Why modernizing CAFTA-DR matters for the United States, and options for updating the trade pact

Title page 1

Contents 1

CAFTA-DR background, and important data to consider 2

What aspects of CAFTA-DR need modernization? 7

Current challenges facing the US private sector with regard to CAFTA-DR members 7

Modernization scenarios: pathways, opportunities, and risks 8

How modernization would land in the region 9

The future of Nicaragua as CAFTA-DR member 9

Why does this matter to the United States? 10

Takeaways for modernizing CAFTA-DR 10

Figures 3

Fig. 1. US trade balance with CAFTA-DR countries as % of total trade 3

Fig. 2. Imports of intermediate goods by source country as share of total (2022) 4

Fig. 3. US share of foreign direct investment in CAFTA-DR countries (2010-2023, % of total) 5

Fig. 4. Main US exports to CAFTA-DR 5

Fig. 5. Main US imports from CAFTA-DR 6

Fig. 6. Historical trade balance between the US and CAFTA-DR countries 6