"We want CAFTA-DR to start as close as possible to January 1, 2006, so that U.S. and regional businesses can begin taking advantage of the Agreement's benefits in the shortest possible time. The United States is prepared to have the CAFTA-DR enter into force as early as January 1, but only with countries that have made sufficient progress in adopting new laws and regulations where necessary. We will move forward as long as at least one country is prepared, and will accommodate new entrants as they become ready.

"We want to reward countries as they become ready and look forward to continued progress with the others. Countries can continue to enjoy existing preferences while they work with the United States to come on board. Preserving benefits during a brief transition period is a non-disruptive way to move countries over the goal line while keeping the Administration’s commitment to Congress to ensure full implementation of all obligations.

"To the extent possible, the United States will seek to create a seamless transition between the Caribbean Basin Initiative / Caribbean Basin Trade Partnership Act (CBI/CBTPA) and the CAFTA-DR. Countries that have ratified the Agreement would retain their benefits under CBI/CBTPA until the CAFTA-DR enters into force for them and would retain their ability to seek retroactive duty refunds for qualifying textiles and apparel. Moreover, U.S. partners for whom the Agreement enters into force by April 1 can retain their full year agricultural quotas for 2006; treatment of quotas after that date will be determined as appropriate."

Background

Countries which are signatories to CAFTA-DR include the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. All of the CAFTA-DR signatories have ratified the Agreement except Costa Rica. El Salvador was the first to ratify in December 2004. Nicaragua was the most recent, in September 2005.

Implementing legislation for the CAFTA-DR passed the U.S. Senate in June and the House of

Representatives in July, 2005, and was signed by the President in August.

The CAFTA-DR partners agreed to a target date of January 1, 2006, for entry into force. All countries recognized, however, that this was an ambitious goal, and that all countries might not have completed their implementation process by that time. Other U.S. free trade agreements have had a longer preparation period to get ready (typically 6-7 months with only one country), so the need for additional time is not unusual.

With the exception of Costa Rica, all of the countries are working to complete the implementation process as soon as possible. Under the "rolling admissions" process, entry into force would occur on the first day of the month with a country that the USTR determines is ready by the middle of the preceding month. The intervening time will allow for a Presidential proclamation to be prepared.

CAFTA-DR is the second largest U.S. export market in Latin America, behind only Mexico, buying more than $16 billion in U.S. exports. Successful CAFTA-DR implementation is critical to the broader U.S. policy goals for the Americas of strengthening democratic governance, expanding economic opportunity, and investing in people.

U.S. Trade Agenda

The United States is aggressively working to open markets globally, regionally, and bilaterally and to expand American opportunities in overseas markets. The Bush Administration has completed FTAs with 13 countries – Chile, Singapore, Australia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Morocco, Bahrain, Oman and Peru. Negotiations are under way with ten more countries: Colombia, Ecuador, United Arab Emirates, Panama, Thailand, and the five nations of the Southern African Customs Union (SACU). New and pending FTA partners, taken together, would constitute America’s third largest export market and the sixth largest economy in the world.

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