The Dominican Republic-Central America Free Trade Agreement (DRCAFTA) will open new opportunities for U.S. companies to invest in our neighbors, cementing reform in key sectors and promoting prosperity for the future.

DR-CAFTA levels the playing field for U.S. investors and offers growth for U.S. investment in the region.

• U.S. foreign investment in the DR-CAFTA region totaled $4.3 billion in 2003. That investment has increased in Costa Rica and El Salvador but declined elsewhere since 1999. In 2001, sales of services by U.S.-owned affiliates totaled $98 million in Costa Rica, $107 million in Guatemala and $1.3 billion in the Dominican Republic.
• DR-CAFTA’s investment provisions are of particular interest to service providers, whose sales often require a local presence. Overall, DRCAFTA ensures that U.S. investors have greater opportunities to establish, acquire and operate investments in each of the Central American countries in all sectors, except where a country has taken reservations.
• While the United States has a bilateral investment treaty (BIT) in force with Honduras, BITs do not protect U.S. investors in any of the other DR-CAFTA partner countries. DR-CAFTA thus advances protections for U.S. investors. All of the parties to DR-CAFTA agreed to undertake significant new commitments on investment. While parties, including the United States, have set out reservations to the provisions affecting various sectors or practices, on balance businesses believe the commitments represent meaningful improvements.

DR-CAFTA meets Trade Promotion Authority (TPA) negotiating objectives for investment.

• The principal negotiating objectives established by Congress for investment in TPA are to seek national treatment; free transfer of investment funds; reduced or eliminated performance requirements and other barriers to establishment and operation of investments; standards and compensation for expropriation; due process; and meaningful procedures for resolving investment disputes.
• DR-CAFTA establishes a secure, predictable legal framework for U.S. investors operating in Central America that covers all forms of investment. It provides for rights that are consistent with U.S. law and contains dispute settlement procedures that are open to the public and that allow interested parties to offer input. It ensures that U.S. investors will receive a fair market value for property in the event it is expropriated. It ensures the free transfer of capital and prohibits performance requirements. National and most-favored-nation treatment for investors are required.
• DR-CAFTA includes investor-state provisions that establish access to impartial third-party arbitration of investor disputes with governments, providing an important safety net and assurances of fair treatment of possible disputes.

U.S. businesses endorse DR-CAFTA.

• Congressional approval of DR-CAFTA will promote growth-generating investment and better working conditions in the region. U.S. investors bring much to the table:
  • respect for worker rights,
  • higher wages,
  • modern business practices and
  • respect for the rule of law.
• DR-CAFTA’s investment provisions are comprehensive and effectively address the concerns raised about possible abuses of investor-state provisions. The benefits of investment in the region will help sustain growth in our domestic economy. Economic links to neighboring economies make U.S. companies more competitive, preserving higherwage U.S. jobs.