How did the CAFTA-DR agreement affect trade between El Salvador and the United States?

The Central America–Dominican Republic Free Trade Agreement (CAFTA-DR), signed in 2004, significantly reshaped the economic relationship between El Salvador and the United States. By establishing a framework to gradually eliminate most tariffs, customs duties, and trade barriers, the agreement aimed to foster economic growth through increased direct investment and export diversification.1

The pact facilitated trade by:

• Removing Barriers: It mandated the immediate removal of some tariffs, with others phased out over 15 to 20 years.1
• Expanding Market Access: It provided the United States with improved access to Salvadoran markets in sectors such as banking, telecommunications, insurance, and government procurement.1
• Promoting Investment: The agreement was intended to attract foreign investment, a goal supported by the Salvadoran government and business sectors, despite opposition from various labor and social groups.1

Today, the United States remains El Salvador’s primary trading partner, with the country heavily involved in importing materials for reexport, particularly in the apparel industry. The agreement also included provisions to ensure transaction transparency and to protect both workers' rights and the environment.21