Latin America and the Caribbean: Issues for the 110th Congress

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Over the past two decades, the Latin America and Caribbean region has made enormous strides in
terms of political and economic development. Regular free and fair elections have become the
norm. So far in 2008, Paraguay and the Caribbean nations of Barbados, Belize, and the
Dominican Republic have held national elections, and Grenada is scheduled to have to hold
parliamentary elections on July 8, 2008. Although the region overall experienced an economic
setback in 2002-2003, it has rebounded since 2004, most recently experiencing an estimated
growth rate of 5.6% in 2007. Despite this progress, several nations face considerable challenges
that affect U.S. interests and policy in the region. These include poverty, guerrilla conflicts,
autocratic leaders, drug trafficking, and high rates of crime and violence.
U.S. interests in Latin America and the Caribbean are diverse, and include economic, political and
security concerns. Geographic proximity has ensured strong economic linkages between the
United States and the region, with the United States being the major trading partner and largest
source of foreign investment for most countries in the region. Free trade agreements with Mexico
and Canada, Chile, Central America and the Dominican Republic (CAFTA-DR), and most
recently with Peru have augmented U.S. economic linkages with the region. The region is also the
largest source of migration, both legal and illegal, with geographic proximity and economic
conditions in the region being major factors in the migration. Curbing the flow of illicit drugs
from Colombia and Mexico into the United States has been a key component of U.S. relations
with Latin America for almost two decades. Latin American nations, largely Venezuela and
Mexico, supply the United States with just over one-third of its imported oil, but there have been
concerns about the security of the region as an oil supplier.
Legislative action on Latin America and the Caribbean in the second session of the 110^th
Congress to date has included the extension of several preferential trade programs (for the
Andean and Caribbean regions and Haiti) and initial funding of the Administration’s proposed
Mérida Initiative for Mexico and Central America to support antidrug and anticrime efforts. In
other pending business, the House version of legislation to reauthorize the President’s Emergency
Plan for AIDS Relief would add 14 Caribbean countries to the list of focus countries under the
program. The House Appropriations Committee version of the FY2009 Financial Services and
General Government Appropriations bill has provisions that would ease restrictions on family
travel to Cuba and U.S. agricultural exports to Cuba. On other trade issues, Congress potentially
could consider implementing legislation for free trade agreements with Colombia and Panama.
This report provides an overview of U.S. relations with Latin America and the Caribbean and
focuses on the role of Congress and congressional concerns. It will be updated periodically. For
further information, see the CRS products listed after each topic.

Overvi ew ....................................................................................................................... .................. 1
Conditions in the Region...........................................................................................................1
U.S. Policy................................................................................................................................3
Regional Issues................................................................................................................................5
U.S. Foreign Assistance............................................................................................................5
Andean Counterdrug Program..................................................................................................8
Mérida Initiative........................................................................................................................9
U.S. Trade Policy....................................................................................................................10
Andean Trade Preferences Extension................................................................................11
U.S.-Peru Trade Promotion Agreement.............................................................................11
U.S.-Colombia Free Trade Agreement..............................................................................12
U.S.-Panama Trade Promotion Agreement.......................................................................13
Haiti HOPE II Act.............................................................................................................13
Free Trade Area of the Americas......................................................................................14
Migration Issues......................................................................................................................15
Terrorism Issues......................................................................................................................17
HIV/AIDS in the Caribbean and Central America..................................................................19
Gangs in Central America.......................................................................................................19
Afro-Latinos ................................................................................................................... ......... 21
Trafficking in Persons in Latin America and the Caribbean...................................................21
Country Issues...............................................................................................................................22
Bolivia ..................................................................................................................................... 22
Brazil ....................................................................................................................................... 23
Colombia ................................................................................................................................. 25
Cuba ........................................................................................................................................ 26
Ecuador ........................................................................................................................ ........... 28
Guatemala ............................................................................................................................... 29
Haiti ......................................................................................................................................... 30
Mexico .................................................................................................................................... 32
Nicara gua ...................................................................................................................... .......... 33
Panama ......................................................................................................................... ........... 35
Peru ......................................................................................................................................... 36
Ve ne zuela ................................................................................................................................ 37
Figure 1. Map of Latin America and the Caribbean........................................................................5
Table 1. U.S. Foreign Assistance to Latin America and the Caribbean, FY2007-FY2009.............7

Author Contact Information..........................................................................................................38

The Latin America and Caribbean region has made enormous strides over the past two decades in
political development, with all countries but Cuba having regular free and fair elections for head
of state. Despite this democratic progress, several nations face considerable challenges that could
threaten political stability, including persistent poverty, violent guerrilla conflicts, autocratic
leaders, drug trafficking, and high rates of crime and violence. In some countries, weaknesses
remain in the state’s ability to deliver public services, ensure accountability and transparency, and
advance the rule of law.
Since 2006, 21 nations in the region have held successful elections. Twelve nations alone held
elections for head of state in 2006, and in 2007, five nations held elections: Argentina, Bahamas,
Guatemala, Jamaica, and Trinidad and Tobago. This year, the Caribbean nations of Barbados and
Belize held parliamentary elections in January and February respectively, in which incumbent
parties were defeated. Paraguay held presidential elections in April, which resulted in the victory
of opposition candidate Fernando Lugo over the long-ruling Colorado Party, while elections in
the Dominican Republic in May saw the re-election of an incumbent President Leonel Fernandez.
Looking ahead, Grenada’s parliamentary elections have been called for July 8, 2008. (For a
listing of recent and forthcoming elections, see CRS Report 98-684, Latin America and the
Caribbean: Fact Sheet on Leaders and Elections, by Mark P. Sullivan and Julissa Gomez-
Granger.)
In terms of economic growth, while the Latin America and Caribbean region overall experienced
a gross domestic product decline of 0.5% in 2002 and only a modest growth rate of 2.1% in 2003,
the region rebounded with an estimated average growth rate of 6.2% in 2004, surpassing even the
most optimistic predictions. Countries that had suffered the deepest recessions—Argentina,
Uruguay, and Venezuela—all experienced significant economic growth in 2004, and even per
capita income for the region as a whole increased by almost 5%. Growth continued in subsequent
years, with rates of 4.6% growth in 2005, 5.6% in 2006, and an estimated growth rate of 5.6% in

2007. In 2007, countries with the highest growth rates were Panama, with growth over 9%;

Argentina, Peru, and Venezuela, with growth rates between 8 and 9%; and Colombia, Costa Rica,
the Dominican Republic, and Uruguay, with rates of between 7 and 8%. Countries with the lowest
economic growth rates were Dominica, with 1% growth; Jamaica, with 1.5% growth, and ²
Ecuador with 2.7% growth. (For information on development indicators in the region, see CRS
Report RS22657, Latin America and the Caribbean: Fact Sheet on Economic and Social
Indicators, by Julissa Gomez-Granger.)

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The Andean region still faces considerable challenges, including the rise of populism in
Venezuela, Bolivia, and Ecuador. In Venezuela, President Hugo Chávez won another six-year
term decisively in December 2006, but lost a December 2007 constitutional reform referendum
that would have removed presidential term limits and allowed him to run again in 2012. The
election of Bolivian indigenous leader Evo Morales as President in 2005 complicated U.S.
relations given Morales’ efforts to decriminalize coca growing. Under the Morales government,
Bolivia has become increasingly divided over the issues of constitutional reform and regional
autonomy.
In Ecuador, Rafael Correa, a left-leaning U.S.-trained economist won the November 2006
presidential elections and has vowed to reform Ecuador’s political system, renegotiate Ecuador’s
foreign debt, and reassert state control over foreign oil companies operating in the country.
Colombia continues to be threatened by drug trafficking organizations and by terrorist groups, but
the government of President Alvaro Uribe has overseen the demobilization of more than 31,000
paramilitaries and made significant progress in combating the Revolutionary Armed Forces of
Colombia (FARC). This year the FARC has suffered significant setbacks with the deaths of
several of its top leaders, including Manuel Marulanda. Colombia’s March 1, 2008 bombing and
raid of a FARC camp in Ecuador prompted condemnation from Colombia’s neighbors, and
increased tensions in relations with Ecuador and Venezuela. Captured FARC computer files from
the raid also raised questions about potential Ecuadoran and Venezuelan government ties to
FARC.
In Central America, countries such as El Salvador, Honduras, and Nicaragua emerged from the
turbulent 1980s and 1990s with democratic institutions more firmly entrenched, yet violent crime
is a major problem in all countries. Honduras and Nicaragua are among the poorest countries in
the hemisphere. In Guatemala, the center-left government of Alvaro Colom took office in mid-
January 2008 after elections in 2007 that proved to be the most violent since 1985. The new
government’s success will depend on its ability to build coalitions since no party in the legislature
holds a majority. In Nicaragua, former President and Sandinista party leader Daniel Ortega won
the November 2006 presidential election. Ortega has faced an increasingly united opposition in
the legislature, which has impeded any substantial legislative initiatives or policy changes. Critics
have raised questions about the Ortega government’s lack of transparency in finances, and
increasingly authoritarian actions.
The diverse Caribbean region, which includes some of the hemisphere’s richest and poorest
nations, also faces significant challenges. The AIDS epidemic in the region, where infection rates
are among the highest outside of sub-Saharan Africa, has been a major challenge for economic
and social development in several countries. Caribbean nations remain vulnerable to destruction
by hurricanes and tropical storms as demonstrated in the 2004 and 2005 hurricane seasons, and
most recently with Hurricane Dean in August 2007. Haiti—the hemisphere’s poorest nation—
continues to be plagued by economic, political, and security problems. While for many observers,
President René Préval’s May 2006 inauguration marked the beginning of a new era, a food crisis
in April 2008 led to violent protests and the removal of the country’s prime minister. Since Fidel
Castro stepped down from power in 2006, Cuba’s political succession from Fidel to Raúl Castro
has been characterized by a remarkable degree of stability. Since Raúl’s official assumption of the
presidency in February 2008, the government has implemented a number of economic changes
that from the outside might not seem substantial, but are significant for a government that has
heretofore followed a centralized communist economic model. While additional economic

changes under Raúl Castro are likely, few expect there will be any change to the government’s
tight control over the political system, which is backed up by a strong security apparatus.
U.S. interests in Latin America and the Caribbean are diverse, and include economic, political and
security concerns. Geographic proximity has ensured strong economic linkages between the
United States and the region, with the United States being the major trading partner and largest
source of foreign investment for most countries in the region. Free trade agreements with Mexico
and Canada, Chile, Central America and the Dominican Republic (CAFTA-DR), and most
recently with Peru have augmented U.S. economic linkages with the region. The region is also the
largest source of migration, both legal and illegal, with geographic proximity and economic
conditions in the region being major factors in the migration. Curbing the flow of illicit drugs
from Mexico and South America into the United States has been a key component of U.S.
relations with Latin America for almost two decades. Latin American nations, largely Venezuela
and Mexico, supply the United States with just over one-third of its imported oil, but there have
been concerns about the security of the region as an oil supplier because of Mexico’s declining oil
reserves and periodic threats by Venezuela’s President to cut oil exports to the United States.
In the aftermath of the Cold War, U.S. policy interests in Latin America and the Caribbean shifted
away from security concerns and focused more on strengthened economic relations, but the
September 2001 terrorist attacks in the United States resulted in security interests re-emerging as
a major U.S. interest. As a result, bilateral and regional cooperation on anti-terrorism efforts have
intensified. The Bush Administration has described the Caribbean region as America’s third
border, with events in the region having a direct impact on the homeland security of the United
States. Cooperation with Mexico on border security and migration issues has also been a key
component of the bilateral relationship.
Bush Administration officials outline four themes or pillars of U.S. policy in the Americas:
consolidating democracy; promoting prosperity, which includes advancing free trade; investing in
people; and protecting the democratic state, which includes support for Colombia through the
Andean Counterdrug Program and support for Mexico and Central America through the Mérida ³
Initiative. As noted above, Latin America has made enormous strides in terms of political and
economic development over the past 25 years, with considerable U.S. support, but such
conditions as persistent poverty and the rise of populism in such countries as Venezuela, Bolivia,
and Ecuador will continue to pose challenges for U.S. interests and policy in the region. Fostering
cooperation on such issues as drug trafficking, terrorism, crime, and poverty reduction will
remain key components of U.S. policy in the region.
Legislative action on Latin America and the Caribbean in the second session of the 110^th
Congress has included the extension of several preferential trade programs for the region and
initial funding of the Administration’s proposed Mérida Initiative for Mexico and Central
America to support antidrug and anticrime efforts. In February 2008, Congress extended trade
benefits for Andean nations through December 2008 (P.L. 110-191). In June, Congress approved
the 2008 farm bill (P.L. 110-246) that included provisions to extend two preferential trade
programs: the Haiti HOPE Act was expanded and extended for 10 years; and the Caribbean Basin

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Trade Partnership Act (CBTPA) was extended for two years until September 30, 2010. In late
June 2008, Congress appropriated $465 million in FY2008 and FY2009 supplemental assistance
(P.L. 110-252) for the Mérida Initiative, while earlier in the month the House voted to authorize
$1.6 billion for the program over three years, FY2008-FY2010 (H.R. 6028).
In other pending business, the House version of reauthorization legislation for the President’s
Emergency Plan for AIDS Relief (PEPFAR), H.R. 848, approved in April 2008, would add 14
Caribbean countries to the list of focus countries under PEPAR; the Senate version of the bill
does not have such a provision. The House Appropriations Committee version of the FY2009
Financial Services and General Government Appropriations bill has provisions that would ease
restrictions on family travel to Cuba and on payment procedures for the sale of U.S. agricultural
exports to Cuba. On other trade issues, legislation action on implementing legislation for a free
trade agreement with Colombia pursuant to expedited procedures was forestalled by the House in
April 2008 (when it approved H.Res. 1092), and it remains uncertain whether and how Congress
will consider implementing legislation in the future. Action on a free trade agreement with
Panama to date has been tied up because of U.S. concerns over the selection of Pedro Miguel
Gonzalez—wanted in the United States for the murder of a U.S. serviceman in 1992—as
president of Panama’s legislature for a one-year term that expires at the end of August 2008.
Additional congressional oversight hearings on Latin America in the second session have focused
on a variety of policy issues: the implications of Cuba’s political succession on future
developments in Cuba and the region; the crisis in the Andean region prompted by Colombia’s
March 2008 raid on a FARC camp in Ecuador; efforts to strengthen border security, which has
been a key issue in relations with Mexico; and China’s growing interest in Latin America and the
implications for U.S. policy.

Figure 1. Map of Latin America and the Caribbean
^Source:^Ma^{p Resources. Adapt}^e^d^{by CRS.}

The United States maintains a variety of foreign assistance programs in Latin America and the
Caribbean, including security assistance, counternarcotics, economic development, and trade

capacity building programs. Aid to the region increased during the 1960s with the Alliance for
Progress and during the 1980s with aid to Central America. Since 2000, U.S. assistance has
largely focused on counternarcotics especially in the Andean region, but more recently is being
expanded to Mexico.
Aid programs are designed to achieve a variety of goals, from poverty reduction to economic
growth. Child Survival and Health (CSH) funds focus on combating infectious diseases and
promoting child and maternal health. Development Assistance (DA) funds improvements in key
areas—such as trade, agriculture, education, the environment, and democracy—in order to foster
sustainable economic growth. Economic Support Funds (ESF) assist countries of strategic
importance to the United States and fund programs relating to justice sector reforms, local
governance, anti-corruption, and respect for human rights. P.L. 480 food assistance is provided to
countries facing emergency situations, such as natural disasters. Counternarcotics programs
funded through the International Narcotics Control and Law Enforcement (INCLE) and the
Andean Counterdrug Program (ACP, formerly known as the Andean Counterdrug Initiative)
accounts seek to assist countries to reduce drug production, to interdict trafficking, and to
promote alternative crop development. Foreign Military Financing (FMF) provides grants to
nations for the purchase of U.S. defense equipment, services, and training. U.S. support to
counter the HIV/AIDS epidemic in the region is provided largely through Global HIV/AID
Initiative (GHAI) funding, but also through some CSH funding. The United States also provides
contributions to multilateral efforts, such as the Global Fund to Fight AIDS, Tuberculosis, and
Malaria.
The Bush Administration’s FY2009 foreign aid request for Latin America is for $2.05 billion,
compared to an estimated $1.47 billion in FY2008 and $1.55 billion provided in FY2007
provided in the regular foreign aid appropriations measures. The FY2009 request reflects an
increase of almost 40% over that being provided in FY2008 in the regular foreign aid
appropriations measure. However, if FY2008 supplemental assistance for the Mérida Initiative
($417 million in FY2008) is included in the comparison, the FY2009 budget request is almost 9%
over the $1.88 billion estimated to be provided in FY2008. (See Table 1.)
In the FY2009 request for Latin America, four foreign aid funding accounts had significant
increases over the estimated amount being provided in regular FY2008 foreign aid funding:
Andean Counterdrug Program (ACP) funding, up 27%; Foreign Military Financing, up 40%;
Development Assistance (DA), up 48%; and International Narcotics Control and Law
Enforcement (INCLE) assistance, up almost 600% because of funding for the Mérida Initiative.
Three accounts had significant decreases: Child, Survival, and Health (CSH) assistance, down
almost 22%; Economic Support Funds (ESF), down about 31%; and P.L. 480 food aid, down 20%
(although food aid provided can often increase depending on need). A substantial portion of the
increase in Development Assistance in the FY2009 request can be explained by shifts from ESF
funding that in the past were being used for counternarcotics and other program areas. Comparing
FY2008 estimates to the FY2009 request, almost $89 million in ESF was shifted to the
Development Assistance account. This occurred in several countries—Bolivia, the Dominican
Republic, Ecuador, Guatemala, Mexico, and Peru.

Table 1. U.S. Foreign Assistance to Latin America and the Caribbean, FY2007-
FY2009
^{(U.S. $ m}^illions)
^FY20⁰⁷^FY20⁰⁸^FY20^{08 Supplementa}^l^FY20^{09 Bridge}^FY20⁰⁹
^(actual)^(estimat^e)^(estimat^e)^{Fund Supplemental (estimat}^e)^(request)
^1,55^{3 1,46}⁷⁴¹⁷⁴⁸^2,04⁹
^Source:^{U.S. Department of Stat}^{e, Congressional Budget Justificat}^{ion for Foreign Operations, FY20}^{09; H.R. 26}^42,
^Suppleme^{ntal Appro}^{priations Act}^{(enrolled as agreed to by House}^{and Senate).}
As noted above, the large increase in the INCLE account is because of the Mérida Initiative,
which would increase security cooperation with Mexico and Central America to combat the
threats of drug trafficking, transnational crime, and terrorism. In legislative action in late June
2008 (H.R. 2642/P.L. 110-252), Congress provided $417 million for the Mérida Initiative in
FY2008 supplemental assistance and $48 million in FY2009 bridge fund supplemental assistance.
In the FY2009 request, the Mérida Initiative would be funded with $550 million from the INCLE
account, including $450 for Mexico and $100 million for Central America under the Western
Hemisphere Regional Program. (For more, see “Mérida Initiative” below.)
Child Survival and Health (CSH) assistance to the region would decline in the FY2009 request,
with cutbacks in CSH for many countries in the region including Bolivia, the Dominican
Republic, El Salvador, Guatemala, Haiti, Honduras, and Peru. CSH funding for both the Central
America Regional Program and the Latin American and Caribbean Regional Program would
decline significantly, by over 70%, from that being provided in FY2008.
There was little change in other foreign aid funding accounts in the FY2009 request. The Global
HIV/AIDS Initiative (GHAI) account request for $112 million for Haiti and Guyana was identical
to that being provided in FY2008. Proposed funding from the International Military Education
and Training (IMET) and Non-proliferation, Anti-terrorism, Demining, and Related Programs
(NADR) accounts would increase, but these are relatively small programs for the region.
Looking at the top foreign aid recipients in the region, five countries—Colombia, Mexico, Haiti,
Peru, and Bolivia—account for the lion’s share of U.S. assistance going to Latin America; about
73% of the FY2009 request for the region will go to these five countries. As it has been for the
past eight years, Colombia is the single largest aid recipient in the region, and would receive
about $543 million or about 26% of assistance going to the region in FY2009. The United States
has not traditionally provided large amounts of foreign assistance to Mexico, but the FY2009
request includes almost $501 million, accounting for about 24% of aid to the region, with almost
$478 million of that under the Mérida Initiative that would increase security cooperation with
Mexico to combat the threats of drug trafficking, transnational crime, and terrorism. Assistance to
Haiti has increased significantly over the past several years as the United States has provided
support to the Préval government. The FY2009 request for Haiti is for almost $246 million, or
about 12% of assistance to the region. Peru and Bolivia have received significant assistance over
the past eight years under the Andean Counterdrug Initiative, now known as the Andean
Counterdrug Program. In the FY2009 request, Peru would receive $103 million and Bolivia $100
million.
The Millennium Challenge Account (MCA) is a new initiative that provides sizable aid grants to
a few low-income nations that have been determined, through a competitive process, to have the
strongest policy reform records and where new investments are most likely to achieve their

intended development results. In 2005, the Millennium Challenge Corporation (MCC) approved
five-year compacts with Honduras ($215 million) and Nicaragua ($175 million), and in 2006 it
approved a five-year compact with El Salvador ($461 million). Both Guyana and Paraguay have
received threshold assistance from the MCC to help assist the countries become eligible for an
MCC compact. Other Latin American or Caribbean nations could be eligible to receive assistance
in future years.
CRS Products
^{CRS Report RL342}^99,^{U.S. Foreig}^{n Assistance to}^{Latin America and the Caribbea}^{n: FY2006-FY2008}^{, by Connie Veillette et}
^al.
^{CRS Report RL333}^37,^{Article 98}^{Agreements and Sanctions on U.S. F}^{oreign Aid to Latin America}^{, by Clare Ribando Seelke.}
^{CRS Report RL340}^23,^{State, Foreign Operations, and Related Programs: FY2008 Appro}^priations^{, by Connie Veillette and}
^{Susan B. Ep}^stein.
^{CRS Report RL324}^27,^Millennium^{Challenge Account}^{, by Curt Tarno}^ff.
^{CRS Report RL334}^91,^Re^structuri^{ng U.S. Foreign Aid: The Role of the}^{Director of Foreign Assistance in Tra}^{nsformational}
^Development^{, by Con}^{nie Veillette.}
The Andean Counterdrug Program (ACP), referred to as the Andean Counterdrug Initiative (ACI)
until FY2008, is the primary U.S. foreign assistance program that supports counternarcotics
activities in the Andean region of South America. Colombia, the main source country for cocaine
entering the United States and a strong U.S. ally in South America, has received the bulk of ACP
funding. However, the ACP program is regional in nature because organizations in countries
bordering Colombia also produce and traffic in narcotics. The ACP program began in 2000, when
Congress passed legislation providing $1.3 billion in interdiction and development assistance
(P.L. 106-246) for Colombia and six regional neighbors: Bolivia, Peru, Ecuador, Venezuela,
Brazil, and Panama. Funding for ACP from FY2000 through FY2008 totaled approximately $6
billion.
For FY2008, the Administration requested $442.8 million for the ACP program, with $367
million requested for programs in Colombia. This request was lower than in previous years due in
part to the Administration’s decision to transfer alternative development programs from the ACP
account to the Economic Support Fund (ESF) account. The FY2008 Consolidated Appropriations
Act (P.L. 110-161) provided some $319.8 million for ACP programs, a reduction of $123.1
million from the Administration’s request, but transferred some ACP activities to the ESF and
International Narcotics Control and Law Enforcement (INCLE) accounts. As in previous years
Colombia received the overwhelming majority of ACP funding, totaling roughly $244.6 million
for interdiction and eradication programs. Other countries receiving ACP assistance included
Bolivia ($30 million), Ecuador ($7 million), Peru ($36.5 million), Brazil ($1 million) and Panama
($1 million). Venezuela no longer receives ACP funding. For FY2008, Congress provided roughly
$194 million in ESF funding for alternative development/institution building programs and $41.9
million in INCLE funding for human rights and rule of law programs in Colombia. The
Administration had not requested any INCLE funding for Colombia. In total, Congress increased
economic and social aid to Colombia by some $84 million in FY2008.

The FY2009 request for the ACP is for $406.8 million, slightly less than what was requested in
FY2008. The FY2009 request seeks to increase ACP funding for eradication and interdiction
programs in Colombia by 35% over the FY2008 enacted levels. The request includes funding at
or slightly above FY2008 enacted levels for Bolivia, Brazil, Ecuador, Peru, and Panama.
The ACP program has helped improve security conditions in Colombia and aided the Uribe
government’s efforts against the leftist Revolutionary Armed Forces of Colombia (FARC)
guerrilla group, but has not reduced drug production in the Andean region. A June 2008 report by
the U.N. Office on Drugs and Crime found that although yields were down, the coca acreage
planted in the Andean region increased by 16% in 2007. Supporters of U.S. counterdrug policy
argue that assistance to Colombia is necessary to help a democratic government confront drug-
supported leftist and rightist illegally armed groups. Assistance to Colombia’s neighbors,
according to supporters, is merited because of an increasing threat from the spillover of violence
and drug production from Colombia. While some critics agree with this assessment, they argue
that U.S. assistance overemphasizes military training and crop eradication rather than alternative
development projects that could provide alternative livelihoods for growers who voluntarily give
up illicit crops. Critics also assert that U.S. assistance provides inadequate support for the
protection of human rights.
For a broader discussion of Colombia beyond the ACP, see “Colombia” below.
CRS Products
^{CRS Report RL322}^50,^Colo^{mbia: Issues f}^{or Congress}^{, by Colleen W. Cook and Clare Ribando Seelke.}
^{CRS Report RL345}^43,^{International Drug Cont}^{rol Policy}^{, by Liana S}^uⁿ^Wyler.
Increasing violence perpetrated by drug cartels, youth gangs, and other criminal groups is
threatening citizen security and democracy in Mexico and Central America. Some 90% of the
drugs entering the United States pass through the Mexico-Central America corridor. On October
22, 2007, the United States and Mexico announced the Mérida Initiative, a multi-year proposal
for $1.4 billion in U.S. assistance to Mexico and Central America aimed at combating drug
trafficking, gangs, and organized crime in the region.
The Administration requested $500 million for Mexico and $50 million for Central American
countries in its FY2008 supplemental appropriations request, and another $450 million for
Mexico and $100 million for Central American countries in the FY2009 budget request. The
proposed funding for Mexico is largely in the form of equipment and training to help support the
Mexican government’s anti-drug efforts. The proposed funding for Central America aims to
support a regional anti-gang strategy and to bolster the capacity of Central American governments
to inspect and interdict drugs, goods, arms and people.
On June 11, 2008, the House approved H.R. 6028 (Berman), the Merida Initiative to Combat
Illicit Narcotics and Reduce Organized Crime Authorization Act of 2008 by a vote of 311 to 106.
The bill would authorize $1.6 billion over three years, FY2008-FY2010, for both Mexico and
Central America, $200 million more than originally proposed by President Bush.

In terms of appropriations legislation, in late June 2008, Congress appropriated $465 million in
FY2008 and FY2009 supplemental assistance for Mexico and Central America in the FY2008
Supplemental Appropriations Act, H.R. 2642 (P.L. 110-252). In the act, Mexico receives $352
million in FY2008 supplemental assistance and $48 million in FY2009 bridge fund supplemental
assistance, while Central America, Haiti, and the Dominican Republic receive $65 million in
FY2008 supplemental assistance. The measure has human rights conditions softer than compared
to earlier House and Senate versions, largely because of Mexico’s objections that some of the
conditions would violate its national sovereignty. The language in the final enacted measure
reduced the amount of funding subject to human rights conditions, from 25% to 15%, removed
conditions that would have required the Mexican government to try military officials accused of
abuses in civilian courts and to enhance the power of its National Human Rights Commission,
and softened the language in other conditions.
CRS Products
^{CRS Report RS2283}^7,^{Merida Initi}^{ative: U.S. Anticrime and Counterd}^r^{ug Assistance for Mexico}^{and Centr}^{al America}^{, by}
^{Colleen W. C}^{ook and Clare Riba}^{ndo Seelke.}
^{CRS Report RL327}^24,^Mexico^-U.S^{. Relations: I}^ssues^{for Congress}^{, by}^{Mark P. Sullivan, Col}^{leen W. Coo}^{k, and Alessandra}
^Durand.
^{CRS Report RS2214}^{1, Gangs}ⁱⁿ^{Central America, by Clare Riban}^{do Seelke.}
^{CRS Report RL345}^43,^{International Drug Cont}^{rol Policy}^{, by Liana S}^uⁿ^Wyler.
Trade, as a critical component of commercial and foreign economic policy, has been one of the
most enduring and dynamic issues in U.S.-Latin American relations. U.S. trade policy has
evolved over time, adjusting to changes in both U.S. interests and altered circumstances and
priorities in the region. When Latin American countries faced economic, social, and political
upheaval in the 1970s and 1980s, the United States sought to support and influence the region
with unilateral (one-way) trade preference programs intended to encourage export-led economic
growth and development. This concept was also the basis for the Haiti HOPE Act, which was
expanded and extended for ten years in June 2008. By the 1990s, the rebound of economic
growth and new-found interest in trade liberalization created an opening for U.S. trade policy to
shift toward reciprocal free trade agreements (FTAs). Among the major differences with trade
preferences, FTAs are negotiated between parties, have more comprehensive, mutual obligations,
and are permanent, not requiring periodic congressional renewal.
By implementing the North American Free Trade Agreement (NAFTA), the U.S.-Chile FTA, the
U.S.-Peru FTA, and the Dominican Republic-Central America-United States Free Trade
Agreement (CAFTA-DR)—still not implemented by Costa Rica—countries exchanged their
unilateral trade preferences provided under the Generalized System of Preferences (GSP), the
Caribbean Basin Initiative (CBI), the Caribbean Basin Trade Partnership Act (CBTPA), and the
Andean Trade Preference Act (ATPA) for reciprocal benefits under the FTAs. Currently, newly
negotiated FTAs with Panama and Colombia present the same tradeoff with respect to unilateral
preferences extended to them under either the CBI or the ATPA. In June 2008, Congress extended
unchanged the CBTPA for two years until September 30, 2010 (H.R. 6124/P.L. 110-246, Title XV,
Section 15408). Congress has been opting for short-term extensions of the ATPA, which will
expire on December 31, 2008.

Three other important issues cut across U.S. trade policy initiatives in the region. First, the
proposed hemispheric-wide Free Trade Area of the Americas (FTAA) has stalled over
disagreements between Brazil and the United States. The Brazil-led Southern Common Market
(Mercado Común del Sur—Mercosur) seems to be expanding its customs union approach to
regional integration as an alternative to the U.S.-backed FTAA, particularly to countries with no
trade preferences with the United States. It is in this context, as well as the lingering World Trade
Organization (WTO) negotiations, that congressional consideration of the two remaining U.S.
bilateral FTAs takes on added significance. Second, the expiration of Trade Promotion Authority
(TPA) means expedited legislative procedures typically used to consider reciprocal trade
agreement implementing legislation is no longer available for FTAs signed after July 1, 2007.
Without a renewed TPA, the United States could be limited in its ability to move forward on
future FTAs in the region. Third, the “New Trade Policy for America,” a set of principles
developed jointly by congressional leadership and the Bush Administration, has emerged as the
basis for significant changes in labor and environmental provisions, among others, in the FTAs
with Peru, Panama, and Colombia.
The Andean Trade Preference Act (ATPA) extends special duty treatment to certain U.S. imports
from Bolivia, Colombia, Ecuador, and Peru that meet domestic content and other requirements.
ATPA was intended to promote export-led economic growth in the Andean region and to
encourage a shift away from the cultivation of illegal coca by supporting alternative crop
production. The ATPA (Title II of P.L. 102-182) was enacted on December 4, 1991, and renewed
and modified under the Andean Trade Promotion and Drug Eradication Act (ATPDEA; title
XXXI of P.L. 107-210) on August 6, 2002, extending trade preferences until December 31, 2006.
Since that time, the Congress has favored short-term extensions of ATPA. On February 29, 2008, ^th
the 110 Congress enacted legislation to extend ATPA trade preferences until December 31, 2008
(P.L. 110-191).
The U.S.-Peru Trade Promotion Agreement (PTPA), a bilateral free trade agreement between the
United States and Peru, was signed into law on December 14, 2007 (P.L. 110-138) by President
Bush. On November 8, 2007, the House passed (285-132) H.R. 3688 to implement the PTPA and
the Senate passed implementing legislation (77-18) on December 4, 2007. President Bush notified
the Congress of his intention to enter into a free trade agreement with Peru on January 6, 2006
and the two countries signed the agreement on April 12, 2006. The Peruvian Congress approved
the PTPA on June 28, 2006 by a vote of 79 to 14. After the signing of the agreement, U.S.
congressional action on the PTPA was postponed in part to allow congressional leadership and the
Bush Administration to develop new text for the labor and environment chapters based on
principles set forth in the “New Trade Policy for America.” On May 10, 2007, Congress and the
Administration reached an agreement on a new bipartisan trade framework that called for the
inclusion of core labor and environmental standards in the text of pending and future trade
agreements. On June 25, 2007, the United States reached an agreement with Peru on the legally
binding amendments to the PTPA to reflect the bipartisan agreement of May 10. Two days later,
Peru’s Congress voted 70 to 38 in favor of the amendments to the PTPA.
The PTPA will likely have a small net economic effect on the United States because of the small
size of Peru’s economy. In 2007, Peru had a nominal GDP of $109 billion, approximately 0.8%

the size of the U.S. GDP of $13.8 trillion. The United States currently extends duty-free treatment
to selected imports from Peru under the Andean Trade Preferences Act (ATPA), a regional trade
preference program that expires at the end of December 2008. In 2007, 57% of all U.S. imports
from Peru received preferential duty treatment under ATPA. U.S. imports from Peru account for
0.3% of total U.S. imports, and U.S. exports to Peru account for 0.3% of total U.S. exports. The
U.S. trade deficit with Peru was $1.44 billion in 2007. The major U.S. import item from Peru is
gold, followed by refined copper, and petroleum light oils, while the leading U.S. export items to
Peru are gasoline, transmission apparatus, and office and data processing machinery parts.
On August 24, 2006, President Bush notified Congress of his intention to enter into the U.S.-
Colombia Free Trade Agreement (CFTA), a bilateral free trade agreement between the United
States and Colombia. The two countries signed the agreement on November 22, 2006.
Implementing legislation for a U.S.-Colombia Free Trade Agreement (CFTA) (H.R. 5724/S. ^th
2830) was introduced in the 110 Congress on April 8, 2008 pursuant to Title XXI (Bipartisan
Trade Promotion Authority Act of 2002) of the Trade Act of 2002 (P.L. 107-210). The House
leadership, however, considered that the President had submitted the implementing legislation
without sufficient coordination with Congress. On April 10, 2008, the House approved H.Res.

1092 by a vote of 224 to 195 to make certain provisions in § 151 of the Trade Act of 1974 (P.L.

93-618) establishing expedited procedures inapplicable to the CFTA implementing legislation.

The CFTA is highly controversial and it is currently unclear whether or how Congress will
consider implementing legislation in the future. The most controversial issue is the ongoing
violence against trade unionists in Colombia. Some Members of Congress oppose the CFTA
because of concerns about the violence against labor union activists and because of the perceived
negative effects of trade on the U.S. economy. The Bush Administration and some Members of
Congress believe that Colombia has made significant advances to combat violence and instability
and views the pending trade agreement as a national security issue in that it would strengthen a
key democratic ally in South America. In his response to U.S. congressional concerns, President
Uribe has stated on several occasions that he would make every effort to ensure that these
concerns were addressed and that the situation in Colombia had improved substantially under his
administration. Some Members of Congress have stated they would like to see evidence of
progress in this area before supporting the agreement.
A CFTA would likely have a small net economic effect on the United States because of the
relatively small size of Colombia as a trading partner when compared to others partners and
regions. Colombia’s gross domestic product (GDP) in 2007 was $173 billion, approximately
1.2% of U.S. GDP ($13.8 trillion in 2007). The United States currently extends duty-free
treatment to selected imports from Colombia under the Andean Trade Preference Act (ATPA), a
regional trade preference program that expires on December 31, 2008. Approximately 90% of
U.S. imports from Colombia enter the United States duty-free, while U.S. exports to Colombia
face duties up to 20%. Economic studies on the impact of a U.S.-Colombia free trade agreement
(FTA) have found that, upon full implementation of an agreement, the impact on the United
States would be positive but very small. In the absence of a CFTA, and if the ATPA is not
renewed, many Colombian products entering the U.S. market would be subject to higher duties.
Since 1996, the U.S. trade balance with Colombia went from a surplus to a deficit of $1.4 billion
in 2007. The dominant U.S. import from Colombia is crude oil, followed by coal, and coffee,
while the leading U.S. export items are corn (maize), automatic data processing machine parts
and accessories, and vinyl chloride.

On June 28, 2007, representatives of the United States and Panama signed a free trade agreement
(FTA) after two and a half years and ten rounds of negotiations. Negotiations concluded on
December 16, 2006, with an understanding that further changes to labor, environment, and
intellectual property rights (IPR) chapters would be made pursuant to detailed congressional
input. These changes were agreed to in late June 2007, clearing the way for the proposed FTA’s
signing in time to be considered under the expiring TPA. The proposed U.S.-Panama FTA
incorporates changes based on principles outlined in the “New Trade Policy for America,” which
requires that both countries adopt as fully enforceable commitments the five basic labor rights
defined in the United Nations International Labor Organization’s (ILO) Fundamental Principles
and Rights at Work and its Follow-up (1998) Declaration, numerous multilateral environmental
agreements (MEAs), and pharmaceutical IPR provisions that potentially may hasten Panama’s
access to generic drugs.
Panama’s legislature ratified the FTA 58 to 4 on July 11, 2007, but there is one highly sensitive
issue that remains to be resolved for the United States. In September 2007, the Panamanian
National Assembly elected Pedro Miguel González Pinzón to a one-year term as President of the
legislative body. Although a deputy in the National Assembly since 1999, his elevation to
President of the Legislature drew the attention of the U.S. Congress because he is also known for
his alleged role in the June 10, 1992 murder of a U.S. serviceman in Panama. A Panamanian court
acquitted him of the charge in 1997, but the United States does not recognize the verdict and
maintains an outstanding warrant for his arrest. His continued presence as National Assembly
President has been one factor delaying consideration of the FTA by the U.S. Congress. This
situation could change if he is not re-elected to a second term in the September 1, 2008 election.
The U.S. trade surplus with Panama was $3.4 billion in 2007. Major U.S. exports to Panama
include oil and mostly capital- and technology-intensive manufactured goods such as aircraft,
pharmaceuticals, machinery, medical equipment, and motor vehicles. U.S. imports from Panama
include seafood, repaired goods, gold, sugar, and coffee. Panama, however, is largely a services-
based economy, which distinguishes it, and the trade negotiations with the United States, from
those of its Central American neighbors. The proposed U.S.-Panama FTA is a comprehensive
agreement similar to other bilateral FTAs entered into by the United States. Some 88% of U.S.
exports would become duty free right away, with remaining tariffs phased out over a ten-year
period. Nearly half of U.S. farm exports to Panama would achieve duty-free status immediately,
with many products restricted by tariff-rate quotas. Tariffs on other farm products are phased out
over 16 years. The FTA includes provisions for services trade, telecommunications, intellectual
property rights, labor, environment, and government procurement, while providing support for
trade capacity building. The two countries also signed a detailed bilateral agreement to resolve
SPS market access issues.
To assist Haiti with rebuilding its economy by encouraging investment and job creation in the ^th
once vibrant apparel sector, the 109 Congress passed the Haitian Hemispheric Opportunity
through Partnership Encouragement (HOPE) Act in December 2006 (P.L. 109-432). The act
provided duty-free treatment for select apparel imports from Haiti that are made in part from less
expensive third country (e.g. Asian) yarns and fabrics, provided Haiti meets eligibility criteria
related to labor, human rights, and anti-terrorism policies. To enhance the effectiveness of these ^th
provisions, the 110 Congress expanded them in June 2008 when it passed the Food,

Conservation, and Energy Act of 2008 (H.R. 6124/P.L. 110-246)—the 2008 farm bill, Title XV of
which includes the Haitian Hemispheric Opportunity through Partnership Encouragement
(HOPE) Act of 2008 (HOPE II Act).
The original HOPE Act did not result in the expected growth in apparel exports, Congress
expanded the preferences, also making them easier to use. Support for HOPE II was based on the
dominant role of the U.S. market as the main destination for Haitian apparel exports and the fact
that apparel assembly is Haiti’s core export sector and essential for its economic well-being
because it generates up to 80% of the country’s foreign exchange used to finance Haiti’s large
food import bill, among other needs. In 2007, apparel constituted over 80% of Haiti’s total
exports and 93% of exports to the United States (81% knit, 12% woven articles), so the sector
provides one potential avenue for employment growth. The preferences also support textile firms
in the Dominican Republic, which have an expanding co-production arrangement with Haiti.
The proposed FTAA was originally conceived over 10 years ago as a regional (presumably WTO-
plus) trade agreement that would include 34 nations of the Western Hemisphere. Since then, three
drafts of an incomplete agreement have been released, but the original January 2005 date for
signing it has long since passed. At the center of the delay are deep differences dividing the
United States and Brazil, the co-chairs of the Trade Negotiating Committee, which is charged
with defining the framework under which the FTAA negotiations can continue. The United States
and Brazil agreed at the November 2003 Miami Ministerial to a two-tier approach that would
include a set of “common rights and obligations” to which all countries would agree, augmented
by optional plurilateral arrangements for countries wishing to make deeper reciprocal
commitments. To date, the United States and Brazil have been unable to define how this two-tier
concept would work, and the United States has declined Brazil’s offer to move ahead with the
“4+1” market access talks with the Mercosur (Southern Common Market) countries (Brazil,
Argentina, Uruguay, Paraguay, and as of July 1, 2006, Venezuela).
The breadth of an emerging resistance to the FTAA became clearer at the fourth Summit of the
Americas held on November 4-5, 2005, in Mar del Plata, Argentina. Amid dramatic and
sometimes violent protests against President George W. Bush and the FTAA, which was not
scheduled as the major topic of this summit, it became clear that Latin American and Caribbean
countries were divided over how to proceed. A total of 29 countries supported restarting
negotiations, and the United States pushed to set a specific date in 2006. The Mercosur countries
rejected this idea, arguing that the conditions for a balanced and equitable FTAA did not yet exist.
Venezuela lobbied independently to end any further effort on the FTAA and called for a unified
resistance against U.S. policies and presence in Latin America. On July 4, 2006, Venezuela
agreed to join Mercosur as its first new full member since its inception in 1991, although Brazil
and Paraguay have yet to ratify the agreement. Although Mercosur has collectively resisted the
FTAA, Venezuela is the only country in Latin America to reject the idea unequivocally. With
Venezuela’s new-found influence on Mercosur, the United States may find it even more difficult
to isolate its unabashedly negative attitude on the FTAA negotiations.
The Summit Declaration called for time to reflect on the problems of the FTAA process while
awaiting the outcome of the WTO Doha Round, particularly with respect to agricultural issues.
Given that the WTO talks have also bogged down, it seems unlikely that the FTAA will find the
support needed to move ahead in the near future, particularly with Venezuela now potentially
influencing policy in the Mercosur group. In the meantime, both Brazil and the United States are

meeting on an informal bilateral basis and continue to court other Latin American countries to
join them in their respective subregional trade pacts, reinforcing the significance of U.S. trade
initiatives as a key element of U.S. foreign policy in the region.
CRS Products
^{CRS Report RL325}^40,^{The Prop}^os^{ed U.S.-Panama Free Trade Agreement}^{, by J. F. Hornbeck.}
^{CRS Report RL339}^51,^{U.S. Trade}^{Policy and the Caribbean: F}^{rom Tra}^{de Preferences to Free Trade Agree}^ments^{, by}^{J. F.}
^Hornbec^k.
^{CRS Report RS2287}^9,^{Haiti: Legislative Respons}^{es t}^o^{the Food Crisis a}^{nd Related Development Challenges}^{, by Clare}
^{Ribando Seelke and J. F. Hornbec}^{k.CRS Report RS22548,}^{ATPA Re}^{newal: Backgroun}^{d and Issues}^{, by}^{M. Angeles}
^Vil^larreal.
^{CRS Report RL318}^70,^{The Domin}^{ican Republic-Central America-Unite}^{d States Free Trade Ag}^{reement (CAFTA-DR)}^{, by J. F.}
^Hornbec^k.
^{CRS Report RS2086}^4,^{A Free Tra}^{de Area of the Americas: Major Poli}^{cy Issues}^{and Status of Negotiations}^{, by J. F. Hornbec}^k.
^{CRS Report 98-8}^40,^{U.S.-Latin Am}^{erica Trade: Recent Trends}^{, by J. F.}^Hornbec^{k and}^{Marisabel Cid.}
Latin America, followed by Asia, is the leading source of both legal and illegal migration to the
United States. The overwhelming majority of Latin American immigrants come from Mexico,
Central America, and the Caribbean. Factors contributing to Latin American migration to the
United States include family ties, poverty, a shortage of good jobs, and proximity to the United
States. Latin American governments, most notably Mexico under President Vicente Fox, lobbied
for comprehensive immigration reform in the United States and the creation of a guest worker
program that would normalize the status of illegal migrant workers and facilitate circular ^th
migration patterns so that workers return to their countries of origin. The 109 Congress
considered immigration reform, but did not enact any comprehensive reform measures. Latin ^th
American nations were disappointed by the failure of immigration reform in the 109 Congress
and the approval of a border fence along 700 miles of the U.S.-Mexico border. After President
Bush signed the Secure Fence Act of 2006 (P.L. 109-367), Mexico, with the support of 27 other
nations, denounced the proposed border fence at the Organization of American States.
In the 110^th Congress, immigration reform has been stymied since June 2007 when the Senate
failed to invoke cloture and limit debate on two comprehensive reform measures, S. 1348 (Reid)
and S. 1639 (Kennedy). While the House held several hearings on immigration reform, the
Senate’s action made it unlikely that the House would take up any comprehensive reform on its
own. President Bush had expressed support for comprehensive immigration reform including
increased border security, a guest worker program, and the normalization of status of some of the
estimated 12 million illegal immigrants. Most observers believe that Congress is unlikely to ^th
revisit comprehensive immigration reform in the second session of the 110 Congress.
Mexico is the largest source of legal migrants to the United States and is also believed to be the
largest source of illegal immigrants. According to the Pew Hispanic Center, undocumented
Mexican migrants accounted for 56% of the estimated 11.5 to 12 million illegal immigrants in the ⁴
United States in 2005. In February 2006, the Mexican Congress approved a concurrent resolution

⁴^P^e^w^Hi^sp^anⁱ^c^Cen^t^er,^“T^h^e^Sⁱ^{ze an}^d^Ch^aract^eri^s^tⁱ^c^{s o}^f^t^h^{e Un}^aut^h^o^rⁱ^zed^Mⁱ^gran^t^P^o^p^u^l^atⁱ^o^{n i}ⁿ^t^h^e^U.^S^.^,^”^b^y^Jeff^r^e^y
^P^a^s^s^e^l,^Ma^r^c^{h 7, 20}⁰⁶^.

on migration and border security in which Mexico acknowledges that its workers will continue to
emigrate until there are more opportunities in Mexico. The resolution also accepts the need to
revisit its migration policies to consider enforcement of its northern and southern borders,
enforcement of Mexican immigration laws that respect the human rights of migrants, and the
need to combat human trafficking. Perhaps most relevant, the Mexican resolution states that the
Mexican government does not promote illegal migration and calls for the development of a guest
worker program in the United States under the principle of shared responsibility. The resolution
commits Mexico to enforcing legal emigration “if a guest country offers a sufficient number of
appropriate visas to cover the biggest possible number of workers and their families, which, until ⁵
now cross the border without documents because of the impossibility of obtaining them.”
Mexico enacted a new human trafficking law in November 2007, which improves upon existing ⁶
legal framework to prevent and sanction trafficking in persons, as well as protect victims.
Mexico benefits from illegal migration in at least two ways: (1) it is a “safety valve” that
dissipates the political discontent that could arise from higher unemployment in Mexico; and (2)
it is a source of remittances by workers in the United States to families in Mexico, estimated to be ⁷
almost $24 billion in 2007. President Calderón announced the creation of a new jobs program in
January 2007 in an effort to boost Mexican development and decrease migration pressures.
In recent years, several Latin American economies have benefitted from remittances received
from workers in the United States, motivating diplomats to push for immigration reform that will
protect the status of their nationals in the United States and in other receiving countries. In 2006,
migrants sent an estimated $60 billion to their home countries, with Mexico, Colombia, and
Brazil receiving the largest amounts of remittances. The Inter-American Development Bank
(IDB) estimates that remittances from the United States have grown 51% since 2004. The IDB
also estimates that remittances to Central America rose to $12.1 billion in 2007.
In addition to concerns over immigration reform, El Salvador, Honduras, and Nicaragua advocate
for extensions of their eligibility for temporary protected status (TPS). TPS is a discretionary,
humanitarian benefit granted to eligible nationals after the Secretary of Homeland Security
determines that a country has been affected by ongoing armed conflict, natural disaster, or other
extraordinary conditions that limit the affected country’s ability to accept the return of its
nationals from the United States. Honduras and Nicaragua were designated for TPS in January
1999 in response to devastation from Hurricane Mitch. U.S. Citizenship and Immigration
Services (USCIS) estimates that 75,000 Hondurans and 4,000 Nicaraguans benefit from TPS. In
May 2007, the Secretary of Homeland Security announced an extension of TPS for Honduras and
Nicaragua through January 5, 2009. El Salvador was previously designated for TPS from 1990 to
1992 in accordance with Section 303 of the Immigration Act of 1990 which established TPS. It
was again designated in March 2001 following a series of earthquakes in January 2001. USCIS
estimates that 225,000 Salvadorans benefit from TPS. The Department of Homeland Security
recently extended El Salvador’s TPS designation through March 9, 2009.
Another issue in U.S. relations with Latin America and the Caribbean is the increase in
deportations in recent years. U.S. deportations to the region constitute the overwhelming majority

⁵^“^M^e^x^ic^o-^U^.^{S.: Mig}^r^a^tio^{n a}ⁿ^{d B}^o^r^d^e^r^Se^c^u^r^ity^,”^Em^ba^ssy^of^Mexⁱ^{co, Fe}^b^r^ua^r^y²⁰⁰⁶^.
⁶^Me^xⁱ^c^aⁿ^Fe^de^r^a^{l C}^ong^r^e^s^s^w^e^bs^ite^,^L^{ey P}^a^{ra P}^r^evenⁱ^r^{y S}^aⁿ^cⁱ^oⁿ^a^{r L}^a^T^r^a^t^{a De P}^e^rs^onas^:
^http:^//www^.diputa^doe^s.g^o^b^.^m^x^.^L^e^y^e^s^Bilio/pdf^/L^P^S^T^P^.^pdf
⁷^Inte^r-Am^e^ric^a^{n De}^v^e^lopm^eⁿ^{t Ba}^nk^{, “}^R^e^m^itta^nc^e^s^{to L}^a^{tin Am}^e^r^ic^a^a^{nd t}^h^e^Ca^ribbe^aⁿ²⁰⁰⁷^,”²⁰⁰⁸^.

of U.S. deportations worldwide.⁸ In FY2007, for example, the Department of Homeland Security
deported almost 238,000 aliens worldwide, with 228,504 of those, or 96%, going to Latin
American and Caribbean countries. Overall in FY2007, almost 40% of those deported to Latin ⁹
America and the Caribbean were removed based on a criminal conviction. For a number of
countries, particularly in the Caribbean, a majority of those deported were removed on criminal
grounds. In Mexico, one of the major concerns about the increase in deportations is the stress that
it has put on border communities, where a majority of the deportees arrive. In the Caribbean and
Central America, policymakers have been most concerned about their countries’ abilities to
absorb the large number of deportees, which pose challenges for social service providers, and the
effect of criminal deportees on crime. Officials from the region have called on the United States
to provide better information on deportees with criminal records and to provide reintegration
assistance to help returning nationals.
CRS Products
^{CRS Report RL336}^59,^{Border Security: Ba}^{rriers Along the U.S. Interna}^{tional Border}^{, by Blas Nuñez-Neto and Yule Kim.}
^{CRS Report RL320}^44,^Im^{migration: Policy Considerations Related to}^{Guest Worker Programs}^{, by A}^{ndorra Bru}^no.
^{CRS Report RS2084}^4,^{Temporary Protected Status: Current Immigrati}^{on Policy and Is}^sues^{, by R}^uth^Ellen^{Wasem and}
^{Karma Ester.}
^{CRS Report RL322}^35,^{U.S. I}^mmig^{ration Policy on Permanent Admis}^sio^ns^{, by Ruth}^{Ellen Wasem.}
U.S. attention to terrorism in Latin America intensified in the aftermath of the September 2001
terrorist attacks on New York and Washington, with an increase in bilateral and regional
cooperation. In its April 2008 Country Reports on Terrorism, the State Department highlighted
threats in Colombia and concerns about support from the region to Middle East terrorist groups.
According to the report, “there were no known operational cells of Islamic terrorists” in the
region, but it maintained that “pockets of ideological supporters and facilitators in South America
and the Caribbean lent financial, logistical, and moral support to terrorist groups in the Middle
East.” Overall, the report maintained that the threat of a transnational terrorist attack remained
low for most countries in the hemisphere. The report also stated that regional governments “took
modest steps to improve their counterterrorism capabilities and tighten border security” but that
progress was limited by “corruption, weak government institutions, ineffective or lack of
interagency cooperation, weak or non-existent legislation, and reluctance to allocate sufficient
resources.” It also noted that most hemispheric nations had solid cooperation with the United
States on terrorism issues, especially at the operational level, with excellent intelligence, law
enforcement, and legal assistance relations.
Cuba has remained on the State Department’s list of state sponsors of terrorism since 1982, which
triggers a number of economic sanctions. The State Department’s April 2008 terrorism report

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pointed to Cuba’s opposition to U.S. counterterrorism policy and its hosting of dozens of U.S.
fugitives from justice. Cuba’s retention on the terrorism list, however, has been controversial,
with critics arguing that domestic political considerations have kept Cuba on the list.
In May 2008, for the third year in a row, the Department of State, pursuant to Arms Export
Control Act, included Venezuela on the annual list of countries not cooperating on antiterrorism
efforts, which triggers a ban on all U.S. commercial arms sales and re-transfers to Venezuela.
(Cuba also has been on that list for many years.) The State Department’s terrorism report stated
that “it remained unclear to what extent the Venezuelan government provided support to
Colombian terrorist organizations,” but information on captured computer files from Colombia’s
March 2008 raid of a Revolutionary Armed Forces of Colombia (FARC ) camp in Ecuador has
raised questions about alleged support of the FARC by the Venezuelan government of Hugo
Chávez. In a turn of events, on June 8, 2008, President Chávez publicly urged the FARC to end
its armed struggle, and release all hostages.
The United States provides Anti-Terrorism Assistance (ATA) training and equipment to Latin
American countries to help improve their capabilities in such areas as airport security
management, hostage negotiations, bomb detection and deactivation, and countering terrorism
financing. In recent years, ATA for Western Hemisphere countries amounted to $8.9 million in
FY2006, $7.3 million in FY2007, and an estimated $8 million in FY2008. For FY2009, the
Administration requested $9.3 million in ATA for Latin America, with $2.8 million for Colombia
and $3 million for Mexico, and the balance for other countries. The United States also began
providing Terrorist Interdiction Program assistance for several Latin American countries in
FY2008. An estimated $1.3 million is being provided to Panama, Brazil, and Nicaragua in
FY2008, while the Administration requested $1.2 million for Latin America for FY2009.
In the first session of the 110^th Congress, the House approved H.Con.Res. 188, which condemned
the 1994 bombing of the Argentine-Israeli Mutual Association in Buenos Aires, and H.Res. 435,
which expressed concern over the emerging national security implications of Iran’s efforts to
expand its influence in Latin America, and emphasized the importance of eliminating Hezbollah’s
financial network in the tri-border area of Argentina, Brazil, and Paraguay. The Senate approved
S.Con.Res. 53 in December 2007, which condemned the hostage-taking of three U.S. citizens—
Marc Gonsalves, Thomas Howes, and Keith Stansell—since February 2003 by the FARC while a
similar resolution, H.Con.Res. 260, was introduced in the House. Notably, all three U.S. hostages,
in addition to Colombian presidential candidate Ingrid Betancourt and 11 other hostages, were
rescued from captivity on July 2, 2008 in a bold operation by the Colombian military.
In the second session, two resolutions related to terrorism in Latin America have been introduced:
H.Res. 1049, calls for Venezuela to be designated a state sponsor of terrorism because of its
alleged support for the FARC, while H.Res. 965, among other provisions, calls for Venezuela to
implement measures to deny the use of Venezuelan territory and weapons from being used by
terrorist organizations.
CRS Reports
^{CRS Report RS2104}^9,^{Latin America: Terrorism Issues}^,^{by Ma}^{rk P. Sullivan.}

The AIDS epidemic in the Caribbean and Central America has begun to have negative
consequences for economic and social development in several countries, and continued increases
in HIV infection rates threaten future development prospects. In contrast to other parts of Latin
America, the mode of HIV transmission in several Caribbean and Central American countries has
been primarily through heterosexual contact, making the disease difficult to contain because it
affects the general population. The countries with the highest prevalence or infection rates are
Belize, the Bahamas, Guyana, Haiti, and Trinidad and Tobago, with rates between 2% and 4%;
and Barbados, the Dominican Republic, Honduras, Jamaica, and Suriname, with rates between

1% and 2%.

The response to the AIDS epidemic in the Caribbean and Central America has involved a mix of
support by governments in the region, bilateral donors (such as the United States, Canada, and
European nations), regional and multilateral organizations, and nongovernmental organizations
(NGOs). Many countries in the region have national HIV/AIDS programs that are supported
through these efforts.
U.S. government funding for HIV/AIDS in the Caribbean and Central America has increased
significantly in recent years. Aid to the region rose from $11.2 million in FY2000 to $33.8 million
in FY2003. Because of the inclusion of Guyana and Haiti as focus countries in the President’s
Emergency Plan for AIDS Relief (PEPFAR), U.S. assistance to the region for HIV/AIDS
increased from $47 million in FY2004 to an estimated $139 million in FY2008. For FY2009, the
Administration requested almost $139 million in HIV assistance for the Caribbean and Central
America, with $92 million for Haiti and $20 million for Guyana.
In the first session of the110^th Congress, H.R. 848 (Fortuño), introduced February 6, 2007, would
add 14 Caribbean countries to the list of focus countries under PEPAR. The additional countries
are Antigua & Barbuda, Barbados, the Bahamas, Belize, Dominica, Grenada, Jamaica,
Montserrat, St. Kitts & Nevis, St. Vincent and the Grenadines, St. Lucia, Suriname, Trinidad &
Tobago, and the Dominican Republic. In the second session, the language of H.R. 848 was
included in PEPFAR reauthorization legislation, H.R. 5501 (Berman), approved by the House on
April 2, 2008. The Senate version of the PEPFAR reauthorization, S. 2731 (Biden), which was
reported by the Senate Committee on Foreign Relations on April 15, 2008, does not have a
similar provision expanding the list of Caribbean countries that are focus countries.
CRS Products
^{CRS Report RL320}^01,^{HIV/AIDS in the Carib}^{bean and Cen}^{tral Americ}^a^{, by Mark P. Sullivan.}
^{CRS Report RL334}^85,^{U.S. Intern}^{ational HIV/AID}^{S, Tuberculosis, and Malaria Spend}^{ing: FY2004-FY2008}^,^{by Tiaji Salaam-}
^Blyther.
The 110^th Congress maintains a keen interest in the effects of crime and gang violence in Central
America, and its spillover effects on the United States. Since February 2005, more than 1,758
alleged members of the violent Mara Salvatrucha (MS-13) gang have been arrested in cities
across the United States. These arrests are raising concerns about the transnational activities of

Central American gangs. Governments throughout the region are struggling to find the right
combination of suppressive and preventive policies to deal with the gangs. Some analysts assert
that increasing U.S. deportations of individuals with criminal records to Central American
countries may be contributing to the gang problem.
Most experts argue that the repressive anti-gangs laws adopted by El Salvador and Honduras have
failed to reduce violence and homicides in those countries, and that law enforcement solutions
alone will not solve the gang problem. Analysts also predict that illicit gang activities may
accelerate illegal immigration and trafficking in drugs, persons, and weapons to the United States,
although a May 2007 United Nations report challenges those assertions. Others maintain that
contact between gang members across the regions is increasing, and that this tendency may cause
increased gang-related violent crime in the United States.
Several U.S. agencies have been actively engaged on both the law enforcement and preventive
side of dealing with Central American gangs. The National Security Council created an inter-
agency task force to develop a comprehensive strategy to deal with international gang activity.
The strategy, which is now being implemented, states that the U.S. government will pursue
coordinated anti-gang activities through five broad areas: diplomacy, repatriation, law
enforcement, capacity enhancement, and prevention.
During its second session, the 110^th Congress has discussed how to address the gang problem in
Central America during its consideration of authorization and appropriations legislation related to
the Mérida Initiative, a $1.4 billion multi-year aid package for Mexico and Central America
proposed by the Bush Administration in October 2007. On June 11, 2008, the House approved
H.R. 6028 (Berman), the Merida Initiative to Combat Illicit Narcotics and Reduce Organized
Crime Authorization Act of 2008, which would authorize $405 million for the Central American
countries over the next three fiscal years. In late June 2008, Congress appropriated $465 million
in FY2008 and FY2009 supplemental assistance for Mexico and Central America in H.R. 2642
(P.L. 110-252), the FY2008 Supplemental Appropriations Act. The measure provides increased
funds for the Central America portion of the Mérida Initiative above the Administration’s request,
including support for anti-gang programs. Congress will continue its consideration of the
Initiative and its gang-related components during the FY2009 appropriations process.
During the first session of the 110^th Congress, immigration legislation was introduced—H.R.
1645 (Gutierrez), S. 330 (Isakson), and S. 1348 (Reid)—that included provisions to increase
regional cooperation in the tracking of gang activity and in the handling of deported gang
members. The joint explanatory statement to the Consolidation Appropriations Act, FY2008
(H.R. 2764/P.L. 110-161) recommended providing $8 million to the State Department to combat
criminal youth gangs, $3 million more than the Administration’s request. On October 2, 2007, the
House passed H.Res. 564 (Engel) supporting expanded cooperation between the United States
and Central America to combat crime and violence.
^{CRS ProductsCRS Report RL341}^12,^{Gangs in Central America}^{, by Clare Ribando Seelke.}

During its second session, the 110^th Congress is maintaining an interest in the situation of Afro-
Latinos in Latin America, particularly the plight of Afro-Colombians affected by the armed
conflict in Colombia. In recent years, people of African descent in the Spanish- and Portuguese-
speaking nations of Latin America—also known as “Afro-Latinos”—have been pushing for
increased rights and representation. Afro-Latinos comprise some 150 million of the region’s 540
million total population, and, along with women and indigenous populations, are among the
poorest, most marginalized groups in the region. Afro-Latinos have formed groups that, with the
help of international organizations, are seeking political representation, human rights protection,
land rights, and greater social and economic rights and benefits. Improvement in the status of
Afro-Latinos could be difficult and contentious, however, depending on the circumstances of the
Afro-descendant populations in each country.
Assisting Afro-Latinos has never been a primary U.S. foreign policy objective, although a number
of foreign aid programs benefit Afro-Latino populations. While some foreign aid is specifically
targeted towards Afro-Latinos, most is distributed broadly through programs aimed at helping all
marginalized populations. Some Members may support increasing U.S. assistance to Afro-
Latinos, while others may resist, particularly given the limited amount of development assistance
available for Latin America.
In the 110^th Congress, there are several bills with provisions related to Afro-Latinos. The
Consolidated Appropriations Act, FY2008 (H.R. 2764/P.L. 110-161) required the State
Department to certify that the Colombian military is not violating the land and property rights of
Afro-Colombians or the indigenous. It also prohibited the use of Andean Counterdrug funds for
investment in oil palm development if it causes displacement or environmental damage (as it has
in many Afro-Colombian communities). In the explanatory statement to the Consolidated
Appropriations Act, the conferees stipulate that up to $15 million in alternative development
assistance to Colombia may be provided to Afro-Colombian and indigenous communities. On
July 11, 2007, the House passed H.Res. 426 (McGovern), recognizing 2007 as the year of the
rights of internally displaced persons (including Afro-Colombians) in Colombia and offering U.S.
support to programs that seek to assist and protect them. Another resolution, H.Res. 618 (Payne),
recognizing the importance of addressing the plight of Afro-Colombians, was introduced on
August 3, 2007. In addition to considering legislation with provisions related to Afro-Latinos, the ^th

110 Congress may discuss the situation of Afro-Colombians during its consideration of the U.S.-

Colombia Trade Promotion Agreement.
CRS Products
^{CRS Report RL327}^13,^{Afro-Latinos in Latin America and Consideratio}^{ns for U.S. Policy}^{, b}^y^{Clare Riband}^{o Seelke.}
Trafficking in persons for sexual exploitation or forced labor, both within a country and across
international borders, is a lucrative criminal activity that is of major concern to the United States
and the international community. While most trafficking victims still appear to originate from
South and Southeast Asia or the former Soviet Union, human trafficking is a growing problem in
Latin America and the Caribbean. Countries in Latin America serve as source, transit, and

destination countries for trafficking victims. Latin America is also a primary source region for the
up to17,500 people that are trafficked to the United States each year. In FY2007, victims from
Latin America accounted for 41% of trafficking victims in the United States certified as eligible
to receive U.S. assistance.
The State Department issued its eighth congressionally mandated Trafficking in Persons (TIP)
Report on June 4, 2008. Each report categorizes countries into four tiers according to the
government’s efforts to combat trafficking. Those countries that do not cooperate in the fight
against trafficking (Tier 3) have been made subject to U.S. sanctions since 2003. The group
named in 2008 includes a total of 14 countries. While Cuba is the only Latin American country
ranked on Tier 3 in this year’s TIP report, seven other countries in the region (Argentina, Costa
Rica, Dominican Republic, Guatemala, Guyana, Panama, and Venezuela) are included on the Tier

2 Watch List and, without significant progress, could receive a Tier 3 ranking in the 2009 report.

Congress has taken a leading role in fighting human trafficking by passing the Victims of
Trafficking and Violence Protection Act of 2000 (P.L. 106-386), the Trafficking Victims
Protection Reauthorization Act of 2003 (P.L. 108-193), and the Trafficking Victims Protection
Reauthorization Act of 2005 (P.L. 109-164).
In the 110^th Congress, there are several bills with trafficking-related provisions. The
Implementing the 9/11 Commission Recommendations Act of 2007 (P.L. 110-53) directs the
Secretary of Homeland Security to provide specified funding and administrative support to
strengthen the Human Smuggling and Trafficking Center. H.R. 3887 (Lantos), approved by the
House by a vote of 405-2 on December 4, 2007, would, among other provisions, reauthorize anti-
trafficking programs through FY2011, and amend the criminal code and immigration law related
to trafficking. A Senate re-authorization bill, S. 3061 (Biden), was introduced on May 22, 2008,
and is under consideration. Another bill, H.R. 2522 (Lewis), would establish a Commission to
evaluate the effectiveness of current U.S. anti-slavery efforts, including anti-TIP programs, and
make recommendations. S. 1703 (Durbin), approved by the Senate Judiciary Committee on
September 20, 2007, would create additional jurisdiction in U.S. courts for trafficking offenses
occurring in other countries.
CRS Products
^{CRS Report RL332}^00,^Trafficking^{in Persons in Latin America and the Carib}^bean^{, by Clare Ribando Seel}^ke.
^{CRS Report RL343}^17,^Trafficking^{in Persons:}^{U.S. P}^{olicy and Issues f}^{or Congress}^{, by Clare Ribando Seelke and Alison}
^Siskin.

Bolivia has experienced a period of political volatility with the country having six presidents
since 2001. Evo Morales, an indigenous leader and head of Bolivia’s coca growers’ union, and his
party, the leftist Movement Toward Socialism (MAS), won a convincing victory in the December
18, 2005, presidential election with 54% of the votes. He was inaugurated to a five-year term on
January 22, 2006. Early in his term, President Morales moved to fulfill his campaign promises to

decriminalize coca cultivation, nationalize the country’s natural gas industry, and enact land
reform. Those policies pleased his supporters, but complicated Bolivia’s relations with foreign
investors and the United States.
Since President Morales took office, Bolivian has become increasingly divided over the issues of
constitutional reform and regional autonomy. A constitutional reform process began in mid-2006
and concluded in late 2007 when the Constituent Assembly (CA) passed a draft constitution
without the presence of opposition delegates. Efforts by the Catholic Church, the Organization of
American States (OAS), and neighboring governments have failed to ease tensions over the
reform process between the MAS government in La Paz and the opposition. Whereas plans for a
national referendum on constitutional reforms have stalled, four departmental referendums on
autonomy have been held, despite the lack of congressional approval for them to be convened.
Tensions could ignite again in the near future as the prefects (departmental governors) have
recently come out against convoking a recall referendum on August 10, 2008 on whether they and
President Morales should remain in office.
U.S. interest in Bolivia has centered on its role as a major coca-producing country. U.S.-Bolivian
relations have been strained by the Morales government’s unorthodox drug policy; ties with
Venezuela, Cuba, and Iran; and its nationalization measures. Bolivian officials have worked
closely with the United States on drug interdiction efforts, but U.S. officials have asserted that
excess coca cultivation remains a problem in Bolivia. In 2007, tensions flared when Bolivian
authorities (including President Morales) complained that some U.S. assistance was going to
support opposition groups trying to undermine the MAS government. The U.S. Ambassador to
Bolivia was called back to Washington for consultations on security issues in mid-June 2008 after
protesters surrounded the U.S. Embassy in La Paz demanding the extradition of former president
Gonzalo Sánchez de Lozada and his ex-defense minister. The two have been charged in Bolivia
with responsibility for the civilian deaths that occurred in Bolivia during protests in September
and October 2003.
Bolivia received $122.1 million in U.S. assistance in FY2007, including $66 million in
counternarcotics assistance. In FY2008, Bolivia received an estimated $99.5 million, including
roughly $47.1 million in counternarcotics assistance. The FY2009 request for Bolivia is for
$100.4 million. In February 2008, Congress voted to extend trade preferences for Bolivia, along
with Colombia, Ecuador, and Peru, under the Andean Trade Preferences and Drug Eradication
Act (ATPDEA) through the end of December 2008. Prior to the end of its second session, the ^th
110 Congress is likely to consider what level of foreign assistance Bolivia should receive in
FY2009, and whether its existing trade preferences should be extended.
CRS Products
^{CRS Report RL325}^80,^{Bolivia: Poli}^{tical and Economic Develop}^{ments a}^{nd Relations with the United States}^{, by Clare Ribando}
^Seelke.
^{CRS Report RS2254}^8,^{ATPA Rene}^{wal: Background}^{and Issues}^{, by M.}^{Angeles Villarreal.}
On January 1, 2007, Luis Inácio “Lula” da Silva, of the leftist Workers’ Party (PT), was
inaugurated for a second four-year term as President of Brazil. Lula was re-elected in the second

round of voting with fairly broad popular support. His immediate tasks were to boost Brazil’s
lagging economic growth and address the issues of crime and violence. Despite President Lula’s
personal popularity, many predicted that intra-party rivalries within his fragile governing coalition
would make it hard for him to push his agenda through Brazil’s notoriously fractured legislature.
A year and a half into his second term, President Lula still enjoys high approval ratings (69% in
April 2008) and is benefitting from a resurgent economy (GDP growth reached 5% again in
2007). Ongoing corruption investigations involving President Lula’s PT party have not
diminished the strength of his second term in office, and some are urging him to seek a third
presidential term, a move that would require a constitutional amendment. Some have criticized
President Lula for thus far being unwilling or unable to use his significant political capital to gain
legislative approval for a more robust political and economic reform agenda. They maintain that
inaction on much-needed structural reforms could dampen Brazil’s current economic expansion.
Few predict that either President Lula or the Brazilian Congress will take action on any major
reform agenda until after the October 2008 municipal elections are held.
During the first Lula term, Brazil’s relations with the United States were generally positive,
although President Lula prioritized strengthening relations with neighboring countries and
expanding ties with nontraditional partners, including India and China. Brazil-U.S. cooperation
has increased during President Lula’s second term, particularly on energy issues. President Bush
visited Brazil on March 9, 2007, and President Lula visited Camp David on March 31. Those
presidential visits culminated in the signing of U.S.-Brazil Memorandum of Understanding
(MOU) to promote greater ethanol production and use throughout Latin America. Some predict
that, given its recent deep-water discoveries, Brazil could eventually become a major oil supplier
to the United
During its second session, the 110^th Congress is likely to maintain an interest in Brazil’s role as an
ethanol producer and in the implementation of the U.S.-Brazil biofuels agreement On October 9,
2007, the House passed H.Res. 651 (Engel), recognizing the warm friendship and expanding
relationship that exists between the United States and Brazil and the importance of the U.S.-
Brazil biofuels cooperation. Congressional interest may also focus on Brazil’s role in the Doha
round of the World Trade Organization (WTO) negotiations and in the resolution of trade disputes
between the two countries. In December 2006, Congress continued trade preferences for Brazil
under the Generalized System of Preferences (GSP), but set thresholds that may limit trade
preferences for some Brazilian exports compared to previous years. Interest in Brazil also centers
on its role as a stabilizing force in Latin America, especially with respect to Venezuela, Bolivia,
and Haiti. In addition, Brazil’s cooperation may be sought on issues of shared concern that
include counternarcotics and counterterrorism efforts, trafficking in persons, protection of the
Amazon, and HIV/AIDS prevention.
CRS Products
^{CRS Report RL334}^56,^{Brazil-U.S. Relations}^{, by Clare Ribando Seelke and Alessandra Du}^rand.
^{.CRS Report RL3419}^1,^{Ethanol and Other Biofuels: Potential for U.S.-Brazil Ene}^{rgy Cooperation}^{, by Clare Ribando Seelke}
^{and Brent D. Yacobucci.}

In the last decade, Colombia—a key U.S. ally in South America—has made significant strides in
reasserting government control over much of its territory, combating drug trafficking and terrorist
activities by illegally armed groups, and reducing poverty and inequality. Since the development
of Plan Colombia in 1999, the Colombian government, with significant U.S. support, has stepped
up its counternarcotics and security efforts. Congress has provided more than $6 billion to
support Plan Colombia from FY2000 through FY2008. Since 2002, Congress has granted the
State Department expanded authority to use counternarcotics funds for a unified campaign to
fight both drug trafficking and terrorist organizations in Colombia. The three main armed groups
in Colombia are the Revolutionary Armed Forces of Colombia (FARC), the National Liberation
Army (ELN), and the United Self-Defense Forces of Colombia (AUC) paramilitaries. All three
participate in drug trafficking and have been designated foreign terrorist organizations by the
State Department.
President Alvaro Uribe, re-elected in May 2006, is making headway in addressing the 40-year
plus conflict with the FARC. Since March 2008, several of the FARC’s key leaders have either
died or been killed. On July 2, 2008, the FARC was dealt a significant setback when the
Colombian military orchestrated an operation to rescue 15 hostages, including three U.S.
citizens—Marc Gonsalves, Thomas Howes, and Keith Stansell—held since February 2003 and
Colombian presidential candidate Ingrid Betancourt held since February 2002.
President Uribe has also overseen the demobilization and disarmament of more than 31,000 AUC
paramilitaries that had been active since the 1980s, although there are credible reports that some
paramilitary groups have re-organized. As a result of these accomplishments, Uribe enjoys strong
popular support. His popularity has not been affected by the so-called “para-political” scandal
concerning government ties to the paramilitaries, in fact, some maintain that the ongoing
investigations of those alleged ties show the newfound strength of the Colombian justice system.
As of May 2008, five legislators had been convicted and more than 60 others, were either under
investigation or awaiting trials for possible paramilitary ties. It remains to be seen how Uribe’s
recent decision to extradite 15 paramilitary leaders to the United States to stand trial for drug
trafficking charges will affect those ongoing investigations, as well as efforts to ensure that
victims of paramilitary violence receive compensation for their suffering.
President Uribe’s popularity soared after Colombia’s March 2008 raid of a FARC camp in
Ecuador resulted in the killing of a top guerrilla commander and the seizure of his computer files.
The unauthorized incursion caused a major diplomatic crisis between Colombia, Ecuador and
Venezuela. Relations remain tense, particularly since Interpol has verified the authenticity of files
on the seized computers alleging that both the Venezuelan and Ecuadorian governments had ties
to the FARC, charges that both governments have denied. Should Uribe continue to make inroads
against the FARC, his supporters may increase their recent calls to convoke a referendum to
amend the constitution so that he could run for a third presidential term in May 2010.
U.S. policy in Colombia remains controversial. Proponents of the current policy point to the
significant inroads that have been made in improving security conditions in Colombia and in
weakening the FARC guerrillas. According to U.S. State Department figures, kidnappings in
Colombia have declined by 83%, homicides by 40%, and terrorist attacks by 76% since 2002.
Critics argue that, despite these security improvements, U.S. policy does not rigorously promote
human rights, provide for sustainable economic alternatives for drug crop farmers, and has not
reduced the amount of drugs available in the United States. A June 2008 report by the U.N. Office

on Drugs and Crime found that although yields were down, the coca acreage planted in Colombia
increased by 27% in 2007.
Congress has expressed concern about a number of Colombia-related policy issues including the
aerial eradication of illicit drug crops, interdiction programs, funding levels for Plan Colombia,
U.S. hostages, and human rights. The FY2008 Consolidated Appropriations Act (P.L. 110-161)
cut overall assistance to Colombia by some 8% from the requested level, providing an estimated
$541 million in assistance. The law reduced interdiction, eradication, and military aid by roughly
$104 million to about $305 million and increased funds for alternative development, human
rights, and institution building programs by some $84 million to $236 million. In December 2007,
the Senate approved S.Con.Res. 53, condemning the hostage -taking of three U.S. citizens for
over four years by the FARC, while a similar resolution, H.Con.Res. 260, was introduced in the
House. As noted above, the hostages were rescued by the Colombian military on July 2, 2008.
Congress has also been concerned about labor activist killings, an issue that came to the fore
during consideration of the U.S.-Colombia Free Trade Agreement (CFTA). Critics of the free
trade agreement have been concerned about the status of labor rights in Colombia, as well as the
ongoing para-political scandal. The Bush Administration believes that Colombia has made
significant advances to combat violence and instability and views the pending trade agreement as
a national security issue in that it would strengthen a key democratic ally in South America. On
April 8, 2008, President Bush submitted implementing legislation to Congress for the CFTA. The
2002 Trade Promotion Authority procedures stipulated that Congress must vote on that
implementing legislation within 90 legislative days of its introduction. However, on April 10,
2008, the House, citing insufficient communication between the President and Congress, voted
224-195 in favor of changing those procedures, effectively putting congressional consideration of
the CFTA on hold indefinitely.
Also see sections above on “
Andean Counterdrug Program” and “U.S.-Colombia Free Trade Agreement.”
CRS Products
^{CRS Report RL322}^50,^Colo^{mbia: Issues f}^{or Congress}^{, by Colleen W. Cook and Clare Ribando Seelke.}

Since the early 1960s, U.S. policy toward Cuba has consisted largely of isolating the communist
nation through economic sanctions, which the Bush Administration has tightened significantly. A
second policy component has consisted of support measures for the Cuban people, including
private humanitarian donations and U.S.-sponsored radio and television broadcasting to Cuba. As ^th
in past years, the main issue for U.S. policy toward Cuba in the 110 Congress has been how to
best support political and economic change in one of the world’s remaining communist nations.
Unlike past years, however, Congress is examining policy toward Cuba in the context of Fidel
Castro’s departure from heading the government because of poor health.

Raúl Castro, who had served as provision head of government since July 2006, was selected on
February 24, 2008 by Cuba’s legislature to continue in that role officially. Since Fidel stepped
down from power in 2006, Cuba’s political succession from Fidel to Raúl Castro has been
characterized by a remarkable degree of stability. Since March 2008, the government has
implemented a number of economic changes that from the outside might not seem significant, but
are substantial policy changes for a government that has heretofore followed a centralized
communist economic model. These have included lifting restrictions on the sales of consumer
products such as computers, microwaves, and DVD and video players; lifting restrictions on the
sale and use of cell phones; de-centralizing the agriculture sector in order to boost productivity;
and revamping salary structures in order to award workers who work hard with more
compensation. In addition, in March 2008, the government lifted a ban on Cubans staying at
tourist hotels. Few Cubans will be able to afford the cost of staying in such hotels, but the move is
symbolically significant and ends the practice of what critics had dubbed “tourism apartheid.”
While additional economic changes under Raúl Castro are likely over the next year, few expect
there will be any change to the government’s tight control over the political system, which is
backed up by a strong security apparatus.
In the first session of the 110^th Congress, Congress fully funded the Administration’s FY2008
request for $45.7 million for Cuba democracy programs in the Consolidated Appropriations Act
for FY2008 (P.L. 110-161). The act did not include provisions easing restrictions on U.S.
agricultural exports to Cuba that had been included in H.R. 2829, the FY2008 Financial Services
and General Government appropriations bill, or S. 1859, the Senate version of the FY2008
agriculture appropriations bill. In other action, on July 27, 2007, the House rejected H.Amdt. 707
to H.R. 2419, the 2007 farm bill, that would have facilitated the export of U.S. agricultural
exports to Cuba in several ways.
In the second session, the Senate approved S.Res. 573 on May 21, 2008, which recognized Cuba
Solidarity Day and the struggle of the Cuban people. On June 25, 2008, the House Appropriations
Committee approved the FY2009 Financial Services and General Government Appropriations bill
with provisions easing restrictions on family travel and U.S. agricultural exports to Cuba.
Several other legislative initiatives introduced in the 110^th Congress would ease sanctions: H.R.
177 (educational travel); H.R. 216 (Cuban baseball players); H.R. 217 and H.R. 624 (overall
sanctions); H.R. 654, S. 554, and S. 721 (travel); H.R. 757 (family travel and remittances); H.R.
1026 (sale of U.S. agricultural products); H.R. 2819/S. 1673 (sale of U.S. agricultural and
medical products and travel); and S. 1268 and H.R. 3182 (development of Cuba’s offshore oil). S.
554 would terminate U.S.-government sponsored television broadcasting to Cuba. Several
initiatives would tighten sanctions: H.R. 525 (related to U.S. fugitives in Cuba), and H.R. 1679/S.

876 and S. 2503 (related to Cuba’s offshore oil development). Two initiatives, H.R. 1306 and S.

749, would amend a provision of law restricting the registration or enforcement of certain Cuban
trademarks; five initiatives—H.R. 217, H.R. 624, H.R. 2819, S. 1673, and S. 1806—would repeal
the trademark sanction. H.R. 5627 and S. 2777 would give the congressional gold medal to
Cuban political prisoner Dr. Oscar Elias Biscet. H.Res. 935 would commemorate the anniversary
of the 1996 shootdown of two U.S. civilian planes by Cuba.

CRS Products
^{CRS Report RL338}^19,^{Cuba: Issue}^{s for the 110}^th^Congress^{, by Mar}^k^{P. Sull}^ivan.
^{CRS Report RL311}^39,^{Cuba: U.S.}^{Restrictions on Travel and Remittances}^{, by}^{Mark P. Sullivan.}
^{CRS Report RS2274}^2,^{Cuba’s Polit}^{ical Succession: From Fidel to}^{Raul Castro}^{, by Mark}^{P. Sullivan.}
^{CRS Report RL336}^22,^{Cuba’s Future Political Scenarios and U.S. Polic}^{y Approaches}^{, by}^{Mark P. Sullivan.}
^{CRS Report RL322}^51,^{Cuba and the State Sponsors of Terrorism List}^,^{by Ma}^{rk P. Sullivan.}
^{CRS Report RS2046}^8,^{Cuban Mig}^{ration Policy and Issues}^{, by}^R^{uth Ellen}^Wasem.
Ecuador, a small, oil-producing country in the Andean region of South America, has experienced
a decade of severe political and economic instability. On January 15, 2007, Rafael Correa, a left-
leaning, U.S.-trained economist, was inaugurated to a four-year term, becoming the country’s
eighth President in ten years. Correa defeated Alvaro Noboa, a wealthy banana magnate, in a run-
off election held in late November 2006, with 57% of the vote as compared to Noboa’s 43%.
President Correa has fulfilled his campaign pledge to call a constituent assembly to reform the
country’s constitution. Convened on November 29, 2007, the assembly immediately closed the
Ecuadorian Congress and has since assumed its legislative functions. The assembly, which is
controlled by representatives from Correa’s party, has until the end of July 2008 to draft a new
constitution. Critics contend that Correa appears to be using the constituent assembly as a
pretense to strengthen his power base.
Ecuador’s relations with the United States have traditionally been close, although recent events
have strained bilateral relations. Negotiations for a bilateral free trade agreement were suspended
indefinitely in May 2006 following Ecuador’s decision to expel a U.S. oil company, Occidental,
from the country without compensation for an alleged breach of contract. President Correa
opposes completing negotiations of a free trade agreement with the United States, and is not
willing to restart negotiations as a condition to continue receiving U.S. trade preferences under
the Andean Trade Preferences and Drug Eradication Act (ATPDEA), which are due to expire on
December 31, 2008.
Another major focus of U.S. interest in Ecuador is on counternarcotics cooperation. President
Correa has confirmed that his government will not renew the lease on the U.S. air base at Manta,
which is used for U.S. aerial counter-drug monitoring operations, when it expires in 2009. He has
expressed reservations about any Ecuadorian involvement in Plan Colombia and publicly
opposed the Colombian army’s incursions into Ecuadorian territory, including Colombia’s
unauthorized March 2008 raid of a Revolutionary Armed Forces of Colombia (FARC) camp in
Ecuador. The United States provided $32.0 million in assistance to Ecuador in FY2007 and an
estimated $25.2 million in assistance in FY2008. The FY2009 request for Ecuador was for $32.5
million.

CRS Products
^{CRS Report RS2168}^7,^{Ecuador: Political and Economic Situation and U.S. Relations}^{, by Clare Riba}^{ndo Seelke.}
^{CRS Report RS2254}^8,^{ATPA Rene}^{wal: Background}^{and Issues}^{, by M.}^{Angeles Villarreal.}
President Alvaro Colom, of the center-left National Union of Hope (UNE) party, was sworn in for
a four-year term on January 14, 2008. He defeated the right-wing candidate, Otto Pérez Molina of
the Patriot Party (PP), in run-off elections held November 4, 2007 after no single candidate
secured a majority of votes in the first round held on September 9. The election was deemed free
and fair, with a significant increase in voting in rural areas, although the election campaigns were
the most violent since 1985. Colom will need to build coalitions to support his agenda since no
party holds a majority in the 158-member National Assembly. Reforms are being delayed because
of corruption investigations on both sides of the aisle. The legislative leader stepped aside and
was suspended from UNE after being implicated in the transfer of legislature funds to a private
firm. The banking regulatory commission has accused opposition leader Pérez Molina of
involvement in siphoning of state funds. Pérez had already declared his intention to run for
President in 2011.
Reporting on his first 100 days in office in late April 2008, Colom cited as achievements a $79.8
million rural development council for projects in the country’s poorest 44 municipalities;
reduction in the murder rate from 17 to 11 a day; and a major drug interception and arrest of 36
alleged traffickers. He also implemented a $200 million investment program supporting
producers of basic grains, rural infrastructure, land reform, and housing projects. In terms of
problems, the attorney general noted an “alarming increase” in kidnappings. Critics voiced
concern over the lack of a comprehensive policy to address gang-related issues and lack of
progress in purging police of corrupt officers.
Addressing concerns that his economic policy was weak, in May 2008, Colom announced a 10-
point program addressing the economic crisis generated by rising food prices. The program’s
goals are to negotiate with the private sector to address inflation; boost production by providing
cooperatives and small producers with access to credit, and achieve economic stability. Given
Guatemala’s widespread poverty, the food crisis has hit the country particularly hard. According
to the UN World Food Program, poverty increased from 2006 to 2007, a three point rise resulting
in 54% of the population living in poverty, and a five point rise resulting in 20.2% living in
extreme poverty. Although spending pressures for social programs may lead to a 2009 tax reform,
some believe that Colom will continue the fiscally conservative and pro-business stance of his
predecessor, Oscar Berger, at least at the outset. Given the importance of trade relations and the
mutual fight against narcotrafficking—nearly 90% of cocaine heading for the United States
passes through Central America—U.S.-Guatemalan relations will likely remain close.
Under President Oscar Berger’s leadership (2004-2008), the Guatemalan economy experienced
the highest growth rates since 1998, up to an estimated 5.6% in 2007. This growth is attributed to
increased remittances, high prices for Guatemalan exports such as sugar and cardamon, and
increased trade and investment stemming from the U.S.-Dominican Republic-Central America
Free Trade Agreement (CAFTA-DR). The Berger government secured passage of a law against

organized crime and legislative approval for the United Nations International Commission
Against Impunity in Guatemala (CICIG) to be established. It also took a significant step in the
implementation of reforms agreed upon in the 1996 peace accords by expanding voting to rural
areas, thus incorporating millions of indigenous people into the political decision-making process.
Drug trafficking and organized crime continued to overwhelm the country’s weak institutions,
however, and violent crime rates remained high.
International adoption from Guatemala has been a source of concern in bilateral relations.
Guatemala implemented a new adoption law to comply with the Hague Convention on the
Protection of Children and Cooperation in Respect of Inter-country Adoption, intended to prevent
human trafficking. Effective January 1, 2008, the law transfers responsibility for adoptions from
private agencies and attorneys to the usually slow Guatemalan courts and a newly created
National Adoptions Council, bringing U.S. adoptions almost to a standstill. The new law permits
the completion of adoption cases pending as of December 31, 2007; they are being reviewed to
ensure they are legal, a process that may take months. Prior to the new process, Guatemala was
the biggest source for U.S. adoptions after China; as of mid-June 2008 no new adoptions had
begun. It is unclear whether the United States will permit adoptions from Guatemala after U.S.
implementation of the Hague Convention in April 2008, due to concerns that the Guatemalan
system will not yet comply with all of the Convention’s requirements.
Relations between the United States and Guatemala traditionally have been close, but there has
been friction at times over human rights and civil/military issues. Congressional concerns
regarding Guatemala focus on human rights, democracy, counternarcotics, and U.S. immigration
policy. Guatemala received $51.3 million of U.S. assistance in FY2007, and is receiving an
estimated $62.9 million in FY2008. The Consolidated Appropriations Act for FY2008 (H.R.
2764/P.L. 110-161) stipulates that funding from the Development Assistance and Global Health
and Child Survival accounts be made available for Guatemala at no less than the amount
allocated in FY2007. Significantly, the act’s joint explanatory statement recommended providing
$500,000 in Foreign Military Financing (FMF) pending Department of State certification that
certain human rights conditions have been met. This is the first time Guatemala has been eligible
to receive FMF funding since 1990. Requested funding for FY2009 is $62.3 million.
CRS Products
^{CRS Report RS2272}^7,^{Guatemala: 2007 Elections and Issues}^{for Congress}^{, by}^{Miranda Louise Jas}^{per a}ⁿ^d^{Colleen W.}
^Cook.
^{CRS Report RL318}^70,^{The Domin}^{ican Republic-Central America-}^Unite^{d States Free Trade Ag}^{reement (CAFTA-DR)}^{, by J. F.}
^Hornbec^k.
^{CRS Report RL341}^12,^{Gangs in Central America}^{, by Clare Ribando}^Seelke.
Haiti’s fragile stability has been shaken yet again by a worsening food crisis, which led to violent
protests and the removal of the Prime Minister in April 2008. UN officials said political
opponents and armed gangs infiltrated the protests and fired at UN peacekeepers in an effort to
weaken the government. Without a Prime Minister, Haiti cannot sign certain agreements with
foreign donors or implement programs to address the crisis. President René Préval, who began his
five-year term in May 2006, named a new candidate for prime minister on June 23, 2008:

Michele Pierre-Louis, a highly-regarded educator and economist who has worked on behalf of the
Haitian poor and youths. Parliament, including members of Préval’s own party, rejected his
previous two choices.
In the previous year and a half, Preval had begun to establish some stability. He outlined the two
main missions for his government as being to build institutions and to establish favorable
conditions for private investment in order to create jobs. In November 2007, his Administration
published its Poverty Reduction Strategy, a key step in meeting IMF requirements for debt relief.
International donors pledged more than $1.5 billion in economic assistance to Haiti. With the
support of the United Nations Stabilization Mission in Haiti (MINUSTAH), security conditions
had improved and reform of the country’s police force had begun. President Bush praised Préval
for his efforts to improve economic conditions and establish the rule of law in Haiti. Préval
pledged to cooperate with U.S. counternarcotics efforts.
The main priorities for U.S. policy regarding Haiti during the 110^th Congress have been how to
strengthen fragile democratic processes, continue to improve security, and promote economic
development. Other concerns include the cost and effectiveness of U.S. aid; protecting human
rights; combating narcotics, arms, and human trafficking; addressing Haitian migration; and
alleviating poverty. Since Haiti’s priorities are many, and deeply intertwined, the Haitian
government and the international donor community are implementing an assistance strategy that
attempts to address these many needs simultaneously. The challenge is to accomplish short-term
projects that will boost public and investor confidence, while also pursuing long-term
development plans to improve living conditions for Haiti’s vast poor population. The challenge
has been made more daunting in the face of rising food and gasoline prices world-wide. In May
2008, the Bush Administration announced an additional $25 million in emergency food aid to
Haiti, making its total emergency contribution $45 million.
U.S. assistance for Haiti in FY2007 totaled an estimated $214.5 million, and the estimated for
regular foreign assistance in FY2008, not including the emergency food aid, is $234.2 million.
The Administration’s FY2008 request was for $223 million, including $83 million to combat
HIV/AIDS and $25.5 million for an integrated conflict mitigation program to target urban crime.
Among other provisions affecting aid to Haiti, the FY2008 Consolidated Appropriations Act
(H.R. 2764/P.L. 110-161) stipulates that not less than $201.5 million in economic and military
assistance be provided. The request for FY2009 is $245.9 million, including $35.5 million in P.L.

480 food aid.

There is bipartisan support in Congress for support to Haiti under the Préval government.
Responding to the food crisis and Préval’s earlier calls for increased U.S. investment in Haiti,
Congress passed the second Haitian Hemispheric Opportunity through Partnership
Encouragement (HOPE) Act as part of the 2008 farm bill in June 2008 (Title XV, P.L. 110-246).
The law expands trade preferences for U.S. imports of Haitian apparel first provided in the 2006
version of the HOPE Act (P.L. 109-432, Title V). In April 2008, the House unanimously passed
an amendment to the Jubilee Act (H.Amdt. 993 to H.R. 2634) recommending immediate
cancellation of Haiti’s outstanding debts to multilateral institutions, which constitute much of
Haiti’s $1.7 billion foreign debt.
Congress is also likely to consider what levels of support to provide for security enhancing
measures in Haiti, counternarcotics programs, development assistance, and police and judicial
reform. Another issue of interest to Congress is likely to be ensuring that free and fair elections
are held this spring for the Haitian Senate. Some Members are likely to remain concerned about

the Bush Administration’s October 2006 decision to partially lift the 15-year-old arms embargo
against Haiti in order to allow arms and equipment to be provided to Haitian security units.
CRS Products
^{CRS Report RL322}^94,^{Haiti: Developments and U}^{.S. Policy Since 199}^{1 and Cur}^{rent Cong}^{ressional Concerns}^{, by Ma}^ureeⁿ
^{Taft-Morales and Clare Ribando Seelke.}
^{CRS Report RS2287}^9,^{Haiti: Legislative Respons}^{es t}^o^{the Food Crisis a}^{nd Related Development Challenges}^{, by Clare}
^{Ribando Seelke and J. F. Hornbec}^k.
^{CRS Report RL340}^29,^{Haiti’s Dev}^elopment^{Needs and a Statistical Overview of Conditions of Poverty}^{, by}^Mauree^{n Taft-}
^{Morales and Demond Alexander}^Drummer.
The United States and Mexico have a close and complex bilateral relationship, with extensive
economic linkages as neighbors and partners under the North American Free Trade Agreement
(NAFTA). Bilateral relations are generally friendly, although the U.S. enactment of border fence
legislation in 2006 caused some tension in the relationship.
Drug trafficking issues are prominent in relations since Mexico is the leading transit country for
cocaine, a leading supplier of methamphetamine and heroin, and the leading foreign supplier of
marijuana to the United States. Shortly after taking office in December 2006, President Felipe
Calderón of the conservative National Action Party (PAN) launched operations against drug
cartels in nine Mexican states. Since early 2008, he has sent more than 25,000 soldiers and
federal police to drug trafficking “hot-spots.” Calderón has increased extraditions to the United
States, and has demonstrated an unprecedented willingness to reach out for counternarcotics
assistance from the United States while also calling for increased U.S. efforts on arms trafficking
and a reduction in the U.S. demand for illicit drugs. The rivalries and turf wars among Mexico’s
drug cartels fueled an increase in violence within the country, particularly along the Southwest
border region that the United States shares with Mexico. In an effort to control the most lucrative
drug smuggling routes in Mexico, rival drug cartels are launching attacks on each other, the
Mexican military, and police personnel. This heightened violence is posing a serious challenge to
Mexico’s security forces.
In October 2007, the United States and Mexico announced the Mérida Initiative to combat drug
trafficking, gangs, and organized crime in Mexico and Central America. The Administration
subsequently requested $500 million in FY2008 supplemental assistance and $450 million in its
regular FY2009 budget request for Mexico as part of a $1.4 billion multi-year aid package for the
Initiative.
In late June 2008 legislative action on Mérida Initiative in H.R. 2642 (P.L. 110-252), Congress
provided $400 million supplemental assistance in FY2008 and FY2009 for Mexico, with not less
than $73.5 million for judicial reform, institution-building, anti-corruption, and rule of law
activities. The measure provides $352 million in FY2008 supplemental assistance within the
International Narcotics Control and Law Enforcement (INCLE), Foreign Military Financing
(FMF), and Economic Support Funds (ESF) accounts, and $48 million in FY2009 supplemental
assistance within the INCLE account. The measure has human rights conditions softer than
compared to earlier House and Senate versions, in large part because of Mexico’s objections that

some of the conditions would violate its national sovereignty. In the final version, human rights
conditions require that 15% of INCLE and FMF assistance be withheld until the Secretary of
State reports in writing that Mexico is taking action in four human rights areas. The Secretary of
State, after consultation with Mexican authorities, is required to submit a report on procedures in
place to implement Section 620J of the Foreign Assistance Act of 1961 with regard to vetting to
ensure that those receiving assistance have not been involved in human rights violations.
In other action, on June 10, 2008, the House approved authorization legislation for the Mérida
Initiative, H.R. 6028, that would authorize $1.6 billion over three years, FY2008-FY2010, for
both Mexico and Central America, $200 million more than originally proposed by President
Bush. Of that amount, $1.1 billion would be authorized for Mexico, and $73.5 million for
activities of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to reduce the
flow of illegal weapons from the United States to Mexico. Among the bill’s various conditions on
providing the assistance, the measure requires that vetting procedures are in place to ensure that
members or units of military or law enforcement agencies that may receive assistance have not
been involved in human rights violations.
Migration, border security, and trade issues also have dominated the bilateral relationship in ^th
recent years. Comprehensive immigration reform was debated early in the 110 Congress, but the
issue was put aside following a failed cloture motion in the Senate on the Comprehensive
Immigration Reform Act of 2007 (S. 1348). In September 2006, Congress approved the Secure
Fence Act of 2006 (P.L. 109-367) to authorize the construction of a border fence and other
barriers along 700 miles of the U.S.-Mexico border. Since 1994, NAFTA institutions have been
functioning, trade between the countries has tripled, and allegations of violations of labor and
environmental laws have been considered by the trilateral institutions. The Bush Administration
argues that NAFTA has had modest positive impacts on all three member countries, but Mexican
farmers have strongly criticized the effects of NAFTA. Notable bilateral trade disputes relate to
trucking, tuna, sweeteners and anti-dumping measures.
CRS Products
^{CRS Report RL327}^24,^Mexico^-U.S^{. Relations: I}^ssues^{for Congress}^{, by}^{Mark P. Sullivan, Col}^{leen W. Coo}^{k, and Alessandra}
^Durand.
^{CRS Report RL342}^15,^Mexico^{’s D}^{rug Ca}^rtels^{, by Colleen W. Co}^ok.
^{CRS Report RL329}^34,^U.S.-^M^exic^{o Economi}^{c Relations: Trends, I}^ssue^{s, and Implications}^{, b}^y^{M. Angeles}^Vil^larreal.
^{CRS Report RL342}^04,^Im^{migration Legislation and Issues in the 110}^th^Congress^{, by A}^{ndorra Bru}^{no et al..}
^{CRS Report RL320}^44,^Im^{migration: Policy Considerations Related to}^{Guest Worker Programs}^{, by A}^{ndorra Bru}^no.
^{CRS Report RL341}^12,^{Gangs in Central America}^{, by Clare Ribando}^Seelke.
The credibility of President Daniel Ortega, inaugurated in January 2007, is diminishing both
within Nicaragua and abroad, as questions arise about the lack of transparency in government
finances, and actions that critics view as increasingly authoritarian. The Sandinista leader’s
previous presidency (1985-1991) was marked by a civil conflict with U.S.-backed “contras,”
authoritarian tendencies, and charges of corruption. Ortega, who had lost the last three
presidential elections, won only 37.9% of the vote in the 2006 elections. But a Nicaraguan law—

which Ortega helped spearhead through the congress—allowed him to avoid a run-off vote
because he was more than 5% ahead of the next closest candidate, Eduardo Montealegre, then-
head of the Nicaraguan Liberal Alliance (ALN). Until now, Ortega has walked a fine line,
balancing strong anti-U.S. rhetoric with cooperation on issues of concern to the United States,
such as the pursuit of free-trade policies (including participation in CAFTA-DR), counter-
narcotics efforts, and resolution of property claims. His administration signed a poverty reduction
strategy with the International Monetary Fund (IMF), providing for a three-year loan program.
Now, however, the IMF is withholding $39 million from Nicaragua because the government
failed to approve an “anti-fraud” energy law to regulate aid from Venezuela, including funds
generated by the re-sale of Venezuelan oil bought on preferential terms, which amounts to
hundreds of millions of dollars a year. The IMF said it will not sign a new agreement with
Nicaragua until the legislature passes legislation recognizing the debts owed to Venezuela and
regulating the use of the funds. Otherwise, donors and critics say, the Venezuelan aid is basically
a slush fund outside the national budget which the Sandinistas can use for patronage, and which
could leave future governments with an enormous debt. The IMF also expressed concern over the
government’s making loans to companies using government social security funds.
The top U.S. foreign policy priorities in Nicaragua are to strengthen democracy and governance,
promote economic growth, and improve security. In 2005, the Bush Administration signed a five-
year, $175 million agreement with Nicaragua under the Millennium Challenge Account to
promote rural development. Other U.S. aid to Nicaragua has fluctuated, from $50 million in
FY2006, to $36.9 million in FY2007, an estimated $28.6 million for FY2008, and a requested
$38 million for FY2009. The U.S. ambassador to Nicaragua and the European Union
representative have both said international financial support could be in jeopardy because of the
Ortega government’s “closure of democratic space.” The Sandinista-dominated electoral council
(CSE) revoked the legal status of two major opposition parties, the dissident Sandinista Reformist
Movement (MRS) and the center-right Conservative Party. The two parties were expected to do
well in next November’s municipal elections. The CSE’s postponement of local elections on the
Atlantic Coast led to riots. Ortega also established Citizens Power Councils, despite the National
Assembly having voted against them. The councils administer government anti-poverty
programs, but are overseen by Ortega’s wife, Rosario Murillo and controlled by the Sandinista
party. Critics say they are another example of lack of transparency and authoritarian practices.
U.S. officials have also expressed concern over increasing ties between Iran and Nicaragua. Iran
has pledged to invest in Nicaragua’s ports, agricultural sector, and energy network, as well as
constructing houses for low-income Nicaraguans, with Venezuela co-financing many of these
infrastructure projects. Nicaragua has joined Mexico and other Central American countries in
criticizing U.S. inaction on comprehensive immigration reform. In 2007, the Department of
Homeland Security extended Temporary Protected Status (TPS) to about 4,000 eligible
Nicaraguans living in the United States until January 5, 2009. Other points of tension may occur
if Ortega continues to strengthen relations with Venezuela or follow through with recent threats to
re-nationalize components of the economy.
CRS Products
^{CRS Report RS2283}^6,^{Nicaragua: Political Situation and U.S. Relations}^{, by Clare Ribando Seelke.}
^{CRS Report RL339}^83,^{Nicaragua: The Election of Daniel Ortega and I}^{ssues in}^{U.S. Relations}^,^{by Ma}^ureeⁿ^{Taft-Morales.}

With four successive elected civilian governments, the Central American nation of Panama has
made notable political and economic progress since the 1989 U.S. military intervention that
ousted the regime of General Manuel Noriega from power. The current President, Martín Torrijos
of the Democratic Revolutionary Party (PRD), was elected in May 2004 and inaugurated to a
five-year term in September 2004. Torrijos, the son of former populist leader General Omar
Torrijos, won a decisive electoral victory with almost 48% of the vote in a four-man race.
Torrijos’ electoral alliance also won a majority of seats in the unicameral Legislative Assembly.
The most significant challenges facing the Torrijos government have included dealing with the
funding deficits of the country’s social security fund; developing plans for the expansion of the
Panama Canal; and combating unemployment and poverty. In April 2006, the government
unveiled its ambitious plans to build a third lane and new set of locks that will double the Canal’s
capacity. In an October 2006 referendum on the issue, 78% of voters supported the expansion
project, which officially began in September 2007. The new set of locks are estimated to be
completed by 2014. Panama’s service-based economy has been booming in recent years, but
income distribution remains highly skewed, with large disparities between the rich and poor.
Because Panama’s Constitution does not allow for presidential re-election, jockeying has already
begun for the May 2009 presidential elections. Primary elections for various parties will be held
later this year.
The United States has close relations with Panama, stemming in large part from the extensive
linkages developed when the Panama Canal was under U.S. control and Panama hosted major
U.S. military installations. The current bilateral relationship is characterized by extensive
counternarcotics cooperation, assistance to help Panama assure the security of the Canal, and
negotiations for a bilateral free trade agreement (FTA). The United States provided Panama with
$12.2 million in foreign aid in FY2007 and an estimated $7.7 million in FY2008, while the
FY2009 request is for $11.6 million.
After 10 rounds of negotiations, the United States and Panama announced the conclusion of an
FTA in December 2006, although U.S. officials stated the agreement was subject to additional
discussions on labor and that the Administration would work with Congress to ensure strong
bipartisan support. Subsequently, congressional leaders and the Bush Administration announced a
bipartisan deal in May 2007, whereby pending FTAs, including that with Panama, would include
enforceable key labor and environmental standards. On June 28, 2007, the United States and
Panama signed the FTA, which included the enforceable labor and environmental provisions.
Panama’s Legislative Assembly overwhelmingly approved the agreement on July 11, 2007 by
vote of 58 to 3, with 1 abstention. The U.S. Congress had been likely to consider implementing
legislation for the agreement in the fall of 2007, but the September 1, 2007 election of Pedro
Miguel González to head Panama’s legislature for one year delayed consideration of the FTA.
González is wanted in the United States for his alleged role in the murder of a U.S. serviceman in
Panama in June 1992. His term is up on August 31, 2008, a step that may increase the likelihood
of the agreement’s ratification. (Also see “U.S.-Panama Trade Promotion Agreement” above.)

CRS Products
^{CRS Report RL309}^81,^Panama:^P^{olitical and Economic Conditions and U.S. Relations}^{, by}^{Mark P. Sullivan.}
^{CRS Report RL325}^40,^{The Prop}^os^{ed U.S.-Panama Free Trade Agreement}^{, by J. F. Hornbeck.}
President Alan García was elected to a second, non-consecutive presidential term in June 2006,
defeating populist Ollanta Humala 53% to 47%. Since taking office for his five-year term, García
has embraced a free trade agreement with the United States, appointed a fiscally conservative
finance minister, and assured the international financial community that he is running the country
as a moderate rather than as the leftist he had been in his early career. García’s earlier presidency
(1985-1990) was marked by hyper-inflation and a violent guerrilla insurgency. President García
has continued the pro-market economic policies of his predecessor, Alejandro Toledo, who
presided over one of the highest economic growth rates in Latin America throughout his term.
Peru’s economy grew about 8% in 2007. Economic growth is expected to remain strong but be
tempered by rising inflation.
García says he seeks to use trade to reduce poverty in Peru, which is concentrated in rural and
jungle areas and among the indigenous population. Local and international groups have charged
that Garcia’s trade agenda threaten the environment and the livelihoods of indigenous people,
especially in the Amazon region. Popular frustration that economic growth has not resulted in
improved living conditions has led to periodic social unrest. Human rights groups charge that the
government is violating civil liberties by prohibiting legitimate protests. Garcia’s administration
pushed laws through congress that imposed strict regulations on non-governmental organizations’
work in Peru; criminalized social protests; and classified strikes as “extortion.”
Peru’s government maintains that it is committed to holding government officials accountable for
past abuses of power. Former President Alberto Fujimori (1990-2000) was extradited from Chile
on charges of corruption and human rights violations and his trial began in December 2007. If
convicted, he faces 30 years in prison and a fine of $33 million. As the trial continues, García
may lose the support of the Fujimorista bloc in the Peruvian Congress, which he relies on to pass
legislation. Fujimori’s daughter Keiko, who won a Congressional seat in 2006 with more votes
than any other candidate, launched a new party assumed to be a vehicle for a 2011 presidential
bid and the release of her father. Corruption scandals have involved members of Garcia’s party.
Issues in U.S.-Peruvian relations include democracy, human rights, environmental protection, and
counternarcotics cooperation. Trade is currently at the forefront of the bilateral agenda. A U.S.-
Peru Trade Promotion Agreement (PTPA) was signed in April 2006, and approved by the
Peruvian legislature that June. PTPA implementing legislation (H.R. 3668) passed the House on
November 8, 2007, by a vote of 285 to 132; the Senate on December 4, 2007, by a vote of 77 to
18; and was signed by President Bush on December 14, 2007 (P.L. 110-138). Peru also benefits
from the Andean Trade Promotion and Drug Eradication Act (P.L. 109-432). Congress extended
that act on its expiration date, February 29, 2008, until December 31, 2008, by which time it is
expected that the superseding PTPA will be implemented. Garcia created an environment ministry
in May 2008 to carry out environmental impact assessments.

Peru is a major illicit drug-producing and transit country. In April 2007, President García
announced a tough anti-drug policy, reaffirming his government’s commitment to coca
eradication, despite protests by coca growers. The United States provided $136.2 million in
foreign assistance to Peru in FY2007 and an estimated $90.3 million in FY2008. The FY2008
request for Peru was for $93.2 million, including $66.8 million in counternarcotics and economic
support funds, with the most significant cuts occurring in counternarcotics funds traditionally
provided through the Andean Counterdrug Initiative (ACI). The joint explanatory statement to the
Consolidated Appropriations Act for FY2008 (H.R. 2764/P.L. 110-161) recommended providing
counternarcotics funds at the level of the President’s request. The request for FY2009 (not
including Peace Corps funds) is $103 million, including $37 million for the Andean Counterdrug
Program, and $53 million for Development Assistance.
CRS Products
^{CRS Report RS2271}^5,^{Peru: Politic}^{al Situation, Economic Conditions and U.S. Relations}^{, by}^{Miranda Louis}^{e Jasper}^{and Clare}
^{Ribando Seelke.}
^{CRS Report RL341}^08,^U.S.-^{Peru Economic}^{Relations and the U.S.-}^{Peru Trade Promotion Agreement}^{, by}^{M. Angeles}
^Vil^larreal.
^{CRS Report RS2254}^8,^{ATPA Rene}^{wal: Background}^{and Issues}^{, by M.}^{Angeles Villarreal.}
Under the populist rule of President Hugo Chávez, first elected in 1998 and most recently
reelected to a six-year term in December 2006, Venezuela has undergone enormous political
changes, with a new constitution and unicameral legislature, and a new name for the country, the
Bolivarian Republic of Venezuela. U.S. officials and human rights organizations have expressed
concerns about the deterioration of democratic institutions and threats to freedom of expression
under President Chávez, who has survived several attempts to remove him from power. The
government has benefitted from the rise in world oil prices, which has sparked an economic boom
and allowed Chávez to increase expenditures on social programs associated with his populist
agenda. After he was reelected, Chávez announced new measures to move the country toward
socialism. His May 2007 closure of a popular Venezuelan television station (RCTV) that was
critical of the government sparked protests. President Chávez was dealt a setback in December
2007 when his proposed constitutional amendment package, which included the removal of
presidential term limits, was defeated by a close margin in a national referendum.
The United States traditionally has had close relations with Venezuela, the fourth major supplier
of foreign oil to the United States, but there has been friction with the Chávez government. U.S.
officials have expressed concerns about human rights, Venezuela’s military arms purchases, its
relations with Cuba and Iran, and its efforts to export its brand of populism to other Latin
American countries. Declining cooperation on anti-drug and anti-terrorism efforts has also been a
U.S. concern. Since 2005, President Bush has annually designated Venezuela as a country that has
failed demonstrably to adhere to its obligations under international narcotics agreements, and
since 2006, the Department of State has prohibited the sale of defense articles and services to
Venezuela because of lack of cooperation on anti-terrorism efforts. In the aftermath of Colombia’s
March 1, 2008 bombing of a FARC camp in Ecuador that killed the terrorist group’s second in
command Raúl Reyes, captured laptops contained files potentially linking the Venezuelan
government with efforts to secure arms and support the FARC. In a turn of events, on June 8,

2008, President Chávez publicly urged the FARC to end its armed struggle, and release all
hostages.
Concerns regarding Venezuela in the 110^th Congress have focused on human rights, energy, and
terrorism issues. On May 24, 2007, the Senate approved S.Res. 211, expressing profound
concerns regarding freedom of expression and Venezuela’s decision not to renew the license of
RCTV. The House version of H.R. 2764, the FY2008 State Department and Foreign Operations
appropriations bill approved in June 2007, would have directed $10 million for targeted
international broadcasting to Venezuela. The final enacted measure (P.L. 110-161, Division J) did
not earmark such funding, but the explanatory statement to the bill expressed support for
restoring shortwave and medium wave transmission to Venezuela. On November 5, 2007, the
House approved H.Res. 435, expressing concern about Iran’s efforts to expand its influence in
Latin America, and noting Venezuela’s increasing cooperation with Iran. Additional House
initiatives that have been introduced include two human rights resolutions, H.Con.Res. 50 and
H.Con.Res. 77; H.Res. 560, expressing concern about Venezuela’s actions in the oil sector;
H.Res. 965, calling upon the Chávez government to take action to deny Venezuelan territory and
weapons from being used by terrorist organizations; and H.Res. 1049, calling for Venezuela to be
designated a state sponsor of terrorism. Two Senate bills, S. 193 and S. 1007, would increase
hemispheric cooperation on energy issues.
CRS Products
^{CRS Report RL324}^88,^{Venezuela: Political Conditions and U.S. Policy}^,^{by Ma}^{rk P. Sullivan.}
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