CAFTA stands for the Central America Free Trade Agreement. It is often referred to as CAFTA-DR (Central America-Dominican Republic Free Trade Agreement) and is a trade pact designed to reduce tariffs and trade barriers between the United States and five Central American countries—Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua—plus the Dominican Republic.
The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) is composed of the United States and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.
The agreement eliminated most tariffs and many non-tariff barriers to trade between the U.S., five of the seven nations in Central America (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua), and the Dominican Republic, an island nation in the Caribbean.
The implementing legislation became Public Law 109-053 when it was signed by President George W. Bush on August 2, 2005. The Dominican Republic, Costa Rica, El Salvador, Guatemala, Nicaragua, and Honduras have also approved the agreement. They are all the current members of CAFTA-DR.
Mercosur consists of the region's two biggest economies, Argentina and Brazil, as well as Paraguay and Uruguay. Bolivia, the bloc's newest member, can join the trade deal in the coming years. Venezuela has been suspended from the bloc and isn't included in the agreement.
The continent includes twelve sovereign countries: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela; two dependent territories: the Falkland Islands and South Georgia and the South Sandwich Islands; and one internal territory: French Guiana.
Some Democrats in Congress, along with groups like the International Labor Organization, say that CAFTA does not offer enough protections for workers in Central America. They say the text of the treaty calls on CAFTA members only to “strive” to enforce national labor laws.
Central America is a part of North America consisting of a tapering isthmus running from the southern extent of Mexico to the northwestern portion of South America.
What is the largest free trade agreement in the world?
The Regional Comprehensive Economic Partnership (RCEP) is the world's largest free trade agreement, uniting 15 economies, including China, Japan, South Korea, and members of The Association of Southeast Asian Nations (ASEAN). It is emerging as a beacon of hope for the future of multilateralism.
The CAFTA-DR promotes stronger trade and investment ties, prosperity, and stability throughout the region and along our Southern border. Trade under CAFTA-DR supports Made-in-America jobs and unlocks opportunities for well-paying work as goods flow across borders and are manufactured into final products.
Thanks to the China-Australia Free Trade Agreement, even under Beijing's new restrictions, local beef exporters have been given a tariff-free quota of 205,000 tonnes. The latest data suggest that total Australian beef exports to China finished 2025 at around 265,000 tonnes.
NAFTA, while extending protections for investors, explicitly excluded any protections for working people in the form of labor standards, worker rights, and the maintenance of social investments. This imbalance inevitably undercut the hard-won social contract in all three nations.
The United Kingdom was a co-founder of EFTA in 1960, but ceased to be a member upon joining the European Economic Community. The country held a referendum in 2016 on withdrawing from the EU (popularly referred to as "Brexit"), resulting in a 51.9% vote in favour of withdrawing.
Guatemala: Since Guatemala implemented CAFTA-DR in July 2006, U.S. exports have increased sharply, and were up by 56% in 2016 at $4.4 billion. The United States also imported $3 billion in goods from Guatemala that year.
JOB OUTSOURCING LEADS TO UNEMPLOYMENT: Free trade allows businesses to move their production to a place where it is cheaper to produce. In countries where labour or production costs are high, this often means that many people lose their jobs, because production is outsourced to cheaper places.
Critics argue the WTO allows politics to influence trade, leading to long-term complications. Some view the WTO as unnecessary, suggesting true free trade would benefit markets more than tariff negotiations. The organization struggles with transparency, often leaving decision-making processes unclear.
South Africa is the only country with three capitals, each serving a different branch of government: Pretoria (administrative/executive), Cape Town (legislative), and Bloemfontein (judicial). This unique setup divides power, with Pretoria housing the President and Cabinet, Cape Town the Parliament, and Bloemfontein the Supreme Court of Appeal.
As of 2025 data, Venezuela ranks as South America's lowest-income country with a GDP per person of $3,805, which is well below the regional norm. Several other countries with low GDP per capita include Bolivia ($4,478), Paraguay ($6,483), and Ecuador ($6,871), due to smaller economies and limited diversification.
