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US-DR-CAFTA

The US-Central America Free Trade Agreement, commonly referred to as “CAFTA,” was signed in December 2003 after twelve short months of negotiation. The negotiations involved the US, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Costa Rica at first refused to join the agreement, then changed its position in late January 2004. The US separately negotiated a bilateral treaty with the Dominican Republic, with a view to folding the deal, and the country itself, into the US-CAFTA scheme.

The US-CAFTA was signed late May 2004, and the Dominican Republic became an additional party to it in August 2004. Since then, the accord has been officially renamed the “United States-Dominican Republic-Central America Free Trade Agreement” or US-DR-CAFTA. But the overall agreement — which a lot of people continue calling just “CAFTA” — still needs ratification by all parties to go into force.

CAFTA is a wide-ranging agreement covering many areas: agriculture, telecommunications, investment, trade in services (from water distribution to gambling), intellectual property, the environment, etc. It essentially serves US business interests by giving them a concrete and high-level set of rights to operate in Central America. Some US sectors, such as sugar producers, feel threatened by the treaty. But by and large, the threats are mainly against the Central American countries which signed on, as it opens the depths of their economies — public and private — to the interests and power of US companies.

In July 2005, US Congress approved the DR-CAFTA and Bush signed it into law in early August. The Central American parliaments eventually also approved it. For the Dominican Republic, the treaty took effect in 2006.

Costa Rica was the Central American country with the strongest resistance to DR-CAFTA. There were large public demonstrations and information campaigns, and a broad grouping of civil society organizations, from trade unions to small farm organizations, signed on. This coalition successfully pushed for a referendum on ratification, which was held on 7 October 2007. The result: 51.62% in favour and 48.38% opposed. The result was considered binding since more than 40% of the electorate voted. In view of these results, CAFTA was ratified.

On December 23, President Bush issued a proclamation to implement the DR-CAFTA for Costa Rica as of 1 January 2009.

last update: May 2012


Improbable implementation of free trade by January 2006
It is still unclear whether the DR-Central America and US Free Trade Agreement (DR-CAFTA) will start in January 2006, and if it does, most of the Central American countries lag in preparation to enter commercial activity.
Democrats and labor leaders balk at lack of workers rights under CAFTA
Democratic members of Congress and labor leaders say they want the Bush administration to move away from CAFTA’s failed trade model or face another tough battle in Congress.
DR should emulate neighbors, be more aggressive with FTA
Officials at the highest level along with private business persons from El Salvador are currently on tours that have been denominated as “CAFTA-Tours” throughout the United States, looking to attract investments, in addition to participating in work shops to train exporters on how to best benefit from markets to open with DR-CAFTA.
Farmers reject new taxes, ask for assistance with upcoming FTA
Associations in the Dominican farming sector today rejected some of the measures recommended by the International Monetary Fund (IMF) and requested from the government to establish a program to shore the sector up, prior to implementing the Free Trade Agreement (FTA) with the United States.
Trade liberalization challenges post-CAFTA
This CRS report for US Congress analyses some of the challenges that became apparent in the aftermath of a divisive trade debate and how they could affect consideration of future trade agreements.
US sets deadline for entering Free Trade
The Dominican Republic has until 15 November to approve reforms stipulated by the Free Trade Agreement with the United States and Central America (CAFTA-DR), or it will not be able to participate as of January 2006, the launch date for the accord.
Costa Ricans march against US free trade agreement
Costa Rica University students peacefully marched to the National Assembly on Tuesday, expressing their rejection of the signing of a Free Trade Agreement with the United States.
American Chamber warns of urgent measures prior to Free Trade
The American Chamber of Commerce yesterday submitted to both chambers of Congress a number of administrative and legislative measures that the country should adopt, within the framework of the Free Trade Agreement with the United States and Central America (DR-CAFTA), while warning that all imported products must be treated with the same guidelines as local goods.
Top US executives set for FTA tour of Central America
Taking advantage of a newly approved free trade agreement, the US begins a commercial offensive in Central America this coming week, prompting concerns that local economies weakened by recent floods could represent easy targets for US corporations.
Nicaragua approves Central American Free Trade Agreement
Nicaragua’s legislature late Monday approved the Central American Free Trade with the United States.