On August 5, 2004, the United States signed the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) with five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) and the Dominican Republic. The CAFTA-DR is the first free trade agreement between the United States and a group of smaller developing economies. This agreement is creating new economic opportunities by eliminating tariffs, opening markets, reducing barriers to services, and promoting transparency. It is facilitating trade and investment among the seven countries and furthering regional integration.
Central America and the Dominican Republic represent the third largest U.S. export market in Latin America, behind Mexico and Brazil. U.S. exports to the CAFTA-DR countries were valued at $19.5 billion in 2009. Combined total two-way trade in 2009 between the United States and Central America and the Dominican Republic was $37.9 billion.
The agreement entered into force for the United States and El Salvador, Guatemala, Honduras, and Nicaragua during 2006, for the Dominican Republic on March 1, 2007, and for Costa Rica on January 1, 2009. With the addition of Costa Rica, the CAFTA-DR is in force for all seven countries that signed the agreement.
On August 15, 2008, the CAFTA-DR Parties implemented important changes to the agreement’s textiles provisions, including changing the rules of origin to ensure that pocket fabric in apparel is sourced from the United States or another CAFTA-DR Party. The Parties also implemented a reciprocal textile input sourcing rule with Mexico. Under this rule, Mexico will provide duty-free treatment on certain apparel goods produced in a Central American country or the Dominican Republic with U.S. input, and the United States will provide reciprocal duty-free treatment under the CAFTA-DR on certain apparel goods produced in a Central American country or the Dominican Republic with Mexican input. These changes will further strengthen and integrate regional textile and apparel manufacturing and create new economic opportunities in the United States and the region.
CAFTA/DR Trade Facts:
CAFTA/DR countries combined would currently be our 12th largest goods trading partner with $38.8 billion in total (two way) goods trade during 2009. (Note: CAFTA/DR countries would have been the 8th largest if EU countries were grouped together as one entity, as well as NAFTA countries). Exports totaled $20.0 billion; Imports totaled $18.8 billion; The U.S. goods trade surplus with CAFTA/DR was $1.2 billion in 2009
U.S. goods exports to CAFTA/DR countries in 2009 were $20.0 billion, down 21.3% ($5.4 billion) from 2008, but up 145% from 1994 (year before Uruguay Round).
CAFTA/DR countries combined would have been the United States’ 14th largest goods export market in 2009. (Note: CAFTA/DR countries would have been the 9th largest if EU countries were grouped together as one entity, as well as NAFTA countries)
The U.S. export markets in CAFTA/DR for 2009 were: Dominican Republic ($5.3 billion), Costa Rica ($4.7 billion), Guatemala ($3.9 billion), Honduras ($3.4 billion), El Salvador ($2.0 billion), and Nicaragua ($715 million).
The top export categories (2-digit HS) in 2009 were: Mineral Fuel ($2.9 billion), Electrical Machinery ($2.6 billion), Machinery ($1.7 billion), Special Other (low value and charity shipments) ($1.4 billion), and Cereals (corn, wheat, and rice) ($1.2 billion).
U.S. exports of agricultural products to CAFTA/DR countries totaled $3.0 billion in 2009, as a group it would be the 6th largest U.S. Ag export market. Leading categories include: coarse grains ($580 million), wheat ($397 million), soybean meal ($382 million), and rice ($223 million).
U.S. goods imports from CAFTA/DR countries totaled $18.8 billion in 2009, down 2.7 ($526 million) from 2008, but up 138% from 1994 (year before Uruguay Round).
CAFTA/DR countries combined would have been the United States’19th largest goods import supplier in 2009. (Note: CAFTA/DR countries would have been the 14th largest if EC countries were grouped together as one entity, as well as NAFTA countries)
The U.S. import suppliers from CAFTA/DR for 2009 were: Costa Rica ($5.6 billion), Dominican Republic ($3.3 billion), Honduras ($3.3 billion), Guatemala ($3.1 billion), El Salvador ($1.8 billion), and Nicaragua ($1.6 billion).
The five largest import categories in 2009 were: Knit Apparel ($4.8 billion), Machinery ($2.6 billion), Edible Fruit and Nuts (bananas and plantains) ($1.5 billion), Woven Apparel ($1.4 billion), and Optic and Medical Instruments ($1.3 billion).
U.S. imports of agricultural products from CAFTA/DR countries totaled $3.6 billion in 2009, as a group it would be the 3rd largest supplier of Ag imports. Leading categories include: bananas and plantains ($831 million), coffee (unroasted) ($762 million) other fresh fruit ($630 million), raw beet and cane sugar ($231 million), processed fruit and vegetables ($183 million), and fresh vegetables ($180 million).
Balance of Merchandise Trade
The U.S. goods trade surplus with CAFTA/DR was $1.2 billion in 2009, a 80.7% decrease ($4.9 billion) over 2008.
Reported U.S. foreign direct investment (FDI) in CAFTA/DR countries (stock) was $8.5 billion in 2008 (latest data available), up 39.4% from 2007.
There is no information on the distribution of U.S. FDI in CAFTA/DR countries.
CAFTA/DR countries’ reported FDI in the United States (stock) was not available in 2008.
**CAFTA/DR consists of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.