What is the Central America–Dominican Republic Free Trade Agreement?

The Central America–Dominican Republic Free Trade Agreement (CAFTA-DR) is a trade pact signed in 2004 to gradually eliminate tariffs and trade barriers between the United States and several nations: Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.1

As the first free trade agreement between the U.S. and a group of developing countries, its primary goals were to improve U.S. market access and stimulate economic growth in the partner nations through increased investment and export diversification.1

The agreement, signed into law by President George W. Bush in 2005, faced significant debate. While governments and business sectors argued it would attract foreign investment, many labor, peasant, and indigenous groups opposed it due to concerns over its social and economic impact. Beyond trade in goods, the pact includes provisions to open service sectors—such as telecommunications and banking—to U.S. firms, while also incorporating measures intended to protect workers' rights and the environment.1