The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) Page: 2 of 39
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The Dominican Republic-Central America-United States
Free Trade Agreement (CAFTA-DR)
On August 5, 2004, the United States, Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua, and the Dominican Republic signed the CAFTA-DR. Nearly
one year later, it faced a contentious debate and close vote in both houses of the U.S.
Congress. The Senate passed implementing legislation 54 to 45 on June 30, 2005,
with the House following in kind 217 to 215 on July 28, 2005. President Bush
signed the legislation into law on August 2, 2005 (P.L. 109-53, 119 STAT. 462). El
Salvador, Honduras, Guatemala, and most recently, the Dominican Republic have
also ratified the agreement. The CAFTA-DR is expected to enter into force on
January 1, 2006, provided these countries demonstrate that they "have taken
necessary measures to comply with the provisions of the agreement." Nicaragua and
Costa Rica may also become participating members of the agreement, should they
ratify it at some later date.
The CAFTA-DR is a regional agreement with all parties subject to "the same
set of obligations and commitments," but with each country defining its own market
access schedule. It is a reciprocal trade agreement, basically replacing U.S. unilateral
preferential trade treatment extended to these countries under the Caribbean Basin
Economic Recovery Act (CBERA), the Caribbean Basin Trade Partnership Act
(CBTPA), and the Generalized System of Preferences (GSP). It liberalizes trade in
goods, services, government procurement, intellectual property, and investment, and
addresses labor and environment issues. Most commercial and farm goods attain
duty-free status immediately. Remaining trade will have tariffs phased out
incrementally over five to twenty years. Duty-free treatment will be delayed longest
for the most sensitive agricultural products. To address asymmetrical development
and transition issues, the CAFTA-DR specifies rules for transitional safeguards, tariff
rate quotas, and trade capacity building.
The CAFTA-DR is not expected to have a large effect on the U.S. economy as
a whole, but some sectors and groups will be affected more than others. Supporters
see it as part of a policy foundation supportive of both improved intraregional trade,
as well as, long-term social, political, and economic development in an area of
strategic importance to the United States. Opponents wanted better trade adjustment
and capacity building policies to address the potentially negative effects on certain
import-competing sectors and their workers. In light of the region's poor labor
standards in some cases, the perception of inadequate labor laws, and widely
accepted lax enforcement, opponents also argued that the labor provisions in the
CAFTA-DR needed strengthening. This report addresses the CAFTA-DR and will
For more on individual country perspectives, see CRS Report RL32322, Central
America and the Dominican Republic in the Context of the Free Trade Agreement
(CAFTA-DR) with the United States, coordinated by K. Larry Storrs.
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The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), report, September 7, 2005; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc809438/m1/2/: accessed March 23, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.