US President George W. Bush announced in January 2002 that CAFTA is a top priority for his administration, and Congress gave his administration "fast track" authority to negotiate it. Negotiations began in January 2003, and agreement was reached with El Salvador, Guatemala, Honduras, and Nicaragua on December 17, 2003, and with Costa Rica on January 25, 2004, and in that month, negotiations began with the Dominican Republic to join CAFTA. On February 20, 2004, President Bush informed Congress of his support for CAFTA. On May 28, 2004, United States Trade Representative Robert Zoellick, Costa Rican Minister of Trade Alberto Trejos, El Salvadoran Minister of the Economy Miguel Lacayo, Guatemalan Minister of the Economy Marcio Cuevas, Honduran Minister of Industry and Commerce Norman GarcĂ­a, and Nicaraguan Minister of Development, Industry and Commerce Mario Arana signed the 2,400-page document at headquarters of the Organization of American States. Negotiations with the Dominican Republic concluded on March 15, 2004, and a second signing ceremony including Dominican Republic Minister of Industry and Commerce Sonia Guzman was held on August 5, 2004.

Because of the lack of popular support, plus the opposition of civil society, many activist groups, political parties, and unions in Central America, DR-CAFTA is seen as a critical step towards FTAA (which also lacks popular support) by its backers, since imported and exported goods passing to and from the rest of Latin America will have to travel through this region. Without the participation of these countries, FTAA will be next to impossible.

Robert Zoellick and corporate backers such as the National Association of Wheat Growers claim the agreement will open new markets to American manufacturers, and help the Central American nations modernize their economies, create worker rights protections that will enforce and improve labor laws, and improve environmental standards. DR-CAFTA is endorsed by the U.S. High-Tech Trade Coalition, fifty-two food and agriculture organizations, Microsoft, the National Association of Manufacturers, the National Foreign Trade Council, Citizens Against Government Waste, the Heritage Foundation, the U.S. Chamber of Commerce, and several Central American environmental organizations including Caribbean Conservation Corporation, Global Alliance for Humane Sustainable Development, and the Honduran Ecologist Network for Sustainable Development.

Opposition and resistance

Public Citizen, the US advocacy group founded by Ralph Nader, says DR-CAFTA is based on the same "failed neoliberal model" as NAFTA and serves to "push ahead the corporate globalization model that has caused the 'race to the bottom' in labor and environmental standards and promotes privatization and deregulation of key public services." Public Citizen claims that independent farmers in America, Canada and Mexico have been hit particularly hard by NAFTA, with thousands wiped out and farmland shifting into the hands of huge agrobusiness concerns such as Tyson and Cargill; the group fears DR-CAFTA will have same effect in Central America. Many US environmental groups are opposed to the agreement, including the Sierra Club, EnviroCitizen and the Safe Earth Alliance.

In May, 2004, the Salvadoran American National Network, the largest national association of Central American community-based organizations, along with other organizations representing Central American immigrants, expressed its opposition to CAFTA, saying:

Our opposition to CAFTA is not ideological. As immigrants, we have a deep understanding of the potential benefits of improved transnational cooperation. We would welcome an agreement that would increase economic opportunity, protect our shared environment, guarantee workers' rights and acknowledge the role of human mobility in deepening the already profound ties between our countries. However, the CAFTA agreement falls far short of that vision. [1]


DR-CAFTA encompasses the following components:

  • Services: all public services are to be open to private investment.
  • Investment: governments promise to grant ironclad guarantees to foreign investment.
  • Government procurement: All government purchases must be open to transnational bids.
  • Market access: governments pledge to reduce and eventually to eliminate tariffs and other measures that protect domestic products.
  • Agriculture: duty-free import and elimination of subsidies on agricultural products.
  • Intellectual property rights: privatization of and monopoly over technological know-how.
  • Antidumping rules, subsidies and countervailing rights: governments commit to phase out protectionist barriers in all sectors.
  • Competition policy: the dismantling of national monopolies.
  • Dispute resolution: the right of transnationals to sue countries in private international courts.
  • Environmental protection: the enforcement of environmental laws and improvement of the environment.
  • Labor standards: the enforcment of the International Labor Organization's core labor standards.
  • Transparency: the reduction of government corruption.

CAFTA Draft Revised Text (Note: this is a Table of Contents which links to pdf files).

  • US Trade Representative's U.S.-Central American Free Trade Agreement and Dominican Republic Free Trade Agreement (broken link ?) webpage.
  • US Trade Representative's Summary of the U.S.-Central America Free Trade Agreement
  • US Trade Representative's Dominican Republic-CAFTA webpage Dominican Republic-CAFTA webpage

daily Kos diaries and discussion

[Note: This section just added on Jan. 8 2005. If you are aware of a relevant, substantive (i.e. content, not rant) diary that should be listed here, please edit this page to add your link.]

See Also

External Links


  • NAFTA to CAFTA: Ten Years of Failed Trade Policy Issue statement by Rep. Sherrod Brown (D, OH-13)
  • MELANCON PLEDGES FIGHT AGAINST CAFTA Campaign statement of Rep. Charlie Melancon (D, LA-3)
  • Kerry Statement on CAFTA May 28. 2004
  • Sierra Club CAFTA page
  • Stopping CAFTA: The Next Trade Battle to Protect Workers’ Rights CAFTA page of the AFL-CIO
  • Central American Free Trade Agreement CAFTA page of Global Exchange
  • CAFTA Not Likely to Do Better Than NAFTA by Mark Weisbrot, Co-Director of the Center for Economic and Policy Research, published by Knight-Ridder/Tribune Information Services (various newspapers, Dec. 2003 - Jan. 2004)
  • A Fight We Can Win by John Nichols, published in The Nation January 31, 2005


  • The World Bank and the Central America Free Trade Agreement
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