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The Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR) includes seven signatories: the United States, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.

CAFTA-DR provides:

  • Tariff reduction
  • New market access for U.S. consumer and industrial products and agricultural products Unprecedented access to government procurement in the partner countries
  • Liberalizes the services sectors
  • Protects U.S. investments in the region
  • Strengthens protections for U.S. patents, trademarks, and trade secrets.

CAFTA-DR creates the third-largest U.S. export market in Latin America, behind only Mexico and Brazil, and the 14th largest U.S. export market in the world.

Costa Rica (top)

In 2005, the US Congress approved establishment of the Central American Free Trade Agreement (CAFTA-DR). CAFTA-DR confers benefits providing disciplines for the non-discriminatory treatment of investors, dispute resolution, protection of intellectual property rights and other areas.

Oil is supplied primarily by Mexico and Venezuela under the auspices of the San Jose Pact and the Caracas Energy Accord.

Costa Rica is very open to foreign investment and a favorite choice for a number of high-tech companies. A comprehensive tax reform has been under consideration. Negotiations on a free-trade agreement with China are underway and could lead to further market expansion and foreign investment.

Agriculture employs nearly half the work force. Approximately 60% of the coffee crop is regarded as “top quality”, though only 6% of world production meets this definition. The country is the world's second largest exporter of bananas. There has been some progress in agricultural diversification and farm exports have risen. Agricultural production has shifted from rice, beans, and yellow corn for domestic consumption to the highly successful production for export of pineapples, melons, strawberries and winter vegetables .

Tourism is the country's largest industry, employing more than 13% of the work force. Eco-tourism accounts for nearly 40% of the industry's revenues in a typical year .

Costa Rica exports electricity to Nicaragua and has the potential to become a major electricity exporter if plans for new generating plants and a regional distribution grid are realized. Other major industries include the production of electronic components, food processing, textiles and apparel, construction materials, cement and fertilizer.

Dominican Republic (top)

In 2005, the US Congress approved the establishment of the Central American Free Trade Agreement (CAFTA-DR) which includes the Dominican Republic.

The Dominican Republic is one of the main centers of clothing “assembly for export”, or maquiladoras, and depends mainly on the US market for sales of both clothing and textiles. Clothing producers have suffered greatly from Asian competition and termination of the Multi-Fiber Agreement (MFA).

The island is the US's seventh largest export market in the Western Hemisphere and a major destination for US foreign direct investments. The government has recently begun to implement tax reforms aimed at simplifying excise taxes and reducing tax evasion. New fiscal policies, including the planned sale of government-owned assets equivalent to 6% of GDP, should help to reduce public debt. The government also intends to raise certain taxes and to improve collection efforts .

El Salvador (top)

It is Central America's largest producer and consumer of geothermal energy. The country has two main geothermal facilities. Thermal generation accounts for 42% of generated electricity while hydropower provides 26%. It is participating in the Puebla-Panama project. The goal of this initiative is to unify the electricity grids of Central American countries to reduce costs and the frequency of power disruptions, as well as to attract private sector investment.

The government pursues an export-led strategy which includes trade agreements with the USA, Chile, the Dominican Republic, Taiwan, Mexico, Panama and Colombia. Textiles and apparel, shoes, and processed foods are among the industries that are benefiting.

Agriculture accounts for around 11% of GDP. Cash crops include sugar, cotton and especially coffee. Industry makes up over 30% of GDP. Leading industries include textiles, food processing, beverages, petroleum, chemicals, fertiliser and furniture manufacture. Growth of maquiladoras, which are firms engaged in the assembly of products, mainly textiles and apparel, for re-export, has helped to offset the decline in farming. The establishment of free-trade zones has encouraged the development of several industries.

Economic reforms have allowed the government to reduce public debt. The goal is to cut this debt to 30% of GDP by 2013 .

Guatemala (top)

Both the US Congress and the Guatemalan government ratified the Central American Free Trade Agreement (CAFTA-DR) in 2005 and Guatemala has concluded a free-trade agreement with Mexico.

The country is participating in the Puebla-Panama project. The goal of this initiative is to unify the electricity grids of Central America to reduce costs and the frequency of power disruptions, as well as to attract private sector investment for the development of new power plants.

The government launched a major reorganization of the banking system and strengthened financial supervision. The new laws have led to significant improvements in the health of the banking sector. This makes the country makes attractive for foreign investment.

The industrial sector is dominated by small-scale manufacturing geared mainly to serve the domestic economy. Clothing, textiles, pharmaceuticals and construction materials are the main industries.

Guatemala is Central America's largest oil producer, producing almost 16,000 barrels per day. The country has 83 million barrels of proven oil reserves located primarily in the country's northern jungles. Efforts are also underway to explore and exploit potential reserves near Lake Izabal, Guatemala's largest lake .

The agricultural sector accounts for two-thirds of exports, and employs half of the work force. The country's main exports are coffee, sugar, bananas, cardamom and beef, but coffee is by far the most important .

International reserves have risen to record levels, boosted by strong remittances and capital inflows. The government is known for its sound fiscal management with public debt being one of the lowest in the region. Guatemala is reportedly negotiating a trade agreement with the Andean Community .

Honduras (top)

The Central American Free-Trade Agreement (CAFTA-DR) between the USA and Honduras took effect in 2006. The country also has free-trade agreements with Panama, Central America, Colombia and Taiwan. In 2008, the country joined Petrocaribe and the Bolivarian Alternative for the Americas, two programs organized by Venezuela.

Honduras is one of the main centers of clothing “assembly for export”, or maquiladoras. By volume, it is the world's third-largest exporter of clothes to the USA and its economy is especially reliant on textiles and clothing production, which goes mostly to the USA.

Agriculture is the largest sector of the economy. In a typical year, farming accounts for about one-quarter of GDP and up to 60-70% of export revenues. Bananas and coffee are the major exports.

Structural reforms to improve the efficiency of the public sector and the stability of the financial system have been approved. The intention is to provide stronger institutional support for economic growth. A national competitiveness plan places top priority on the development of agribusiness, forestry, and tourism, which are all areas with growth potential. An income tax surcharge was introduced in 2008.

The country's tiny tourism sector has potential but is underdeveloped. However, more than US$100 million is being spent to develop hotels, luxury villas and golf course near Tela, Honduras. The new resorts will target wealthy visitors who are willing to pay premium prices. Foreign investment is continuously being sought out.

Nicaragua (top)

The country has a trade agreement called the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR) with the USA. The CAFTA-DR gives the country better access to the US market.

Agriculture accounts for one-third of GDP and employs 42% of the workforce. Major exports include coffee, cotton, sugar and bananas. Food processing, coffee roasting, textiles, timber and handicrafts are other important activities. Under the Central American Free Trade Agreement, policy makers hope that export niches will emerge for peanuts, rum, cigars and cheese .

Fossil fuels account for around 80% of country’s electricity generation, with hydropower and other renewable sources, mainly geothermal, which accounts for 7.6%. The government plans to boost investment in the electricity industry while reducing distribution losses and improving the regulatory framework .

The government has introduced a number of fiscal reforms to support its medium-term plans. These moves have substantially improved public finances and make it more attractive to foreign investment and market expansion.

Services account for 47% of GDP . Tourism has emerged as one of the country’s most dynamic sectors with the number of visitors growing significantly every year. The country is continuously seeking foreign investment in assist in the development of this sector.

United States of America (top)

It is a member is NATO (The North Atlantic Treaty Organization), which provides a forum in which the USA, Canada, and European countries can consult together on securities issues of common concern and take joint action in addressing them.

The country is a member of APEC, which is the premier Asia-Pacific economic forum with the primary goal to support sustainable economic growth and prosperity in the Asia-Pacific region.

The United States is a part of the North American Free Trade Agreement (NAFTA), which helps facilitate trade with Mexico and Canada. It is the world's largest free trade area, which now links 444 million people producing $17 trillion worth of goods and services.

The U.S. is a federation of 50 states which spans the land mass between the Pacific Ocean and the northern Atlantic. In the north it borders on Canada, and in the south with Mexico.

Agriculture accounts for just 1.0% of GDP and is predominately large scale and efficient. The US is a major exporter of foodstuffs and processed foods. The country's manufacturing sector contributes 12.1% of GDP and leads the way in the information technology revolution. Prominent industries include aerospace, telecommunications, chemicals, electronics and computers. The most important activities in the service sector include real estate, transport, finance, healthcare and business services. Congress expects to enact a series of financial reforms in the near future in hope of strengthen the service market even further.

The USA has 21.8 billion barrels of proven oil reserves, which is the eleventh highest in the world. Domestic oil exploration and development spending by US oil companies has rebounded as oil prices rise. Overall, production from deepwater areas of the Gulf of Mexico has been increasing rapidly, with deepwater wells accounting for about two-thirds of total US Gulf output .
Most growth and economic activity takes place in metropolitan areas. An estimated US$225 billion is needed each year for upkeep however funding is difficult to find, therefore creating opportunity for foreign investment .

There are several tax advantages in individual states. States such as Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming New Hampshire, and Tennessee offer no the advantage of no income taxes. Instead of paying the state approximately 7-15% of your income, you can use that money for an investment. The top six states with the lowest Property Taxes are Louisiana, Alabama, West Virginia, Mississippi, Arkansas, and Oklahoma. The state of Delaware has low income tax levels and provides tax incentives to US corporations. The state also has partnership taxation laws which make it favorable to non-US entities, generally allowing taxation at 0% where the partners are registered in non-US jurisdictions .

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