Top Reasons to Support the DR-CAFTA

1. Small Countries, Big Markets

Collectively, DR-CAFTA is the second largest U.S. export market in Latin America and the
United States 12
th
largest export market worldwide in 2004. It is a larger market than Russia,
India and Indonesia combined.
Once in force, the DR-CAFTA will be the United States second largest FTA after our FTA with
Canada and Mexico.
2. Leveling the Playing Field: New Opportunities for U.S. Workers and Farmers
Through unilateral preference programs overwhelming approved by Congress, nearly 80%
percent of DR-CAFTA imports and 99% of DR-CAFTA agricultural products already enter the
United States duty-free. The agreement will lock in those benefits and expand on them.
More importantly, DR-CAFTA will open their markets to our farm and industrial goods and
services, eliminating high tariffs, tariff rate quotas and non-tariff barriers.
3. Strong Labor Protections and New Opportunities to Improve Working Conditions
The constitutions and national laws of the six DR-CAFTA countries generally provide strong
labor protections that largely recognize the International Labor Organizations four core
principles. Indeed, their labor protections are largely in line with the labor laws in Morocco and
J ordan, with which Congress overwhelmingly approved FTAs.
The DR-CAFTA will promote economic opportunities and growth that are likely to be the most
powerful catalysts for improved working conditions in a region where millions live on less than
$2 a day. Through capacity-building and dispute settlement, the DR-CAFTA will also address
the regions need for improved enforcement of its existing labor laws.
4. Textiles and Apparel: Critical Markets and Expanded Partnerships
The DR-CAFTA countries are the United States largest market for U.S. apparel and yarn
exports, and the second largest market for U.S. fabric exports. DR-CAFTA is critical to sustain
and expand existing partnerships and to give U.S.-DR-CAFTA goods a competitive edge,
particularly with the elimination of global quotas and increased competition from Asia, and to
help support approximately 400,000 jobs in Central America and the Dominican Republic and
700,000 workers in the U.S. cotton, yarn, textile, and apparel sectors.
5. Bolstering Democracy and the Rule of Law
DR-CAFTA will help promote stability and the United States own security in a region that was
devastated by civil wars two decades ago. It will also promote new economic opportunities,
providing needed alternatives to illegal narcotics activity or illegal immigration.
6. Sugar: Handled with Care


1211 Connecticut Avenue, N.W., Suite 801, Washington, D.C. 20036
www.uscafta.org Phone 202.659.5147 Fax 202.659.1347
DR-CAFTA balances important sensitivities, permitting very limited increased imports (equal
to one days U.S. consumption), but allowing no change in the U.S. duty on sugar.


JUST THE FACTS ABOUT THE DR-CAFTA

On an economywide basis, the DR-CAFTA countries already represent Americas . . .

12
th
largest export market worldwide in
2004.
2
nd
largest export market in the region, after
Mexico, in 2004.
6
th
largest export growth market (based on
the value of export growth, 2000-2004).
largest potential new FTA partner in more
than a decade.


On a state-by-state basis, the DR-CAFTA market in 2004 is . . .

Ranked among the top twelve export destinations worldwide for:

Florida-1
st

New Mexico-2
nd

North Carolina-2
nd


Mississippi-4
th

Alabama-5
th

Louisiana-5
th


Georgia-9
th

Hawaii-10
th

South Carolina-10
th


Oregon-11
th

Rhode Island-11
th

Pennsylvania-12
th

Texas-12
th

A top growth market for state exports, particularly the following states that have more than
doubled their exports to the DR-CAFTA since 2000:

Hawaii-31,743%
Oregon-1,500%
Utah-412%
New Mexico-409%
Montana-277%
Rhode Island-273%
Delaware-183%
Washington-183%
North Carolina-167%
Maine-166%
Nevada-156%
Idaho-130%
Ohio-117%
Alabama-100%


Ranked among the top twenty-five export destinations worldwide for thirty-five U.S. states in 2000:
Alabama
Arizona
Arkansas
California
Connecticut
Delaware


Florida
Georgia
Hawaii
Idaho
Illinois
Iowa


Kentucky
Louisiana
Maine
Michigan
Mississippi
Missouri


Nebraska
New Hampshire
New Jersey
New Mexico
New York
North Carolina


Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina


Tennessee
Texas
Utah
Virginia
Wisconsin
A key agricultural export market, including for the top-ten state agricultural exporters to the region:
Louisiana
Connecticut
Tennessee
California
Texas
Florida
Georgia
Massachusetts
Minnesota
Pennsylvania

Upon implementation of the DR-CAFTA . . .

U.S. agricultural exports to the DR-CAFTA are estimated to increase by nearly $900 million.
Even under a static analysis, the International Trade Commission has estimated that U.S. exports
worldwide will increase by $1.9 billion, more than with any recent FTA partner, including Australia.
Sources: International Trade Administration of the U.S. Department of Commerce (1999-2004 data); International Trade
Commission; American Farm Bureau Federation.
2

U.S.-Dominican Republic-Central America Free Trade Agreement
A Foreign Policy Priority
The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) is a good
opportunity for U.S. manufacturers, farmers and service providers, but it may be even more
important from a foreign policy standpoint. A few issues to consider:

Economic Growth By enhancing opportunities for economic growth, the agreement will help
provide jobs at all levels of the Central American and Dominican Republic economies, while
providing governments with additional resources for much-needed education, health care, labor,
environmental and basic infrastructure projects.

Democracy The countries of Central America and the Dominican Republic have made
significant strides towards a more open and representative form of government in the last 10-15
years. However, these democracies are still in early stages. Expanded trade, and especially the
disciplines that come with an agreement, support the institutional framework upon which
functioning democracies depend.

Security Not long ago, most of Central America was locked in bitter civil wars - ideological
struggles opposed to freedom and democracy in the region. Today, through a combination of
U.S. assistance and a turn towards democratic and market reforms, Central America shows great
hope. Having won the war, we must not lose the peace. Providing Central America and the
Dominican Republic with a strategic economic partnership will help lock in these countries as
important U.S. allies.

Migration The illegal entry of many thousands of nationals from these countries into the
United States is a logistical and legal challenge to the U.S., a threat to security, and a serious
drain on resources for the region. By providing economic opportunity at home, the DR-CAFTA
can help ease pressures to emigrate. It can also facilitate better cooperation with the United
States as it works to legalize and manage the movement of people.

Regional Integration - Together, the Central American countries are taking on a serious level of
commitment to economic opening, in a way that emphasizes regional cooperation and
integration. These elected democracies are moving down a path of democratic and economic
reform and peaceful cooperation, a process this agreement is designed to facilitate. This is not a
set of five bilateral trade agreements. Rather, it is a blueprint for economic cooperation and
mutual growth among all the countries.

Narcotics Both the movement of illegal narcotics through the region and the involvement of
nationals of these countries in the drug trade pose serious challenges for the United States.
Again, a free trade agreement helps establish a cooperative framework in which other fronts such
as narcotic interdiction can be constructively addressed, while providing the economic
alternatives necessary to keep individuals away from illegal activity.


U.S.-Dominican Republic-Central America Free Trade Agreement:
Creating Opportunities, Raising Living Standards, and Strengthening
Democracy in Our Neighborhood

The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA)
will create new commercial opportunities and expanded markets and help raise living standards
and strengthen democracy in a region that is important not only because of its strategic
proximity, but for the strong bonds of family and culture that join us together.

For two decades, the United States has unilaterally opened its markets to most goods
from the Dominican Republic and Central America, as part of its broader Caribbean Basin
initiatives. And it has done so with overwhelming bipartisan Congressional support.

In J uly 1983, 392 House members voted to approve the original Caribbean Basin
Initiative. Only 18 House members voted against it.

On May 4, 2000, 309 House members, including 183 Republicans and 126
Democrats, voted in support of the Trade and Development Act of 2000, which
further unilaterally opened the U.S. market to goods from Central America and
the rest of the Caribbean Basin.

As a result of these and other programs, about 75 percent of Central American exports are
duty-free. With the completion of the DR-CAFTA, Members of Congress will now have the
opportunity to make that relationship reciprocal and approve an agreement that will not
only further open U.S. markets, but will substantially open markets in the Dominican
Republic and Central America for U.S. farm products, goods and services.

BIG OPPORTUNITIES: While the six democracies in Central America are relatively small
countries, they represent a big market for U.S. goods and services.

These six countries already represent our 12
th
largest export market, exceeding U.S. exports
to such countries as Italy, Ireland, Brazil, Malaysia, Australia, and Hong Kong. It is already
our 2
nd
largest export market in Latin America (after Mexico).

U.S. products account for about 50 percent of their imports.
Central America and the Dominican Republic area already important export markets for
American electrical machinery, high technology, motor vehicles, chemicals, energy,
food, agricultural products, paper, textiles and fertilizer.

MUCH MORE THAN TRADE: But this agreement is about much more than trade:

DR-CAFTA can help strengthen democracy and the rule of law in a region that was
wrecked by civil war not that long ago. This is important for all Americans, but
particularly the approximately 3 million who have emigrated from these countries and
still have family living there.



DR-CAFTA can help promote economic development and the reduction of poverty in
countries where many leave to come to the United States in search of new opportunities.

o For example, the World Bank reports that 63 percent of Hondurans and 50 percent
of Nicaraguans live in poverty and 45 percent of Hondurans and 19 percent of
Nicaraguans live in extreme poverty.

o Will an FTA with the United States cure these problems? Of course not. But it
will be a force for positive change by generating new economic opportunities,
new investment and new hope for the region. Expanded commercial relations with
the United States based on growing trade and investment flows may be the most
effective way for the United States to help these countries raise their standard of
living.

o Additional support for regional capacity-building, including the rule of law, will
also be critically important.

o The alternative not implementing the comprehensive and commercially
meaningful DR-CAFTA is far worse, because it will signal that the status quo is
acceptable. It would help perpetuate the poverty in much of a region where
millions live on less than $2 a day.

DR-CAFTA also represents an example of how the United States can reach an FTA with
six developing countries. It will build relationships that will be important not only as
efforts at regional integration continue, but also for our interests at the WTO and our
broader national interests.


U.S.-Dominican Republic-Central America Free Trade Agreement

Opening Markets for U.S. Agriculture

The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) will provide
new market opportunities for a wide range of U.S. agricultural products. The American Farm
Bureau indicates that when fully implemented, the DR-CAFTA with just the five Central
American countries could boost U.S. agricultural exports by approximately $900 million.

Over half of U.S. agriculture products will enter the Central American and Dominican
Republic countries duty-free immediately upon implementation of the agreement, with
most remaining duties on U.S. products phased out over 15 years.

Some of the most important U.S. exports to the region that can be expected to gain
significantly from the DR-CAFTA include feed grains (currently valued at $166 million),
wheat ($146 million), rice ($75 million), soybeans ($50 million), poultry ($38 million),
pork ($16 million) and beef ($6 million).

Without implementation of the DR-CAFTA, U.S. agriculture will continue to be prejudiced by
non-reciprocal trade. Currently, 99.9 percent of food and agriculture products from the Central
American countries and the Dominican Republic receive duty-free treatment in the United States
while U.S. farm exports face significant barriers in these nations.

In addition, important non-tariff issues, such as sanitary and phytosanitary measures, are being
resolved. For example, these countries are moving toward recognizing our meat inspection system
as equivalent for purposes of exporting to their markets. Implementation of the DR-CAFTA will
provide an ongoing system for bilateral dispute settlement and, more importantly, dispute
avoidance on these types of issues. The DR-CAFTA will also eliminate the use of export
subsidies on agricultural trade within the region. However, the United States will preserve its right
to respond to third countries that may use export subsidies within the Central American and
Dominican Republic market to displace U.S. products while the United States works to eliminate
the worldwide use of agriculture subsidies in the WTO negotiations.

U.S. agricultural exports can be expected to grow not only because of the direct effect of reduced
tariffs and other restrictions, but also because of the economic growth that will occur as a result of
the DR-CAFTA. As we have seen in other bilateral trade agreements that fully include agriculture,
exports grow to the benefit of producers and consumers in all nations.

These six countries currently provide preferential access to other trading partners through various
other free trade or preferential arrangements. As previously noted, the United States already
provides preferential access to Central American and Dominican Republic food and agriculture
products. It is time to allow U.S. agriculture producers to be on a level playing field with the
agriculture producers of other nations.


U.S.-Dominican Republic-Central America Free Trade Agreement
New Opportunities and Expanded Markets for U.S. Manufacturers

The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA)
with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua
holds the promise of new opportunities and expanded markets for a wide array of U.S.
manufacturing firms and their employees. Key opportunities that this agreement will provide are
the following:

The agreement immediately and significantly expands duty-free market access for U.S.
non-apparel industrial exports, while largely codifying the current duty-free market
access that most Central American and Dominican Republic non-apparel industrial
exports already enjoy to the U.S. market. In other words, U.S. access permanently
improves, while Central Americas and the Dominican Republics access becomes
permanent.

More than 80 percent of U.S. industrial exports can be sold duty-free into the six
countries upon entry into force of the agreement. That is a substantial improvement over
the 2001 average zero-duty access level of 70 percent of U.S. industrial exports.

Central American and Dominican Republic average applied industrial tariffs are 30 to
100 percent higher than U.S. applied industrial rates. Whereas U.S. rates average 3.6
percent, Guatemalas average applied industrial tariff is 7.1 percent, Honduras is 6.7
percent, El Salvadors is 6.5 percent, Nicaraguas is 4.9 percent, Costa Ricas is 4.6
percent and the Dominican Republics is 10.7 percent (2001 figures).

Major U.S. industrial sectors that are highly competitive will gain immediate duty-free
treatment, including information technology, paper, a range of important chemicals and
pharmaceuticals, and construction, agricultural, medical, and scientific equipment.

The industrial market access chapter is comprehensive, with no exemptions or
exceptions. Tariffs on even the most sensitive items will be removed within 10 years.

The Dominican Republic, Guatemala, Honduras and Nicaragua will join the WTO
Information Technology Agreement (ITA). Costa Rica and El Salvador already
participate in the ITA.

About 99 percent of Central American non-apparel industrial exports will enter the U.S.
market duty-free upon entry into force of the agreement. This is the same percentage of
non-apparel industrial exports that already enters duty-free under the Caribbean Basin
Initiative and the Caribbean Basin Trade Partnership Act. Existing U.S. duties on
sensitive items like rubber footwear and canned tuna will be removed over 10 years.


U.S.-Dominican Republic-Central America Free Trade Agreement
New Opportunities and Expanded Markets for U.S. Service Providers
The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) will open
up new markets and opportunities for U.S. companies across a range of service industries. It will
also serve to demonstrate to other developing countries, that commitments to liberalization and
internal economic reform are necessary for economic development, higher standards of living,
and global competitiveness.

The liberalization of cross-border trade and investment in services is particularly
significant for the U.S. economy; services account for approximately 81 percent of
private sector GDP in the United States, and account for the same proportion of private
sector employment. From 1992-2002, the services sector added approximately 21
million new American jobs.

In 2003, U.S. cross-border exports of services were $305 billion, up from $292 billion the
previous year, and represented about 40% of U.S. merchandise exports of $713 billion.
The $60 billion services trade surplus that the U.S. ran last year partially offset our
merchandise trade deficit of $549 billion.

A significant portion of U.S. services trade is delivered through the foreign affiliates of
U.S. parent companies. In 2001, the services sales of U.S. foreign affiliates worldwide
reached $432 billion. Such sales generated inflows of income from investments of about
$68 billion in 2001, and they support a substantial number of jobs at home offices in the
United States. These foreign operations are crucial to U.S. companies' competitiveness in
global markets.

Under the DR-CAFTA, the Central American countries will open up substantial portions of their
services market, subject to few exceptions. They have also agreed to significant commitments
on regulatory transparency and principles to guide independent regulatory authorities. Key
sectors where new opportunities will be created for U.S. companies include telecommunications,
banking, insurance, distribution, computer, audiovisual and entertainment, energy, transport,
construction, professional and other services.

Under the DR-CAFTA, the Central American countries also agreed to reform their so-called
dealer distribution laws, which represent a substantial barrier to distribution in the region. They
also agreed to provisions on e-commerce that reflect the importance of services and other e-
commerce activities.

There are extreme deviations among each country's GATS commitments, with particular sectors
being severely constrained and with others relatively open. The DR-CAFTA therefore
represents significant new market access and opportunities for one of the most vibrant sectors of
the U.S. economy.



U.S.-Dominican Republic-Central America Free Trade Agreement
Expanded Markets for the U.S. Textile and Apparel Industry
Swift implementation of a high standard U.S.-Dominican Republic-Central America Free
Trade Agreement (DR-CAFTA) is critical for the continued evolution of the strong partnership
that currently exists between textile and apparel industries in the United States and in Costa Rica,
the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.

During the past twenty years, and especially over the last 36 months, the United States
and these six countries have developed an increasingly integrated supply chain and co-
production relationship in textiles and apparel. As a result, Central America and the Dominican
Republic has emerged as both one of the largest export markets for U.S. cotton growers, yarn
spinners, and fabric mills, and one of the most important sourcing locations for U.S. apparel and
retail companies. During 2003, U.S. fabric and yarn exports to the region stood at $2.24 billion,
or just over 26 percent of worldwide U.S. fabric and yarn exports. Apparel imports from the
region surpassed 3.9 billion square meter equivalents (SMEs), or about 20.8 percent of all U.S.
apparel imports. More than ever, the one million U.S. and Central American and Dominican
Republic textile and apparel workers depend upon each other to maintain a globally competitive
textile and apparel industry in North America.

While the current U.S.-Caribbean Basin Trade Partnership Act (CBTPA) trade preference
arrangements has worked to keep the industry competitive thus far, it is not dynamic enough to
withstand new competitive pressures that will be unleashed, and which are already being felt, as
worldwide textile and apparel quotas are removed on J anuary 1, 2005. The DR-CAFTA will
build on the CBTPA by making that partnership:

More Flexible: A new rule of origin and commonsense customs procedures in the DR-
CAFTA will ensure that more garments are eligible to qualify for the trade benefits, thus
extending the incentive for U.S. input to a larger market. Currently, 36 percent of all apparel that
is imported from the region is ineligible to qualify for trade benefits because of rigid and
incomplete rules.

Reciprocal: Not only will the DR-CAFTA preserve duty free benefits for Central
American exports to the United States, but it will also, for the first time, extend the same benefits
to U.S. textile and apparel exports to the region.

Broader: U.S. textile firms lose opportunities to sell their products to the region because
they are used as inputs for finished textile products, such as home furnishings, that are currently
excluded from the trade preference partnership regime. The DR-CAFTA will remedy this.

Predictable: The CBTPA is unilateral, is conditioned on trade preference criteria and
will expire in a few years. The DR-CAFTA will create a reciprocal rules based system that is
more predictable and permanent the perfect foundation upon which to grow this partnership.


U.S.-Dominican Republic-Central America Free Trade Agreement
New Opportunities and Expanded Markets for U.S. High-Tech Companies

The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) with Costa
Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua holds the
promise of new opportunities and expanded markets for a wide array of U.S. high tech
merchandise exporters, manufacturers, service providers and their employees. Total U.S. high-
tech exports to Central America in 2003 totaled nearly $2.5 billion.

This agreement also contains strong commitments in the following areas that will provide
significant opportunities for U.S.-made high-tech products and services. It will also establish
important precedents for other U.S. agreements, including an FTA with the Andean nations and
the Free Trade Area of the Americas (FTAA).

Market Access
The agreement features tariff elimination, most of it immediate, across a wide range of
products. In particular, the Dominican Republic, Guatemala, Honduras and Nicaragua
will join the WTO Information Technology Agreement (ITA), allowing U.S. high-tech
exports to enter their markets duty-free. Costa Rica and El Salvador already are parties to
the ITA. These 4 new ITA members will save U.S. exporters over $75 million annually
on tech product duties.

E-Commerce
All parties commit to non-discrimination and national treatment of digital products, and
they will not impose customs duties on products delivered electronically.

Intellectual Property Rights
All parties will ratify the World Intellectual Property Organization (WIPO) copyright
treaty upon entry into force and ensure that governments use only legitimate computer
software.

Services
All six countries agreed to use a negative list whereby all sectors are deemed open to
liberalization unless specifically exempted. No reservations (exemptions) apply to
computer and related services; only Costa Rica applied reservations to
telecommunications services.

Telecommunications services
o All six parties agreed to implement wide-ranging telecom regulatory principles
that guarantee flexibility in the choice of technologies, access to and use of public
telecommunications networks and services, interconnection obligations of major
suppliers and support for and/or creation of independent regulatory authorities.
o Costa Rica made first-time-ever commitments in a trade agreement to open to
foreign competition Internet services, private data networks and wireless services.



DR-CAFTA Will Make it Easier for U.S. Companies to Distribute and Sell
Products in Central America and the Dominican Republic
Among its numerous benefits, the U.S.-Central America and Dominican Republic Free Trade Agreement (DR-
CAFTA) is the first trade agreement to require trading partner signatories to reform onerous distribution laws that
have restricted trade for decades.
Background: So-called dealer protection laws in five of the six DR-CAFTA countries have for decades
imposed substantial obstacles on U.S. and other foreign companies seeking to distribute and sell their products in
the region. In some cases, these dealer protection regimes effectively lock foreign companies into exclusive and
permanent relationships with a single local distributor, regardless of how well or how poorly the local distributor
performs. Dealer protection laws tend to supersede any private contracts and have prevented foreign suppliers
from disciplining a nonperforming or even larcenous dealer. In one country, the law specifically applied only to
foreign suppliers, in clear violation of World Trade Organization national treatment rules. Moreover, these laws
may subject outside suppliers to paying disproportionate penalties (often in the millions of dollars) in order to
terminate or modify a dealer relationship. In the face of such exposure, many U.S. companies have chosen not to
enter these markets at all.
DR-CAFTA Commitments: Among its provisions, DR-CAFTA eliminates any requirement that a U.S. supplier
must import through a local dealer. The agreement also prohibits the use of import bans, which can completely
block a U.S. company from selling its products in the country, as a remedy in any dealership dispute. The four
countries with existing dealer protection laws Costa Rica, the Dominican Republic, El Salvador, and Honduras
each committed to adopt a number of additional, substantial revisions of their laws. For example:
All four countries committed to allow U.S. exporters, when they establish new dealer and distribution
relationships, to establish the duration of the relationship, whether it is exclusive, the terms of
indemnification for premature termination of the dealership, and any requirements for the use of
arbitration.
Costa Rica, the Dominican Republic and Honduras undertook explicit commitments that allow parties
in future dealer relationships to terminate such agreements at the end of the contract or renewal period
without costly indemnification payments.
The Dominican Republic and Honduras explicitly committed that the calculation of actual damages
will be based on general contract law in the case of an early termination of a dealership (rejecting
current requirements that use an inflated, artificial statutory formula that bears little relation to the
commercial relationship).
Guatemala, which had already repealed its dealer protection law but still applies its provisions to
contracts already in existence, will encourage dealers still subject to the old law to renegotiate their
contracts to eliminate application of the old law.
Benefits to U.S. Companies: These commitments will result in the significant liberalizing of onerous dealer
protection laws in the DR-CAFTA countries, substantially improving access to these markets for U.S. companies
once DR-CAFTA enters into force. U.S. companies for the first time will have concrete assurances that the
contacts they enter into with local dealers will be respected and not superseded by local law and that they will not
be locked into exclusive or unproductive relationships or be unfairly financially penalized for trying to terminate
unproductive dealer relationships.


U.S.-Central American Free Trade Agreement
New Opportunities and Expanded Markets for Food and Consumer Products

The U.S.-Dominican Republic-Central America Free Trade Agreement with Costa Rica, the
Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua holds the promise of
new market opportunities for exports of processed food and beverage products.

Opening Markets

In general, U.S. exports of processed food products already capture roughly one quarter of total
food imports in these economies and U.S. brands are well known throughout the region.
Already, exports of processed food products are often growing faster than any other agricultural
product and the elimination of Central Americas and the Dominican Republic tariffs on our
products will make them far more competitive in the region. Products with the most potential
growth in the region include, snack foods, breakfast cereals, pet foods, frozen potatoes and
processed fruits and vegetables.

Tariffs on exports of all food and beverage products will be reduced to zero over fifteen years.
Certain products, such as breakfast cereals, soups, cookies and pet food products will receive
immediate duty-free treatment in these countries.

Comprehensive Agreement

Perhaps the most important aspect of the agreement for the food and beverage industry is the
comprehensiveness of the agreement. All products are included in the agreement, including
sugar, a key ingredient for many food products. As a result, U.S. food manufacturers will have
increased access to high quality Central American and Dominican Republic sugar, which will
help increase their competitiveness vis--vis other low cost producers.

Enhanced Rules on Intellectual Property Rights

The agreement goes beyond current protections for trademarks to apply the principle of first-in-
time, first-in-right to all products, including those that may contain a place (geographical) name.
This means that the first company to file for a trademark is granted the exclusive right to that
name, phrase or geographical place name. This agreement sets an important precedent that is
necessary to fight the European Unions approach to geographical indications. (Under EU law
geographical indications (Parmesan cheese, Parma ham, Pilsner beer) are given priority to
trademarks and may cancel protections for brands.)


U.S.-Dominican Republic-Central America Free Trade Agreement
Sugar Provisions
The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) will eventually
lead to fully liberalized trade in nearly all products. In the case of sugar, however, U.S. imports from
DR-CAFTA countries will expand only modestly, through small quotas that increase incrementally
during the agreement.

Sugar is among the most highly protected of all U.S. commodities. The U.S. government gives import
quotas to 40 countries, and each country can sell only its quota into the U.S. market any sugar above
that amount is subject to a prohibitive tariff.

The table below shows the quantity of sugar that the DR-CAFTA countries can ship under the quota
system today, before the agreement takes effect, and the additional quantities that they will be entitled
to sell in the agreements first and fifteenth years.

Country Current Quota

(metric tons)
Year 1
Additional
Quota
(metric tons)
Year 15
Additional
Quota
(metric tons)
Costa Rica 15,796 13,000 16,080
Dominican Republic 185,335 10,000 12,800
El Salvador 27,379 24,000 36,040
Guatemala 50,546 32,000 49,820
Honduras 10,530 8,000 10,240
Nicaragua 22,114 22,000 28,160
Total 311,700 109,000 153,140

The additional sugar access for DR-CAFTA countries is extremely modest. The first-year
additional quota of 109,000 metric tons represents

Less than 1% of 2003/04 total U.S. sugar supply;
Less than 7% of total U.S. imports and less than 6% of 2003/04 ending stocks;
About one-tenth of one months value of sugar utilization in the United States.

Contrary to the claims of some DR-CAFTA opponents, these small imports will not harm the domestic
U.S. sugar industry. Under the U.S. sugar program, domestic sugar prices should not decline at all.
Prices will be stabilized by domestic marketing allotments, legislated by Congress in 2002 at the
specific request of the U.S. sugar industry.

Sugar is about 1% of the U.S. farm economy, and the DR-CAFTA imports are less than 1% of
total sugar supplies. If ever anyone made a mountain out of a molehill, it is the opponents of the
DR-CAFTA who claim it will harm U.S. sugar growers.


The U.S.-Dominican Republic-Central America FTA
Strong Rules to Protect and Promote Creative and Scientific Industries

The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) contains strong rules
for the protection of intellectual property that are critical to promote innovation and new research in
numerous sectors, from information technology to scientific industries, and to stimulate a rich and diverse
marketplace for the development and publishing of business information and creative works. Key
commitments include:

International Agreements. Parties agreed to ratify or accede to other international agreements protecting
intellectual property, including the World Intellectual Property Organization (WIPO) Internet Treaties and
the International Convention for the Protection of New Varieties of Plants.
Trademarks. Parties agreed to strong protections, including:
a system to resolve disputes over trademarks used in Internet domain names;
adoption of first-in-time, first-in-right principle to trademarks and geographical indications;
encouragement of on-line system for registration and maintenance of trademarks; and
transparent procedures for the registration of trademarks, including geographical indications.
Copyright. Parties agreed to strong protections for copyrighted works, including by
clarifying copyright owners rights with respect to temporary copies in computer memory;
ensuring that authors, composers and other copyright owners have the exclusive right to make their
work available on-line.
providing terms of copyright protection for works and phonograms that are consistent with U.S. law;
establishing prohibitions against circumvention of technological measures used to protect copyrighted
works and satellite programming;
requiring governments to use only legitimate computer software; and
establishing rules for limited liability of Internet Service Providers consistent with U.S. law; and
requiring the Dominican Republic to take special measures to address broadcast piracy.
Patents. Parties agreed to strong protections for patented products, including:
compensation for delays in granting original patents, consistent with U.S. practice;
protections against arbitrary revocation of patents;
protections for test data and trade secrets submitted to a government for the purpose of product
approval for a period of five years for pharmaceuticals and ten years for agricultural chemicals.
protections against marketing approval of products that infringe on existing patents; and
protections for newly developed plant varieties.
Enforcement. Parties agreed to provide strong penalties for violations, including:
criminalization of end-use piracy;
statutory and actual damages for copyright infringement and trademark piracy;
seizure, forfeiture and destruction of pirated and counterfeit goods, the equipment used to make
or distribute them and related documentation.




The U.S.-Dominican Republic-Central America FTA
Exporting U.S. Legal Protections for Americans Investing Abroad

The U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) contains
strong rules to protect Americans investing in these six countries. These investment rules are
based on centuries old U.S. legal principles -- from the Takings Clause and Due Process and Equal
Protection provisions of the U.S. Constitution to strong state and federal laws on the protection of
property. Since foreign investors in the United States already enjoy these protections, the DR-
CAFTAs investment provisions are critical to level the playing field.

The Core Protections. Like the 45 bilateral investment treaties and five FTAs that preceded the
DR-CAFTA, it includes at its core very basic and critically important provisions, including:

NO DISCRIMINATION in favor of domestic investors or other foreign investors (the better of
national treatment or most favored nation treatment).
TREATMENT IN ACCORDANCE WITH CUSTOMARY INTERNATIONAL LAW, including
fair and equitable treatment (e.g., due process) and full protection and security.
PROMPT COMPENSATION FOR EXPROPRIATION.
PROTECTION FOR THE MOVEMENT OF CAPITAL, including the repatriation of profits.
NO PERFORMANCE REQUIREMENTS, such as local sourcing or export requirements.
RESOLUTION OF DISPUTES between investors and governments before objective,
impartial arbitral tribunals.

In accordance with Congress directions in Trade Promotion Authority, enacted as part of the Trade
Act of 2002, the DR-CAFTA also ensures that key protections conform to U.S. legal principles and
practice and that disputes are handled transparently, efficiently and with public input. Unlike any
prior FTA, the DR-CAFTA also provides a concrete mechanism for the development of an
appellate or other review procedure to ensure the coherence of decisions.

Investment Protections Are Critical To Support Continued U.S. Economic Growth. U.S. investment
overseas, which depends on strong investment protections, is critical for supporting U.S. economic
growth. Over the past 20 years, U.S. companies that invest abroad have:

exported more (accounting for to of all U.S. exports)
expended more on U.S. research and development and physical capital investments, and
paid their U.S. workers more

than companies not engaged globally. Foreign affiliate sales of U.S. companies invested abroad
amount to approximately $2 trillion, which help to support jobs and business activities in the
United States. More than 70 percent of the profits earned by such affiliates are returned to the
United States. In short, these investment protections support U.S. foreign investment that, in turn,
complements U.S. business activity, supporting higher paying jobs, greater productivity, a higher
standard of living and economic growth in the United States.


Labor Rights in Central America and the Dominican Republic:
Constitutional and National Law Protections
Labor Law Framework of the DR-CAFTA Countries: Costa Rica, the Dominican
Republic El Salvador, Guatemala, Honduras, and Nicaragua have generally adopted -- both
through International Labor Organization (ILO) conventions and their own constitutions and
laws robust standards of the protection for labor rights.
Core ILO Conventions: Costa Rica, Guatemala, Honduras, Nicaragua and the Dominican
Republic have ratified all eight ILO core labor conventions while El Salvador has ratified
six.
*
These conventions are considered part of the domestic law of each of these countries.
Constitutional Protections: As documented by the ILOs two recent reports, Fundamental
Principles and Rights at Work: A Labour Law Study Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua, ILO (Oct. 2003) and Fundamental Principles and Rights at Work: A
Labour Law Study Dominican Republic, ILO (J an. 2004), the constitutions of each of these
six countries incorporate broadly many, if not all, of the four ILO core labor principles.
National Law Protections: In addition, the national laws of each of these countries also
include strong standards for labor rights on the core issues of freedom of association and
collective bargaining, forced labor, child labor, and discrimination. The ILO has identified
specific areas where laws could be and should be improved; over the past several years, each
of the countries has and continues to make progress in improving its labor standards.
Implementation: Each of these countries has also taken important steps to enforce its labor
standards, although each recognizes the need for more resources and attention to improve
implementation of its labor laws.
DR-CAFTA Framework: The U.S.-Central America and Dominican Republic Free Trade
Agreement (DR-CAFTA), includes binding dispute settlement for the enforcement of each
countrys labor laws, as well as related work on capacity-building. DR-CAFTA represents an
important opportunity to strengthen and broaden the labor rights protections in each of these
countries through new commercial opportunities, investment and technical assistance. In
December 2004, Congress appropriated $20 million for labor and environmental capacity-
building in these countries.
Countries Commitment to Concrete Improvements in Working Conditions: On April 4,
2005, the six countries and the Inter-American Development Bank released a paper detailing
how the democratically-elected governments of each country have made and continue to seek
progress in improving labor standards and working conditions in their countries. The report also
identifies specific areas where the countries require technical assistance to improve working
conditions.
Status Quo Is Not the Answer: Failure to implement the DR-CAFTA will at best maintain the
status quo. It will not improve labor conditions and could actually worsen the situation with the
flight of U.S. investment, the loss of jobs in the second largest sector in these economies (textiles
and apparel) and a deteriorating economic situation.


*
Freedom of Association Conventions: C. 87 and C. 98; Forced Labor Conventions: C. 29 and C. 105;
Discrimination Conventions: C. 100 and C. 111; Child Labor Conventions: C. 138 and C. 182. El Salvador has
ratified all but the two conventions on Freedom of Association.

The U.S.-Central American and Dominican Republic FTA
Binding Environmental Provisions and Concrete Steps on Capacity-Building
The U.S.-Central America and Dominican Republic FTA (CAFTA-DR) contains key
provisions on environmental protection that go beyond the requirements of Trade Promotion
Authority and the recently implemented U.S.-Chile and U.S.-Singapore FTAs.

FTA Contains Binding Commitments to Enforce Environmental Laws. Each of the six nations
has agreed, subject to binding dispute settlement, to enforce their environmental laws. This is a
robust commitment given that each of these countries -- Costa Rica, the Dominican Republic, El
Salvador, Guatemala, Honduras, and Nicaragua -- have generally adopted, both through
multilateral environmental agreements and their laws, high standards of protection for the
environment. Each of these nations is, for example, a party to the following multilateral
environmental agreements:

United Nations Convention on Biological Diversity
Convention on International Trade in Endangered Species of Wild Flora and Fauna
United Nations Framework Convention on Climate Change and the Kyoto Protocol
Montreal Protocol on Substances that Deplete the Ozone Layer
Basel Convention on the Transboundary Movements of Hazardous Wastes

FTA Provides for Formal Citizen Submission Process. Going beyond the U.S.-Chile and U.S.-
Singapore FTAs, this FTA establishes a robust citizen submission process that will create a
secretariat to review all public submissions regarding a countrys enforcement of its
environmental laws.

Countries Agree to Take Concrete Action to Promote Environment Capacity-Building. The
countries also agreed to create a standing body for trade capacity building and for developing
concrete and ambitious projects to promote environmental protection. These steps will build
upon and advance the work of the Central America-United States J oint Accord (CONCAUSA)
and other activities, through which the United States has worked with these countries to
undertake a wide range of environmental protection activities, including with respect to wildlife
population, pesticides and pollutants, sea turtles, sustainable development, tropical forest
conservation, water resource management, and sustainable wastewater and solid waste treatment.
Congress has already appropriated $20 million for environmental and labor capacity-
building in these countries.

In short, the CAFTA-DR and the related Environmental Cooperation Agreement will help strengthen
and broaden the protection of the environment in each of these countries through several
mechanisms, including new commercial opportunities, investment, capacity building, and a citizen
submission process. Failure to achieve an FTA, on the other hand, will at best maintain the status
quo. It will not improve environmental conditions and could actually worsen the situation if the
result is a flight of U.S. investment and a deteriorating economic situation.