Order Code RL33828

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

Updated June 22, 2007

Mark P. Sullivan, CoordinatorSpecialist in Latin American Affairs

Foreign Affairs, Defense, and Trade Division

Colleen W. Cook, J. F. Hornbeck,Nelson Olhero, Clare M. Ribando,

Connie Veillette, M. Angeles VillarrealForeign Affairs, Defense, and Trade Division

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

Summary

Over the past two decades, the Latin America and Caribbean region has madeenormous strides in terms of political and economic development. Twelve countriesheld successful elections for head of government in 2006, including a close electionin Mexico. To date in 2007, the Bahamas held elections in May, while presidentialelections are scheduled in Guatemala (September) and Argentina (October), andparliamentary elections are due by October in Jamaica and Trinidad and Tobago.Although the region overall experienced an economic setback in 2002-2003, it hasrebounded since 2004, most recently experiencing a growth rate over 5% in 2006.Despite this progress, several nations face considerable challenges that affect U.S.interests and policy in the region. These include persistent poverty, violent guerrillaconflicts, autocratic leaders, drug trafficking, increasing crime, and the rise of a newform of populism in several countries.

In the 110th Congress, legislative and oversight attention to Latin America andthe Caribbean is focusing on continued counternarcotics efforts, especially in theAndean region; immigration reform and increased border security, which have beenkey issues in relations with Mexico; efforts to deal with threats to democracy and therise of populism in such nations as Venezuela, Bolivia, and Ecuador; debate over thebest means to foster political change in Communist Cuba; trade issues, including thepotential consideration of implementing legislation for free trade agreements (FTAs);and continued efforts to support stability and poverty alleviation in Haiti.

Curbing the flow of illicit drugs from Mexico and South America into theUnited States has been a key component of U.S. relations with Latin America foralmost two decades. Since 2000, the centerpiece of this policy has been the AndeanCounterdrug Initiative (ACI) aimed at supporting Colombia and its neighbors ineradicating the production of illicit drugs. From FY2000-FY2006, the United Statesprovided around $5 billion for the ACI.

In the trade arena, the United States signed FTAs with Colombia and Peru in2006, and also completed negotiations for an agreement with Panama late in the year.Implementing legislation for the Colombia and Peru FTAs, when introduced, couldbe considered under fast track legislative procedures, while the Panama FTA needsto be signed by June 30, 2007, for the implementing legislation to be consideredunder fast track. In May 2007, the congressional leadership and the BushAdministration reached a bipartisan deal regarding the incorporation of enforceablelabor and environmental provision into pending free trade agreements, but theAdministration and Congress are still working on final language. Congress willlikely consider legislation to extend Andean trade preferences (which expire June 30,2007) until September 2009.

This report provides an overview of U.S. relations with Latin America and theCaribbean and focuses on the role of Congress and congressional concerns. It willbe updated periodically. For further information, see the CRS products listed aftereach topic.

Contents

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Conditions in the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Regional Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6U.S. Foreign Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Andean Counterdrug Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8U.S. Trade Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Andean Trade Preferences Extension . . . . . . . . . . . . . . . . . . . . . . . . . 10U.S.-Peru Trade Promotion Agreement . . . . . . . . . . . . . . . . . . . . . . . . 11U.S.-Colombia Trade Promotion Agreement . . . . . . . . . . . . . . . . . . . 11U.S.-Panama Trade Promotion Agreement . . . . . . . . . . . . . . . . . . . . . 12Free Trade Area of the Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Migration Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Terrorism Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16HIV/AIDS in the Caribbean and Central America . . . . . . . . . . . . . . . . . . . . 17Gangs in Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Afro-Latinos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Trafficking in Persons in Latin America and the Caribbean . . . . . . . . . . . . 20

Country Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Cuba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Haiti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Nicaragua . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

List of Figures

Figure 1. Map of Latin America and the Caribbean . . . . . . . . . . . . . . . . . . . . . . . 5

1 This report draws from the various CRS reports listed after each topic. General sourcesused for this report include major newspapers covering the region, such as the MiamiHerald, New York Times, and Washington Post; country reports from the EconomistIntelligence Unit; articles from various daily, weekly, and monthly publications ofLatinNews.com; congressional hearings and reports; and reports, press releases, andcongressional budget justifications from such agencies as the State Department, the U.S.Agency for International Development, and the Office of the United States TradeRepresentative.

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

Overview1

Conditions in the Region

The Latin America and Caribbean region has made enormous strides over thepast two decades in political development, with all countries but Cuba having regularfree and fair elections for head of state. Despite this democratic progress, severalnations face considerable challenges that could threaten political stability, includingpersistent poverty, violent guerrilla conflicts, autocratic leaders, drug trafficking,increasing crime, and the rise of radical populism. In some countries, weaknessesremain in the state’s ability to deliver public services, ensure accountability andtransparency, and advance the rule of law.

Twelve countries held successful elections for head of government in 2006:Chile, Costa Rica, Haiti, Peru, Colombia, Mexico, Guyana, Brazil, Ecuador,Nicaragua, Venezuela, and St. Lucia. In Mexico, the narrow official victory ofconservative candidate Felipe Calderón over leftist Andrés López Obrador eliciteda dramatic response from López Obrador who protested the electoral outcome.Presidents were reelected in four races — Brazil, Colombia, Guyana, and Venezuela — and in five countries, former heads of government returned to power — CostaRica, Haiti, Nicaragua, Peru, and St. Lucia. To date in 2007, elections were held inthe Bahamas in May and are expected in four additional countries: presidentialelections in Guatemala (September 9) and Argentina (October); and parliamentaryelections in Jamaica and Trinidad and Tobago (both by October). (For a listing ofrecent and forthcoming elections, see CRS Report 98-684, Latin America and theCaribbean: Fact Sheet on Leaders and Elections.)

In terms of economic growth, while the Latin America and Caribbean regionoverall experienced a gross domestic product decline of 0.6% in 2002 and only amodest growth rate of 1.5% in 2003, the region rebounded with an estimated averagegrowth rate of 5.9% in 2004, surpassing even the most optimistic predictions.

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2 U.N. Economic Commission for Latin America and the Caribbean (ECLAC), “PreliminaryOverview of the Economies of Latin America and the Caribbean,” December 2006.

Countries that had suffered the deepest recessions in recent years — Argentina,Uruguay, and Venezuela — all experienced significant economic growth in 2004,and even per capita income for the region as a whole increased by more than 4%.Growth continued in 2005 at a rate of 4.5%, with Argentina, the DominicanRepublic, Grenada, Trinidad and Tobago and Venezuela all registering growth ratesover 8%. Only Guyana experienced an economic setback of 3% in 2005. For 2006,The U.N. Economic Commission for Latin America and the Caribbean estimated agrowth rate of 5.3% for the region, with Antigua and Barbuda, Argentina, theDominican Republic, Trinidad and Tobago, and Venezuela leading the way withgrowth rates over 8%.2 (For information on development indicators in the region, seeCRS Report RS22657, Latin America and the Caribbean: Fact Sheet on Economicand Social Indicators.)

The Andean region still faces considerable challenges, including the rise ofpopulism in several countries. Colombia continues to be threatened by drugtrafficking organizations and by two left-wing guerrilla groups and a rightistparamilitary group, all of which, combined, have been responsible for thousands ofdeaths each year. The election of Bolivian indigenous leader Evo Morales asPresident in December 2005 complicated U.S. relations given Morales’ efforts todecriminalize coca growing. In Ecuador, Rafael Correa, a left-leaning U.S.-trainedeconomist won the November 2006 presidential elections and has vowed to reformEcuador’s political system, renegotiate Ecuador’s foreign debt, and reassert statecontrol over foreign oil companies operating in the country. Venezuela underPresident Hugo Chávez has been plagued by several years of political polarization,although Chávez’s rule has been solidified since 2004 when he survived a recallreferendum. He won another six-year term decisively in early December 2006, inlarge part because windfall oil profits have allowed his government to boost socialspending significantly. In Peru, the presidential electoral victory in June 2006 offormer President Alan García over retired military officer Ollanta Humala, anadmirer of Hugo Chávez, eased U.S. concerns about the future of democracy in thecountry and the future of U.S.-Peruvian relations.

In Central America, countries such as El Salvador, Honduras, and Nicaraguaemerged from the turbulent 1980s and 1990s with democratic institutions morefirmly entrenched, yet violent crime is a major problem in all countries. Hondurasand Nicaragua are among the poorest countries in the hemisphere. While Guatemalahas made significant progress in improving the government’s human rights policy,significant problems remain. In Nicaragua, former President and Sandinista partyleader Daniel Ortega won the November 2006 presidential election. Observers areuncertain how his government will proceed since his campaign vacillated betweenanti-U.S. rhetoric and reassurances that his government would respect privateproperty, free trade policies, and work toward a cooperative relationship with theUnited States.

The diverse Caribbean region, which includes some of the hemisphere’s richestand poorest nations, also faces significant challenges. The AIDS epidemic in the

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3 U.S. Department of State, “Future Engagement and Partnership with Latin America,” R.Nicholas Burns, Under Secretary for Political Affairs, November 20, 2006.

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 stormsas demonstrated in the 2004 and 2005 hurricane season. Haiti — the hemisphere’spoorest nation — continues to be plagued by political and security problems, but formany observers, the new government of President René Préval marks the beginningof a new era. Cuba remains a hardline communist state with a human rights situationthat has deteriorated since 2003. In July 2006, Cuban leader Fidel Castro’sannouncement that he was temporarily ceding political power to his brother in orderto recover from surgery prompted widespread speculation about the island’s politicalfuture and the future of U.S.-Cuban relations after Fidel.

U.S. Policy

U.S. interests in Latin America and the Caribbean are diverse, and includeeconomic, political and security concerns. Geographic proximity has ensured strongeconomic linkages between the United States and the region, with the United Statesbeing the major trading partner and largest source of foreign investment for mostcountries in the region. Free trade agreements with Mexico and Canada, Chile, andCentral America and the Dominican Republic have augmented U.S. economiclinkages with the region. The region is also the largest source of migration, bothlegal and illegal, with geographic proximity and economic conditions in the regionbeing major factors in the migration. Curbing the flow of illicit drugs from Mexicoand South America into the United States has been a key component of U.S. relationswith Latin America for almost two decades. Latin American nations, largelyVenezuela and Mexico, supply the United States with just over one-third of itsimported oil, but there have been concerns about the security of the region as an oilsupplier because of Mexico’s declining oil reserves and periodic threats byVenezuela’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 theCaribbean shifted away from security concerns and focused more on strengthenedeconomic relations, but the September 2001 terrorist attacks in the United Statesresulted in security interests re-emerging as a major U.S. interest. As a result,bilateral and regional cooperation on anti-terrorism efforts have intensified. TheBush 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 theUnited States. Cooperation with Mexico on border security and migration issues hasalso been a key component of the bilateral relationship.

In general, Administration officials set forth three priorities for the United Statesin Latin America and the Caribbean: promoting democracy; advancing free trade; andadvancing poverty alleviation and social justice.3 As noted above, Latin America hasmade enormous strides in terms of political and economic development over the past25 years, with considerable U.S. support, but such conditions as persistent poverty,especially in Haiti, and the rise of populism in such countries as Venezuela, Bolivia,

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and Ecuador will continue to pose challenges for U.S. interests and policy in theregion. Fostering cooperation on such issues as drug trafficking, terrorism, crime,and poverty reduction will remain key components of U.S. policy in the region.

In the 110th Congress, legislative and oversight attention to Latin America andthe Caribbean are focusing on: continued counternarcotics efforts, especially inMexico and the Andean region; potential immigration reform and increased bordersecurity; efforts to deal with threats to democracy in such nations as Venezuela aswell as the rise of populism in several Latin American countries; debate over the bestmeans to foster political change in Communist Cuba; trade issues, including thepotential consideration of several free trade agreements with Colombia, Peru, andPanama; and continued efforts to support stability and poverty alleviation in Haiti.The Congress will also likely maintain an oversight interest in potential terroristthreats in Latin America, as well as efforts to counter the trafficking of persons in theregion, the rise of violent gangs in Central America, and continued efforts againstHIV/AIDS in the Caribbean, where infection rates in some countries are among thehighest outside sub-Saharan Africa.

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Figure 1. Map of Latin America and the Caribbean

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Regional Issues

U.S. Foreign Assistance

The United States maintains a variety of foreign assistance programs in LatinAmerica and the Caribbean, including security assistance, counternarcotics,economic development, and trade capacity building programs. Aid to the regionincreased during the 1960s with the Alliance for Progress and during the 1980s withaid to Central America. Since 2000, U.S. assistance has focused on counternarcoticsespecially in the Andean region. In FY2006, aid levels to Latin America and theCaribbean comprised about 11.8% of the worldwide bilateral aid budget.

Appropriations for FY2007 were finalized late in the fiscal year (P.L. 109-289,as amended by P.L. 110-5 on February 15, 2007). Estimated FY2007 funding levelson a country and regional level are not yet available. Amounts requested for FY2008would continue to reduce the ratio of assistance to Latin America, despite concernsexpressed by some Members of Congress about decreasing levels of aid to the region.The Administration contends that aid levels have not been cut when MillenniumChallenge Compacts are included. Current aid levels could increase as morecountries are deemed eligible for compacts. A restructuring of foreign aid programs,led by the newly created position of Director of Foreign Assistance at the StateDepartment, got underway in 2006.

The annual Foreign Operations Appropriations bills have been the vehicles bywhich Congress provides funding for, and sets conditions on, foreign assistanceprograms. For FY2006, U.S. assistance to Latin America and the Caribbeanamounted to an estimated $1.68 billion, the major portion of which, $919 million,was allocated to the Andean region, largely through the Andean CounterdrugInitiative discussed in more detail below. Mexico and Central America received$292 million, while the Caribbean received $307 million. Brazil and the SouthernCone of South America received an estimated $36 million. The United States alsomaintains programs of a regional nature that totaled an estimated $133 million inFY2006.

The FY2007 request of $1.63 billion represented the lowest levels of U.S.foreign assistance to the region in more than four decades, measured in constantdollars. The FY2007 request was 3% lower than FY2006. The largest proposeddecrease occurred in the Development Assistance Account, which sustained a 28%reduction. The largest proposed increase was for Economic Support Funds (up 26%)and the Global HIV/AIDS Initiative (up 35%). The increase in Economic SupportFunds included trade assistance for signatory countries of the Dominican Republic-Central America-United States Free Trade Agreement. The Child Survival andHealth Account would be cut by 9%.

The FY2008 request for Latin America totals $1.45 billion, a nearly 9%decrease from the FY2007 request, with major reductions in Child Survival andHealth, Development Assistance, and Foreign Military Financing. Other reductionsinclude International Narcotics Control and Law Enforcement (INCLE), and the Non-proliferation, Anti-terrorism, Demining, and Related Programs account (NADR).

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The request includes increases for the ESF and the Global HIV/AIDS Initiative. OnJune 22, 2007, the House passed the FY2008 State, Foreign Operations and RelatedPrograms Appropriations bill (H.R. 2764). The bill expressed concern withdecreasing levels of assistance to Latin America and the Caribbean. It alsosignificantly restructured aid to Colombia and other countries that receive AndeanCounterdrug Initiative funds.

Aid programs are designed to achieve a variety of goals, from poverty reductionto economic growth. Child Survival and Health (CSH) funds focus on combatinginfectious diseases and promoting child and maternal health. DevelopmentAssistance (DA) funds improvements in key areas — such as trade, agriculture,education, the environment, and democracy — in order to foster sustainableeconomic growth. Economic Support Funds (ESF) assist countries of strategicimportance to the United States and fund programs relating to justice sector reforms,local governance, anti-corruption, and respect for human rights. P.L. 480 foodassistance is provided to countries facing emergency situations, such as naturaldisasters. Counternarcotics programs seek to assist countries to reduce drugproduction, 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 providedthrough programs administered by several U.S. agencies, although the U.S. Agencyfor International Development (USAID) is the lead agency in the international fightagainst AIDS. The United States also provides contributions to multilateral efforts,such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria.

The Millennium Challenge Account (MCA) is a new initiative that providessizable aid grants to a few low-income nations that have been determined, througha competitive process, to have the strongest policy reform records and where newinvestments are most likely to achieve their intended development results. In 2005,the Millennium Challenge Corporation (MCC) approved five-year compacts withHonduras ($215 million) and Nicaragua ($175 million), and in 2006 it approved afive-year compact with El Salvador ($461 million). Both Guyana and Paraguay havereceived threshold assistance from the MCC to help assist the countries becomeeligible for an MCC compact. Other Latin American or Caribbean nations could beeligible to receive assistance in future years.

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CRS Products:

CRS Report RL32487, U.S. Foreign Assistance to Latin America and the Caribbean,coordinated by Connie Veillette.

CRS Report RL33337, Article 98 Agreements and Sanctions on U.S. Foreign Aid toLatin America, by Clare M. Ribando.

CRS Report RL34023, State, Foreign Operations and Related Programs: FY2008Appropriations, by Connie Veillette, and Susan B. Epstein.

CRS Report RL32427, Millennium Challenge Account, by Curt Tarnoff.

CRS Report RL33491, Restructuring Foreign Aid: The Role of the Director ofForeign Assistance in Transformational Development, by Connie Veillette.

Andean Counterdrug Initiative

The Andean Counterdrug Initiative (ACI) is the primary U.S. program thataddresses counternarcotics and alternative development in the Andean region ofSouth America. The ACI supports Plan Colombia, a six-year plan developed by theColombian government in 1999 to combat drug trafficking and related guerrillaactivity. Some critics have argued that it has been ineffective in reducing drugproduction, while supporters claim that it has helped stabilize Colombia, a strongU.S. ally.

The ACI program is regional in nature because organizations in countriesbordering Colombia also produce and traffic in narcotics and because it is affectedby other cross-border issues. The ACI began in 2000, when Congress passedlegislation 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 ACI from FY2000 through FY2006totaled approximately $5 billion.

For FY2007, the Administration requested $721.5 million for the ACI program,of which $65.7 million was proposed for the Critical Flight Safety Program, toupgrade aging aircraft. On June 9, 2006, the House passed H.R. 5522, the FY2007Foreign Operations Appropriations Act, that makes significant changes to the wayforeign aid to Colombia is provided but largely approves the Administration’s requestwith regard to funding levels. The Senate Appropriations Committee reported itsversion of the Foreign Operations bill on June 29, 2006, which would have provided$699.4 million for ACI, a decrease of $22 million. Both the House and Senate billsmaintain reporting requirements from previous appropriations bills. Congress did notcomplete the Foreign Operations bill, instead passing three continuing resolutions tomaintain funding into 2007. The final CR (P.L. 109-289, as amended by P.L. 110-5)sets ACI funding at $722 million.

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For FY2008, the Administration requested $442.8 million for ACI. Thisapparent decrease results from the decision to transfer alternative developmentprograms from the ACI account to Economic Support Funds. The House-passedFY2008 State, Foreign Operations and Related Programs Appropriations bill, H.R.2764, provided $312.5 million for ACI, a reduction of $130.4 million from therequest. The bill provides funding for economic development, alternativedevelopment and democratic institution building in the ESF and INCLE accounts thathad previously been funded from ACI. The bill realigns the ratio of securityassistance to alternative development from 76-24% to 56-44%. With regard toColombia, the bill provides a total of $530.6 million from all accounts, with FMF cut$30 million from the request. The bill requires the Secretary of State to certify thatcertain human rights conditions have been met before 35% of funds can be madeavailable for aid to the Colombian Armed Forces.

Supporters of U.S. policy argue that assistance to Colombia is necessary to helpa democratic government besieged by drug-supported leftist and rightist armedgroups. Assistance to Colombia’s neighbors, according to supporters, is meritedbecause of an increasing threat from the spillover of violence and drug productionfrom Colombia. While some critics agree with this assessment, they argue that U.S.assistance overemphasizes military and counter-drug assistance and providesinadequate support for protecting human rights. Critics also assert that U.S.assistance is disproportionately targeted to eradication of crops and military trainingrather than to alternative development projects that could provide alternativelivelihoods for growers who voluntarily give up illicit crops.

For a broader discussion of Colombia beyond the ACI, see section on“Colombia” below.

CRS Products:

CRS Report RL33370, Andean Counterdrug Initiative (ACI) and Related FundingPrograms: FY2007 Assistance, by Connie Veillette.

CRS Report RL32774, Plan Colombia: A Progress Report, by Connie Veillette.

CRS Report RL32250, Colombia: Issues for Congress, by Colleen Cook.

CRS Report RL33163, Drug Crop Eradication and Alternative Development in theAndes, by Connie Veillette and Caroline Navarette-Frias.

U.S. Trade Policy

As a matter of commercial and foreign economic policy, trade has been one ofthe most enduring and dynamic issues in U.S.-Latin American relations, with U.S.trade policy evolving over time to address changing circumstances and priorities.When Latin American countries faced economic, social, and political upheaval in the1970s and 1980s, the United States created unilateral (one-way) trade preference

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programs to encourage export-led economic growth and development. In the 1990sand thereafter, the rebound of economic growth and trade liberalization shifted U.S.trade policy shifted toward an emphasis on reciprocal free trade agreements (FTAs).Among the major differences with trade preferences, FTAs are negotiated betweenparties, have more comprehensive, mutual obligations, and are permanent, notrequiring congressional renewal.

By implementing the North American Free Trade Agreement (NAFTA), theU.S.-Chile FTA, and the Dominican Republic-Central America-United States FreeTrade Agreement (CAFTA-DR) — still not ratified by Costa Rica — countriesexchanged their unilateral trade preferences provided to them under the GeneralizedSystem of Preferences (GSP) and the Caribbean Basin Initiative (CBI). Currently,newly negotiated FTAs with Panama, Peru, and Colombia present the same tradeoffwith respect to unilateral preferences extended to them under either the CBI or theAndean Trade Preference Act (ATPA). The choice to enter an FTA is furthercomplicated by the fact that these preferential arrangements are set to expire by theclose of the 110th Congress and that their renewal faces resistence by some keyMembers of Congress. Their potential expiration puts additional pressure on thoseLatin American countries not currently negotiating an FTA with the United States toreconsider the option in order to maintain preferential access to the U.S. market.Costa Rica, the Caribbean Community (CARICOM) countries, Ecuador, and Boliviafall into this category.

Three other important issues cut across U.S. trade policy initiatives in theregion. First, the proposed hemispheric-wide Free Trade Area of the Americas(FTAA) has stalled over disagreements between Brazil and the United States. TheSouthern Common Market (Mercado Común del Sur — Mercosur) seems to beexpanding its customs union approach to regional integration as an alternative to theU.S. backed FTAA. It is in this context, as well as the lingering WTO negotiations,that congressional consideration of the three recently concluded U.S. bilateral FTAstakes on added importance. Second, the expiration of Trade Promotion Authority(TPA) on July 1, 2007, which contains expedited legislative procedures typicallyused to consider reciprocal trade agreement implementing legislation, could limit theability of the United States to move forward on future FTA initiatives in the region,should they arise. Third, the “New Trade Policy for America” being developedjointly by congressional leadership and the Bush Administration is expected tochange the proposed bilateral FTA texts, particularly the labor and environmentalchapters. The “New Policy” would also contain more stringent provisions on the roleof Congress in trade negotiations, trade adjustment assistance, port security,government procurement, investment, and intellectual property rights, whichcollectively could expand support for future FTAs.

Andean Trade Preferences Extension. 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 regionand to encourage a shift away from the cultivation of illegal coca by supportingalternative crop production. The ATPA (Title II of P.L. 102-182) was enacted onDecember 4, 1991, and renewed and modified under the Andean Trade Promotionand Drug Eradication Act (ATPDEA; title XXI of P.L. 107-210) on August 6, 2002.

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Andean trade preferences were scheduled to end on December 31, 2006. Legislationwas enacted late in the 109th Congress to extend Andean trade preferences until June30, 2007, and for an additional six months if a country enters into a free tradeagreement with the United States before then. In the 110th Congress, lawmakers areconsidering an extension of the trade preferences. H.R. 1830 (Rangel) would extendATPA benefits until September 30, 2009, while the Administration supports a shorterextension of the trade preferences.

U.S.-Peru Trade Promotion Agreement. On January 6, 2006, PresidentBush notified the Congress of his intention to enter into a free trade agreement withPeru. On April 12, 2006, the United States and Peru signed the U.S.-Peru TradePromotion Agreement (PTPA). The PTPA was signed in time to be considered byCongress under the current Trade Promotion Authority (TPA), which is set to expireon July 1, 2007. TPA requires the President to submit formally the draft agreementand implementing legislation to Congress after entering into the agreement, but withno time limit to do so. The implementing bill would then be considered on anexpedited basis, with limited debate and no amendments. The Peruvian Congressalready approved the PTPA on June 28, 2006 by a vote of 79 to 14. U.S.congressional action on the PTPA has been postponed in part to allow congressionalleadership and the Bush Administration to develop new text for the labor andenvironment chapters based on principles set forth in the “New Trade Policy forAmerica.” This language is expected to be completed in the near future, but it is stillnot clear how it will be integrated into the agreement, or whether the PeruvianCongress will agree to reopen the FTA to adopt these changes.

A PTPA would likely have a small net economic effect on the United Statesbecause of the small size of Peru’s economy. In 2006, Peru had a nominal GDP of$93 billion, approximately 0.7% the size of the U.S. GDP of $13.2 trillion. TheUnited States currently extends duty-free treatment to selected imports from Peruunder the Andean Trade Preferences Act (ATPA), a regional trade preferenceprogram that expires at the end of June 2007. In 2006, 54% of all U.S. imports fromPeru received preferential duty treatment under ATPA. U.S. imports from Peruaccount for 0.3% of total U.S. imports, and U.S. exports to Peru account for 0.3% oftotal U.S. exports. The U.S. trade deficit with Peru was $3.24 billion in 2006. Themajor U.S. import from Peru is gold, followed by refined copper, and petroleum lightoils, while the leading U.S. exports to Peru are gasoline, transmission apparatus, andoffice and data processing machinery parts.

U.S.-Colombia Trade Promotion Agreement. On August 24, 2006,President Bush notified Congress of his intention to enter into the U.S.-ColombiaTrade Promotion Agreement (CTPA), and both parties subsequently signed the FTAon November 22, 2006. The CTPA implementing legislation, should it beintroduced, will likely be considered under expedited procedures as defined in TPA.Changes to bilateral free trade agreements made according to language developed inthe “New Trade Policy for America” (see above) would also likely apply to theCTPA, as it would for the FTAs with Panama and Peru. The Colombia agreement,however, presents some additional unique challenges for Congress. The mostcontroversial issue is the ongoing violence against trade unionists in Colombia.Some Members of Congress have voiced strong concern over the lack of action onthe part of the Colombian government and want to see stronger measures taken to

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4 Bureau of National Affairs, “Five Democratic Lawmakers Blast Proposed Colombia FTADue to Violence,” International Trade Reporter, June 14, 2007.

investigate the murders before agreeing to an FTA. Colombian President AlvaroUribe has stated that he is willing to take the necessary steps to address theseconcerns in order to obtain congressional support for the agreement.4

A CTPA would likely have a have a small net economic effect on the UnitedStates because of the relatively small size of Colombia’s economy. Colombia’s grossdomestic product (GDP) in 2006 was $132 billion, approximately one percent of U.S.GDP ($13.2 trillion in 2006). The United States currently extends duty-freetreatment to selected imports from Colombia under the ATPA, a regional tradepreference program that expires at the end of June 2007. In 2006, 52% of all U.S.imports from Colombia received preferential duty treatment under this program. Inthe absence of a CTPA, and if the ATPA is not renewed, many Colombian productsentering the U.S. market will be subject to higher duties. The U.S. trade deficit withColombia was $3 billion in 2006. The dominant U.S. import from Colombia is crudeoil, 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.

U.S.-Panama Trade Promotion Agreement. On November 16, 2003,President Bush formally notified Congress of his intention to negotiate a bilateralFTA with Panama. Negotiations commenced in April 2004 and after an extendedhiatus, the tenth and final round concluded on December 19, 2006. Concluding theagreement has been delayed by three factors. The first was difficulty in coming toan agreement on sensitive agriculture issues, particularly sanitary and phytosantiary(SPS) measures and procedures, now resolved. The second was the Panamaniangovernment’s decision to put off negotiations for much of 2006 while it focused thenation’s attention on another controversial issue, the national referendum on thePanama Canal expansion project. The canal expansion referendum passed onOctober 22, 2006. The third is settling on the specific language to be used in thelabor and environment chapters, which remain open. It is widely expected that whenCongress and the Bush Administration agree on such language, as outlined inprinciple in the “New Trade Policy for America” initiative, it will be incorporatedinto the FTA. The trade agreement must be signed by June 30, 2007 to be consideredunder the current TPA/fast track authority.

Panama is largely a services-based economy, which distinguishes it, and thetrade negotiations with the United States, from those of its Central Americanneighbors. The proposed U.S.-Panama FTA is a comprehensive agreement similarto other bilateral FTAs entered into by the United States. According to a summaryprovided by the United States Trade Representative (USTR), 88% of U.S. exportswould become duty free right away, with remaining tariffs phased out over a ten-yearperiod. Approximately half of U.S. farm exports to Panama would achieve duty-freestatus immediately, with many products restricted by tariff-rate quotas. Tariffs onother farm products are phased out in up to 16 years, giving Panama’s most sensitivesectors time to adjust to free trade. Panama and the United States signed a detailedbilateral agreement to resolve SPS issues. Panama agreed to recognize U.S. foodsafety inspection as equivalent to Panamanian standards, which will expedite entry

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of U.S. meat and poultry exports. The FTA also includes additional provisions forservices trade, telecommunications, intellectual property rights, labor, environment,and government procurement, while providing support for trade capacity building.The agreement has not yet been signed and Panamanian negotiators have expresseda willingness to adopt changes to the labor and environment chapters, among others,to accommodate U.S. congressional concerns.

The U.S. trade surplus with Panama was $2.3 billion in 2006. Major U.S.exports to Panama include oil and mostly capital- and technology-intensivemanufactured goods such as aircraft, pharmaceuticals, machinery, medicalequipment, and motor vehicles. U.S. imports from Panama include seafood, repairedgoods, gold, sugar, and coffee.

Free Trade Area of the Americas. The proposed FTAA was originallyconceived over 10 years ago as a regional (presumably WTO-plus) trade agreementthat would include 34 nations of the Western Hemisphere. Since then, three draftsof an incomplete agreement have been released, but the original January 2005 datefor signing it has long since passed. At the center of the delay are deep differencesdividing the United States and Brazil, the co-chairs of the Trade NegotiatingCommittee, which is charged with defining the framework under which the FTAAnegotiations can continue. The United States and Brazil agreed at the November2003 Miami Ministerial to a two-tier approach that would include a set of “commonrights and obligations” to which all countries would agree, augmented by optionalplurilateral arrangements for countries wishing to make deeper reciprocalcommitments. To date, the United States and Brazil have been unable to define howthis two-tier concept would work, and the United States has declined Brazil’s offerto move ahead with the “4+1” market access talks with the Mercosur (SouthernCommon Market) countries (Brazil, Argentina, Uruguay, Paraguay, and as of July 1,2006, Venezuela).

The breadth of an emerging resistence to the FTAA became clearer at the fourthSummit 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 andthe FTAA, which was not scheduled as the major topic of this summit, it becameclear that Latin America was divided over how to proceed. A total of 29 countriessupported restarting negotiations, and the United States pushed to set a specific datein 2006. The Mercosur countries rejected this idea, arguing that the conditions fora balanced and equitable FTAA did not yet exist. Venezuela lobbied independentlyto end any further effort on the FTAA and called for a unified resistence against U.S.policies and presence in Latin America. On July 4, 2006, Venezuela formally joinedMercosur as its first new full member since its inception in 1991. AlthoughMercosur has collectively resisted the FTAA, Venezuela is the only country in LatinAmerica to reject the idea unequivocally. With Venezuela’s new-found status as amember of Mercosur, the United States may find it even more difficult to isolate itsunabashedly negative influence on the FTAA negotiations.

The Summit declaration called for a time to reflect on the problems of theFTAA process while awaiting the outcome of the WTO Doha Round, particularlywith respect to agricultural issues. Given that the WTO talks have also boggeddown, it seems unlikely that the FTAA will find the support to move ahead in the

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near future, particularly with Venezuela now potentially influencing policy in theMercosur group. In the meantime, both Brazil and the United States are meeting onan informal bilateral basis and continue to court other Latin American countries tojoin them in their respective subregional trade pacts, making the future of U.S. tradepolicy in the region even more of a challenge.

CRS Products:

CRS Report RL32540, The U.S.-Panama Free Trade Agreement, by J. F. Hornbeck.

CRS Report RS22419, U.S.-Colombia Trade Promotion Agreement, by AngelesVillarreal.

CRS Report RS22391, U.S.-Peru Trade Promotion Agreement, by Angeles Villarreal.

CRS Report RL33951, U.S. Trade Policy and the Caribbean: From TradePreferences to Free Trade Agreements, by J. F. Hornbeck.

CRS Report RL31870, The Dominican Republic-Central America-United States FreeTrade Agreement (CAFTA-DR), by J. F. Hornbeck.

CRS Report RS20864, A Free Trade Area of the Americas: Status of Negotiations andMajor Policy Issues, by J. F. Hornbeck.

CRS Report 98-840, U.S.-Latin America Trade: Recent Trends, by J. F. Hornbeck.

Migration Issues

Latin America, followed by Asia, is the leading source of both legal and illegalmigration to the United States. The overwhelming majority of Latin Americanimmigrants come from Mexico, Central America, and the Caribbean. Factorscontributing to Latin American migration to the United States include family ties,poverty, a shortage of good jobs, and proximity to the United States. Latin Americangovernments, most notably Mexico under President Vicente Fox, lobbied forcomprehensive immigration reform in the United States and the creation of a guestworker program that would normalize the status of illegal migrant workers andfacilitate circular migration patterns so that workers return to their countries of origin.The 109th Congress considered immigration reform, but did not enact anycomprehensive reform measures. Latin American nations were disappointed by thefailure of immigration reform in the 109th Congress and the approval of a borderfence along 700 miles of the U.S.-Mexico border. After President Bush signed theSecure Fence Act of 2006 (P.L. 109-367), Mexico, with the support of 27 othernations, denounced the proposed border fence at the Organization of AmericanStates.

In the 110th Congress, immigration reform legislation has been introduced inboth the House and Senate. The Senate began debate on the ComprehensiveImmigration Reform Act of 2007 (S. 1348) in May 2007. The Senate measure stalled

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5 Pew Hispanic Center, “The Size and Characteristics of the Unauthorized MigrantPopulation in the U.S.,” by Jeffrey Passel, March 7, 2006.6 “Mexico-U.S.: Migration and Border Security,” Embassy of Mexico, February 2006.7 Dianne Solis and Laurence Iliff, “$23 Billion Sent to Mexico in ‘06,” Dallas MorningNews, February 1, 2007.

after two cloture votes to end debate failed in June 2007. Negotiations on the billcontinue in the Senate. While the House has held several hearings on immigrationreform, it is unlikely to take up comprehensive reform if the Senate does not approvecomprehensive immigration reform. President Bush continues to express support forcomprehensive immigration reform including increased border security, a guestworker program, and the normalization of status of some of the estimated 12 millionillegal immigrants.

Mexico is the largest source of legal migrants to the United States and is alsobelieved to be the largest source of illegal immigrants. According to the PewHispanic Center, undocumented Mexican migrants accounted for 56% of theestimated 11.5 to 12 million illegal immigrants in the United States in 2005.5 InFebruary 2006, the Mexican Congress approved a concurrent resolution on migrationand border security in which Mexico acknowledges that its workers will continue toemigrate until there are more opportunities in Mexico. The resolution also acceptsthe need to revisit its migration policies to consider enforcement of its northern andsouthern borders, enforcement of Mexican immigration laws that respects the humanrights of migrants, and the need to combat human trafficking. Perhaps most relevant,the Mexican resolution states that the Mexican government does not promote illegalmigration and calls for the development of a guest worker program in the UnitedStates under the principle of shared responsibility. The resolution commits Mexicoto enforcing legal emigration “if a guest country offers a sufficient number ofappropriate visas to cover the biggest possible number of workers and their families,which, until now cross the border without documents because of the impossibility ofobtaining them.”6

Mexico benefits from illegal migration in at least two ways: (1) it is a “safetyvalve” that dissipates the political discontent that could arise from higherunemployment in Mexico; and (2) it is a source of remittances by workers in theUnited States to families in Mexico, estimated to be $23 billion in 2006.7 PresidentCalderón announced the creation of a new jobs program in January 2007 in an effortto boost Mexican development and decrease migration pressures.

In recent years, several Latin American economies have benefitted fromremittances received from workers in the United States, motivating diplomats to pushfor immigration reform that will protect the status of their nationals in the UnitedStates and in other receiving countries. In 2006, migrants sent an estimated $60billion to their home countries, with Mexico, Colombia, and Brazil receiving thelargest amounts of remittances. The Inter-American Development Bank (IDB)estimates that remittances from the United States have grown 51% since 2004.

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8 “Cenbank: Remittances Reach US$3.3 bn in 2006,” Business News Americas, January 22,2007.

Remittances to El Salvador in 2006 were the equivalent of almost 18% of thatcountry’s gross domestic product.8

In addition to concerns over immigration reform, El Salvador, Honduras, andNicaragua advocate for extensions of their eligibility for temporary protected status(TPS). TPS is a discretionary, humanitarian benefit granted to eligible nationals afterthe Secretary of Homeland Security determines that a country has been affected byongoing armed conflict, natural disaster, or other extraordinary conditions that limitthe affected country’s ability to accept the return of its nationals from the UnitedStates. Honduras and Nicaragua were designated for TPS in January 1999 inresponse to devastation from Hurricane Mitch. U.S. Citizenship and ImmigrationServices (USCIS) estimates that 75,000 Hondurans and 4,000 Nicaraguans benefitfrom TPS. In May 2007, the Secretary of Homeland Security announced anextension of TPS for Honduras and Nicaragua through January 5, 2009. El Salvadorwas previously designated for TPS from 1990 to 1992 in accordance with Section303 of the Immigration Act of 1990 which established TPS. It was again designatedin March 2001 following a series of earthquakes in January 2001. USCIS estimatesthat 225,000 Salvadorans benefit from TPS. The Department of Homeland Securityrecently extended El Salvador's TPS designation through March 9, 2009.

CRS Products:

CRS Report RL33659, Border Security: Barriers Along the U.S. International Border,by Blas Nunez-Neto and Stephen R. Vina.

CRS Report RL32044, Immigration: Policy Considerations Related to Guest WorkerPrograms, by Andorra Bruno.

CRS Report RS20844, Temporary Protected Status: Current Immigration Policy andIssues, by Ruth Ellen Wasem and Karma Ester.

CRS Report RL32235, U.S. Immigration Policy on Permanent Admissions, by RuthEllen Wasem and Karma Ester.

Terrorism Issues

U.S. attention to terrorism in Latin America intensified in the aftermath of theSeptember 2001 terrorist attacks on New York and Washington, with an increase inbilateral and regional cooperation. Latin American nations strongly condemned theattacks, and took action through the Organization of American States (OAS) tostrengthen hemispheric cooperation. OAS members signed an Inter-AmericanConvention Against Terrorism in 2002. The Senate agreed to the resolution ofadvice and consent on the Convention in the 109th Congress and the United Statesratified it in November 2005.

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In its April 2007 Country Reports on Terrorism, the State Departmenthighlighted threats in Colombia, Peru, and the tri-border area of Argentina, Brazil,and Paraguay. According to the report, there were no known operational cells ofIslamic terrorists in the hemisphere, but pockets of ideological supporters in theregion lent financial, logistical, and moral support to terrorist groups in the MiddleEast.

Cuba has remained on the State Department’s list of state sponsors of terrorismsince 1982, which triggers a number of economic sanctions. In May 2006, theDepartment of State, pursuant to Arms Export Control Act, added Venezuela to itsannual list of countries not cooperating on antiterrorism efforts, which triggeredprohibitions on the sale or license of defense articles and services to that country.Cuba also has been on that list for many years.

The 110th Congress is continuing to monitor potential terrorist threats in LatinAmerica and the region’s cooperation with the United States on antiterrorism efforts.The Administration’s FY2008 foreign aid request includes $8.1 million in Anti-Terrorism Assistance and $1.4 million in Terrorist Interdiction Program assistancefor Western Hemisphere countries. H.Res. 435 (Klein), introduced May 23, 2007,would express concern about Iran’s behavior in Latin America and the threateningactivities of terrorist organizations sponsored by Iran in Latin America.

CRS Products:

CRS Report RS21049, Latin America: Terrorism Issues, by Mark P. Sullivan.

HIV/AIDS in the Caribbean and Central America

The AIDS epidemic in the Caribbean and Central America has begun to havenegative consequences for economic and social development in several countries, andcontinued increases in HIV infection rates threaten future development prospects.In contrast to other parts of Latin America, the mode of HIV transmission in severalCaribbean and Central American countries has been primarily through heterosexualcontact, making the disease difficult to contain because it affects the generalpopulation. The countries with the highest prevalence or infection rates are Belize,the Bahamas, Guyana, Haiti, and Trinidad and Tobago, with rates between 2% and4%; and Barbados, the Dominican Republic, Honduras, Jamaica, and Suriname, withrates between 1% and 2%.

The response to the AIDS epidemic in the Caribbean and Central America hasinvolved a mix of support by governments in the region, bilateral donors (such as theUnited States, Canada, and European nations), regional and multilateralorganizations, and nongovernmental organizations (NGOs). Many countries in theregion have national HIV/AIDS programs that are supported through these efforts.

U.S. government funding for HIV/AIDS in the Caribbean and Central Americahas increased significantly in recent years. Aid to the region rose from $11.2 million

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in FY2000 to $33.8 million in FY2003. Because of the inclusion of Guyana andHaiti as focus countries in the President’s Emergency Plan for AIDS Relief(PEPFAR), U.S. assistance to the region for HIV/AIDS increased to $47 million inFY2004, $82.5 million in FY2005, and $93 million in FY2006. The FY2007 requestwas for $113 million, with $63 million for Haiti and $25 million for Guyana,although final foreign aid allocations for FY2007 are not yet available. For FY2008,the Administration requested almost $132 million in HIV assistance for theCaribbean and Central America, with $83 million for Haiti and $21 million forGuyana.

In the 110th Congress, H.R. 848 (Fortuño), introduced February 6, 2007, wouldadd 14 Caribbean countries to the list of focus countries targeted for increasedHIV/AIDS assistance. 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 theDominican Republic. Another initiative, H.Con.Res. 166 (Lee), introduced June 7,2007, would support the goals and ideals of National Caribbean American HIV/AIDSAwareness Day.

CRS Products:

CRS Report RL32001, AIDS in the Caribbean and Central America, by Mark P.Sullivan.

CRS Report RL33485, U.S. International HIV/AIDS, Tuberculosis, and MalariaSpending: FY2004-FY2007, by Tiaji Salaam-Blyther.

Gangs in Central America

The 110th Congress is likely to maintain an oversight interest in the effects ofcrime and gang violence in Central America, and its spillover effects on the UnitedStates. Since February 2005, more than 1,374 members of the violent MaraSalvatrucha (MS-13) gang have been arrested in cities across the United States,according to the FBI. These arrests have raised concerns about the transnationalactivities of Central American gangs. Governments throughout the region arestruggling to find the right combination of suppressive and preventive policies toeffectively deal with the gang problem as well as more effective ways to solve relatedissues such as police corruption, overcrowded prisons, and weak judicial systems.Gang violence may threaten political stability, inhibit social development, anddiscourage foreign investment in Central America.

Many analysts predict that illicit gang activities may accelerate illegalimmigration, and trafficking in drugs, persons, and weapons to the United States.Some maintain that contact between gang members across the regions is increasing,and that this tendency may cause increased gang-related violent crime in the UnitedStates. Many experts argue that the repressive anti-gangs laws adopted by ElSalvador and Honduras have failed to reduce violence and homicides in thosecountries, and that law enforcement solutions alone will not solve the gang problem.

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9 Inter-American Development Bank, “The Region: Race Latin America’s InvisibleChallenge,” Washington, DC, January 1997.

Others assert that unless the root causes of gang violence — poverty, joblessness,ineffective judicial systems, easy access to arms, and the social exclusion of at-riskyouth — are addressed in a holistic manner, the problem will continue to escalate.

Several U.S. agencies have been actively engaged on both the law enforcementand preventive side of dealing with Central American gangs. The National SecurityCouncil (NSC) created an inter-agency task force to develop a comprehensive, three-year strategy to deal with international gang activity. The strategy, which is nowbeing 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. On February 5, 2007, Attorney GeneralAlberto Gonzales attended a conference at which he and President Tony Saca of ElSalvador agreed to oversee the creation of a transnational anti-gang unit (TAG) thatwill be coordinated by the FBI.

In the 109th Congress, legislation was introduced — S. 853 (Lugar) and H.R.2672 (Harris), the North American Cooperative Security Act — that includedprovisions to increase cooperation among U.S., Mexican, and Central Americanofficials in the tracking of gang activity and in the handling of deported gangmembers. In the 110th Congress, similar provisions have been included in bothHouse and Senate versions of broader immigration legislation, H.R. 1645(Gutierrez), S. 330 (Isakson), and S. 1348 (Reid).

CRS Products:

CRS Report RS22141, Gangs in Central America, by Clare Ribando.

Afro-Latinos

As in recent years, the 110th Congress has maintained an interest in the situationof Afro-Latinos in Latin America, particularly the plight of Afro-Colombians affectedby the ongoing armed conflict in Colombia. In recent years, people of Africandescent in the Spanish- and Portuguese-speaking nations of Latin America — alsoknown as “Afro-Latinos” — have been demanding increased rights andrepresentation. Afro-Latinos comprise some 150 million of the region’s 540 milliontotal population, and, along with women and indigenous populations, are among thepoorest, most marginalized groups in the region.9 Afro-Latinos have formed groupsthat, with the help of international organizations, are seeking political representation,human rights protection, land rights, and greater social and economic rights andbenefits. Improvement in the status of Afro-Latinos could be difficult andcontentious, however, depending on the size and 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. Those

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programs are funded through USAID, the State Department, the Inter-AmericanFoundation (IAF), the Peace Corps, and the National Endowment for Democracy(NED). They include agricultural, micro-credit, health, democracy, and bilingualeducation programs. While some foreign aid is specifically targeted towards Afro-Latinos, most is distributed broadly through programs aimed at helping allmarginalized populations. Some Members may support increasing U.S. assistanceto Afro-Latinos, while others may oppose, particularly given the limited amount ofdevelopment assistance available.

During the 109th Congress, the House passed H.Con.Res. 175, recognizing theinjustices suffered by African descendants of the transatlantic slave trade in all of theAmericas. Legislation was introduced — H.R. 4886 (McGovern) the ColombianTemporary Protected Status Act of 2006 — that would have made Colombiannationals, including Afro-Colombians affected by the country’s ongoing conflict,eligible for Temporary Protected Status (TPS). A resolution, H.Res. 822(McCollum), was introduced that recognized the efforts of Afro-Colombian and otherpeace-building communities.

In the 110th Congress, legislation has been introduced, H.Res. 426 (McGovern),that would recognize 2007 as the year of the rights of internally displaced persons(including Afro-Colombians) in Colombia and offer U.S. support to programs thatseek to assist and protect them.

CRS Products:

CRS Report RL32713, Afro-Latinos in Latin America and Considerations for U.S.Policy, by Clare Ribando.

Trafficking in Persons in Latin America and the Caribbean

Trafficking in persons for sexual exploitation or forced labor, both within acountry and across international borders, is a lucrative criminal activity that is ofmajor concern to the United States and the international community. Trafficking inpersons affects nearly every country and region in the world. While most traffickingvictims still appear to originate from South and Southeast Asia or the former SovietUnion, human trafficking is a growing problem in Latin America and the Caribbean.Countries in Latin America serve as source, transit, and destination countries fortrafficking victims. Latin America is also a primary source for the estimated 14,500to 17,500 people that are trafficked to the United States each year. According to theState Department, trafficking is increasingly tied to organized criminal groups,including Mexican drug cartels, who exploit undocumented migrants, especially inthe U.S.- Mexico border region.

Congress has taken a leading role in fighting human trafficking by passing theVictims of Trafficking and Violence Protection Act of 2000 (P.L. 106-386), theTrafficking Victims Protection Reauthorization Act of 2003 (P.L. 108-193), and theTrafficking Victims Protection Reauthorization Act of 2005 (P.L. 109-164). As aresult of that legislation, the State Department and other U.S. agencies provided more

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than $74 million in anti-trafficking assistance to foreign governments in FY2006(latest available data).

On June 12, 2007, the State Department released its seventh annual report onhuman trafficking, Trafficking in Persons Report (TIP) dividing countries into fourgroups according to the efforts they were making to combat trafficking. Tier 3countries are those that have not made an adequate effort to combat trafficking andare subject to sanctions. In the 2007 TIP report, Cuba and Venezuela are the onlycountries identified as Tier 3 in the region, but six others — including Argentina,Dominican Republic, Guatemala, Guyana, Honduras, and Mexico — are on the Tier2 Watch List. The President must make a determination within 90 days from therelease of the TIP report on whether to impose sanctions on any or all of the Tier 3countries.

In the 110th Congress, both chambers are continuing to address humantrafficking as part of their authorization, appropriations, and oversight activities. TheImplementing the 9/11 Commission Recommendations Act of 2007, H.R. 1(Thompson), approved by the House and referred to the Senate on January 9, 2007,increases funding and equipment to strengthen the Human Smuggling andTrafficking Center within the Department of Homeland Security. A related bill hasbeen introduced in the Senate, the Improving America’s Security Act of 2007, S. 4(Reid). The Trafficking Victims Protection Reauthorization Act of 2007, H.R. 270(Smith), introduced on January 5, 2007, would authorize funds for anti-traffickingprograms for FY2008 through FY2010.

CRS Products:

CRS Report RL33200, Trafficking in Persons in Latin America and the Caribbean, byClare Ribando.

CRS Report RL30545, Trafficking in Persons: The U.S. and the InternationalResponse, by Clare Ribando.

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Country Issues

Bolivia

In the past few years, Bolivia has experienced extreme political unrest resultingin the country having six presidents since 2001. Evo Morales, an indigenous leaderof the leftist Movement Toward Socialism (MAS) party, won a convincing victoryin the December 18, 2005, presidential election with 54% of the votes. He wasinaugurated to a five-year term on January 22, 2006.

During his first year in office, President Morales moved to fulfill his campaignpromises to decriminalize coca cultivation, nationalize the country’s natural gasindustry, and enact land reform. These policies pleased his supporters within Bolivia,but have complicated Bolivia’s relations with some of its neighboring countries,foreign investors, and the United States.

While the Morales government has made progress in many areas, its efforts toenact constitutional reforms – including calling for early elections in 2008 – havefaced serious obstacles. In August 2006, many Bolivians hoped that the constituentassembly elected in July would be able to carry out meaningful reforms and respondto the eastern province’s demands for regional autonomy within a year. Instead,disputes between MAS and opposition delegates over voting procedures stalledprogress in the assembly, which is unlikely to meet its original mid-2007 deadline forcompleting constitutional reform. The Morales government is also struggling tosatisfy leftist social movements and other actors that are pressuring him to adoptmore radical proposals.

U.S. interest in Bolivia has traditionally centered on its role as a coca producerand its relationship to Colombia and Peru, the two other major coca- and cocaine-producing countries in the Andes. U.S.-Bolivian relations became tense in 2006 inthe wake of the Morales government’s questionable commitment to combating illegaldrugs, increasing ties with Venezuela and Cuba, and the nationalization measure.Some U.S. officials have stated that democracy in Bolivia could be at risk becauseof measures taken by President Morales to eliminate checks on his authority.

In FY2006, Bolivia received $133.8 million in U.S. foreign assistance,including some $79.2 million in counternarcotics funds. For FY2007, theAdministration requested $99.8 million for Bolivia, including $66 million incounternarcotics funds, but actual aid amounts for FY2007 are not yet available. TheFY2008 request for Bolivia is for $111.7 million, including $30 million incounternarcotics funds. In December 2006, Congress voted to extend tradepreferences for Bolivia, along with Colombia, Ecuador, and Peru, under the AndeanTrade Preferences and Drug Eradication Act (ATPDEA) through June 30, 2007.Legislation has been introduced in the 110th Congress, H.R. 1830 (Rangel), thatwould extend the Andean trade preferences until September 30, 2009, although theBush Administration supports a shorter extension of the trade preferences. The 110th

Congress is considering what level of foreign assistance Bolivia should receive, andwhether its existing trade preferences should be extended.

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CRS Products:

CRS Report RL32580, Bolivia: Political and Economic Developments andImplications for U.S. Policy, by Clare Ribando.

CRS Report RL32770, Andean-U.S. Free Trade Agreement Negotiations, by M.Angeles Villarreal.

Brazil

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. PresidentLula defeated Geraldo Alckmin, former governor of the state of São Paulo, of theBrazilian Social Democratic Party (PSDB), in a run-off presidential election held onOctober 29, 2006. Lula captured 61% of the votes as compared to Alckmin’s 39%,winning handily in the poorer, north and northeastern regions of the country, butfailing to carry the more prosperous southern and western states or São Paulo, thecountry’s industrial and financial hub. In the second round, Brazilians, thoughdivided by class and region, effectively voted in favor of continuing macroeconomicstability under a second Lula Administration despite the corruption scandals that hadinvolved Lula’s party, including many of his closest advisers, during the first term.

President Lula has formed a broad governing coalition that he hopes will becapable of pushing his agenda through Brazil’s notoriously fractured legislature. Hisimmediate task is to boost Brazil’s lagging economic growth and to address theissues of crime and violence. Some analysts predict that ongoing investigations andallegations of corruption against President Lula’s PT party may undermine thestrength of his second term in office.

Relations with the United States have been generally positive, althoughPresident Lula has made relations with neighboring countries in the SouthernCommon Market (Mercosul) his first priority, and has sought to strengthen ties withnontraditional partners, including India and China. Many believe Brazil-U.S.cooperation may increase during President Lula’s second term, particularly on energyissues. President Bush visited Brazil on March 9, 2007, which was followed by avisit from President Lula to Camp David on March 31. During those visits, theleaders launched a new energy partnership to encourage ethanol production and usethroughout the Western hemisphere.

In recent years, congressional interest in Brazil has centered on the U.S.-Brazilian bilateral trade relationship, as well as Brazil’s role in sub-regional, regional,and global trade talks in the Doha round of the World Trade Organization (WTO)negotiations. In December 2006, Congress extended trade preferences for Brazilunder the Generalized System of Preferences (GSP), but set thresholds that may limittrade preferences for some Brazilian exports compared to previous years. Interest inBrazil also focuses on its role as a stabilizing force in Latin America, especially withrespect to Venezuela and Bolivia. During the 109th Congress, Brazil’s role as anethanol producer generated interest that is likely to increase during the 110th

Congress. S. 1007 (Lugar), the United States-Brazil Energy Cooperation Pact of

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2007, would direct the Secretary of State to work with Brazil and other WesternHemisphere countries to develop partnerships to accelerate the development ofbiofuels production, research, and infrastructure. Brazil is also a key U.S. ally whosecooperation is sought on issues that include counternarcotics efforts; human rightsconcerns; the environment, including protection of the Amazon; and HIV/AIDSprevention.

CRS Products:

CRS Report RL33456, Brazil-U.S. Relations, by Clare M. Ribando.

CRS Report RL33258, Brazilian Trade Policy and the United States, by J .F.Hornbeck.

Colombia

Colombian President Alvaro Uribe was reelected on May 28, 2006, with 62%of the vote. Parties loyal to President Uribe also won a majority of both houses ofcongress in the March 2006 congressional elections. His second term has thus farbeen marred by scandals, including a Supreme Court investigation into the allegedparamilitary ties of several pro-Uribe congressmen. President Uribe has been a strongally of the United States and a supporter of U.S. counternarcotics efforts in the regionand, through the Andean Counterdrug Initiative (ACI), Colombia is the largest U.S.foreign aid recipient in Latin America.

U.S. policy toward Colombia has come under scrutiny in the 110th Congress asMembers are concerned about the effectiveness of U.S. counternarcotics efforts inreducing the supply of cocaine; alleged Colombian government ties to paramilitaries;and human rights conditions. The House-passed FY2008 State, Foreign Operations,and Related Programs Appropriations bill, H.R. 2764, would cut theAdministration’s request of some $590 million by almost $60 million; significantly,the House approved a shift in the proportion of U.S. assistance for alternativedevelopment from 25% to 45% of U.S. aid to Colombia. Colombia has beenlobbying Congress to continue current assistance levels and to approve the U.S.-Colombia Trade Promotion Agreement. Critics of the agreement are concerned aboutthe targeting of labor activists in Colombia. Supporters of the agreement maintainthat the trade agreement will enhance Colombia's ability to reduce poverty in thecountry. Legislation has been introduced in the 110th Congress, H.R. 1830 (Rangel),that would extend Andean trade preferences, set to expire June 30, 2007, untilSeptember 30, 2009, although the Bush Administration supports a shorter extensionof the trade preferences. Other matters of congressional interest in Colombia relateto the level of risk to U.S. personnel in Colombia, including the continued captivityof three American hostages by the Revolutionary Armed Forces of Colombia(FARC); Afro-Colombians; and the paramilitary demobilization process.

Colombia produces 70% of the world’s supply of cocaine, according to the U.N.Office on Drugs and Crime, and a significant amount of the heroin entering the

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10 U.S. Department of State, International Narcotics Control Strategy Report, March 2006,p. 101.11 Organization of American States, Seventh Quarterly Report of the Secretary General tothe Permanent Council on the Mission to Support the Peace Process in Colombia(MAPP/OEA), August 30, 2006.

United States.10 Illegally armed groups of both the left and right are believed toparticipate in the drug trade. In March 2006, the United States indicted fiftycommanders of the FARC for drug trafficking. The United States has also requestedthe extradition of 23 paramilitary leaders on drug trafficking charges. In 2004,Congress raised the cap on military personnel allowed to be deployed in Colombiain support of Plan Colombia from 400 to 800 for military personnel and from 400 to600 for civilian contractors (FY2005 Ronald W. Reagan National DefenseAuthorization Act, P.L. 108-375). In 2006, Congress extended the increased cap onmilitary personnel and civilian contractors through 2008 (John Warner NationalDefense Authorization Act for Fiscal Year 2007, P.L. 109-364). Since FY2002,Congress has appropriated funds in support of a unified campaign against narcoticstrafficking and activities of organizations designated as terrorist organizations by theDepartment of State.

A scandal involving alleged paramilitary ties to politicians, including currentmembers of the Colombian Congress, erupted in November 2006. Since the so-called para-political scandal broke several Colombian politicians, including over adozen current members of the Colombian Congress, have been charged with ties toparamilitary groups. Members of Congress from several parties have been implicatedin the scandal, though the majority are from pro-Uribe parties. Several governorsand former members of Congress have also been caught up in the scandal. ForeignMinister Maria Consuelo Araujo was forced to resign due to the investigation intoher brother's and father's connections to the paramilitaries and their involvement inthe kidnaping of Alvaro Araujo's opponent in a Senate election.

On July 15, 2003, the Uribe Administration announced an agreement withleaders of the paramilitary United Self-Defense Forces of Colombia (AUC) that ledto the demobilization of nearly 31,000 paramilitaries as of July 2006. An estimated2,000 paramilitaries remain outside of the disarmament process, and there arecredible reports that paramilitary groups are re-organizing in several regions ofColombia.11 The demobilization process has been controversial. Critics maintainthat there is no mechanism to ensure that demobilizing leaders fully disclose theircrimes in exchange for reduced sentence and likely protection from extradition to theUnited States. Critics also are concerned that the demobilization process does notaddress the criminal enterprises, such as narcotics trafficking, that financed theAUC’s political operations and that the paramilitaries are re-organizing, notdemobilizing. Further concern has focused on the ability of the government to re-incorporate ex-fighters into law-abiding civilian life and to provide some type ofrestitution to their victims.

Colombia has the second largest population of internally displaced persons(IDPs) in the world, behind Sudan. The U.S. Committee for Refugees and theColombian government report that there are 3 million IDPs in Colombia. The United

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Nations High Commissioner on Refugees reports that some 200,000 Colombianswere newly displaced in 2006, and over 200,000 Colombian refugees and asylumseekers outside of Colombia. U.S. efforts to resettle Colombian refugees, begun in2002, have been limited due to provisions of the REAL ID Act of 2005 (included inP.L. 109-13), which bars admission to the United States of persons who haveprovided material support to terrorist groups. In 2005, the United Nations HighCommissioner for Refugees (UNHCR) stopped referring Colombians forresettlement to the United States because of this issue. (Also see sections above on“Andean Counterdrug Initiative” and “U.S.-Colombia Trade PromotionAgreement.”)

CRS Products:

CRS Report RL32250, Colombia: Issues for Congress, by Colleen Cook.

CRS Report RL32774, Plan Colombia: A Progress Report, by Connie Veillette.

CRS Report RL33370, Andean Counterdrug Initiative (ACI) and Related FundingPrograms: FY2007 Assistance, by Connie Veillette.

CRS Report RL33163, Drug Crop Eradication and Alternative Development in theAndes, by Connie Veillette and Caroline Navarette-Frias.

CRS Report RS22419, U.S.-Colombia Trade Promotion Agreement, by AngelesVillarreal.

Cuba

Since the early 1960s, U.S. policy toward Cuba under Fidel Castro has consistedlargely of isolating the communist nation through comprehensive economicsanctions, which have been significantly tightened by the Bush Administration,including restrictions on travel, private humanitarian assistance, and payment termsfor U.S. agricultural exports to Cuba. A second component of U.S. policy hasconsisted of support measures for the Cuban people, including private humanitariandonations and U.S.-sponsored radio and television broadcasting to Cuba.

As in past years, the main issue for U.S. policy toward Cuba in the 110th

Congress will be how to best support political and economic change in one of theworld’s remaining communist nations. Unlike past years, however, Congress is nowexamining policy toward Cuba in the context of Fidel Castro’s temporary, andpotentially permanent, departure from the political scene because of healthconditions. Although there has been broad agreement in Congress on the overallobjective of U.S. policy toward Cuba — to help bring democracy and respect forhuman rights to the island — there have been several schools of thought on how bestto achieve that objective. Some advocate maximum pressure on the Cubangovernment until reforms are enacted; others argue for lifting some sanctions thatthey believe are hurting the Cuban people, or as part of a strategy of lifting sanctions

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incrementally in response to positive changes in Cuba. Still others call for a swiftnormalization of U.S.-Cuban relations.

Over the past several years, one or both houses have at times approvedlegislative provisions that would ease U.S. sanctions on Cuba, but ultimately theseprovisions have been stripped out of the final enacted measures. President Bush hasregularly threatened to veto various appropriations bills if they contained provisionsweakening the embargo.

To date in the 110th Congress, several measures have been introduced that wouldease Cuba sanctions: H.R. 177 (educational travel), H.R. 216 (Cuban baseballplayers), H.R. 217 and H.R. 624 (overall sanctions), H.R. 654, S. 554, and S. 721(overall travel), H.R. 757 (family travel and remittances), H.R. 1026 (facilitation ofthe export of U.S. agricultural products), H.R. 2819/ S. 1673 (facilitation of theexport of U.S. agricultural products, removal of impediments to medical exports toCuba, and overall travel), and S. 1268 (development of Cuba’s off shore oil). S. 554also would terminate U.S.-government sponsored television broadcasting to Cuba.Several initiatives would tighten sanctions: H.R. 525 (related to U.S. fugitives inCuba), and H.R. 1679 and S. 876 (related to Cuba’s offshore oil development). Twoinitiatives, H.R. 1306 and S. 749, would amend a provision of law restricting theregistration or enforcement of certain Cuban trademarks; H.R. 217, H.R. 624, HR.2819, and S. 1673 would repeal the trademark sanction.

For FY2008, the Administration requested $45.7 million in Economic SupportFunds (ESF) for Cuba democracy promotion projects, more than five times theamount provided in FY2006 ($8.9 million) and the amount requested in FY2007 ($9million). The House-passed FY2008 State, Foreign Operations and RelatedPrograms Appropriations bill, H.R. 2764, approved June 22, 2007, would fully fundthe Administration’s request. As reported by the House Appropriations Committee(H.Rept. 110-197), the bill would have provided $9 million in ESF for Cubademocracy programs, but a Diaz-Balart amendment (H.Amdt. 351, approved by avote of 254-170) increased funding by $36.7 million to fully fund theAdministration’s request. The Administration also requested $38.7 million for Cubabroadcasting in FY2008, but House-passed H.R. 2764 would provide $33.681million, about $5 million less than the request.

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CRS Products:

CRS Report RL33819, Cuba: Issues for the 110th Congress, by Mark P. Sullivan.

CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Legislative Initiatives, byMark P. Sullivan.

CRS Report RL33622, Cuba after Fidel Castro: U.S. Policy Implications andApproaches, by Mark P. Sullivan.

CRS Report RL32251, Cuba and the State Sponsors of Terrorism List, by Mark P.Sullivan.

CRS Report RS20468, Cuban Migration Policy and Issues, by Ruth Ellen Wasem.

CRS Report RL33499, Exempting Food and Agriculture Products from U.S. EconomicSanctions: Status and Implementation, by Remy Jurenas.

Ecuador

On January 15, 2007, Rafael Correa, a left-leaning, U.S.-trained economist, wasinaugurated to a four-year term as President of Ecuador. Correa defeated AlvaroNoboa, a wealthy banana magnate, in a run-off election held in late November 2006.Contrary to analysts’ predictions, Correa won the election decisively with 57% of thevote as compared to Noboa’s 43%.

President Correa has moved to fulfill his campaign pledge to reform Ecuador,a country whose economy is currently expanding because of high oil prices, butwhose political institutions are extremely fragile. On April 15, 2007, 82% of eligibleEcuadorians voted in favor of convoking a constituent assembly with the power torewrite the country’s constitution and to dismiss its current elected officials, despitevehement protests from the opposition-led Ecuadorian Congress. Ecuador’sconstitutional court is still considering the legality of the events that led up to thereferendum. In the meantime, elections for constituent assembly delegates arescheduled for September 2007. Many analysts had predicted that Correa would havea difficult time enacting his agenda given that his party lacks representation in theEcuadorian Congress, but that may change as a result of the constituent assemblyprocess. Critics contend that Correa appears to be using the constituent assembly asa pretense to strengthen his power base.

Ecuador has traditionally had close relations with the United States, althoughrecent trade disputes have strained bilateral relations. Ecuador continues to work withthe United States on counternarcotics matters, but negotiations for a bilateral freetrade agreement were suspended indefinitely in May 2006 following Ecuador’sdecision to expel a U.S. oil company, Occidental, from the country withoutcompensation for an alleged breach of contract. U.S. officials congratulated Correaon his recent victory and pledged to cooperate with his government, but have also

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expressed concerns about his ties with Hugo Chávez of Venezuela and his statedpolicies regarding trade, energy, and counternarcotics matters.

Several key issues could complicate U.S.-Ecuadorian relations in 2007. Correaopposes 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 June 30, 2007. Legislation has beenintroduce, H.R. 1830 (Rangel), that would extend the Andean trade preferences untilSeptember 30, 2009, although the Bush Administration supports a shorter extensionof the trade preferences. President Correa has recently confirmed that hisgovernment will not renew the lease on the U.S. air base at Manta, which is currentlyused for U.S. aerial counter-drug detection and monitoring operations, when itexpires in 2009. He has expressed reservations about any Ecuadorian involvementin Plan Colombia and publicly opposed the Colombian army’s incursions intoEcuadorian territory and the Colombian government’s recent resumption of aerialfumigation along the Ecuador-Colombian border. In May 2007, the Correagovernment announced the end of a deal that guaranteed U.S. investments inEcuador. For FY2006, the United States allocated an estimated $29.6 million toEcuador. The Administration requested an estimated $34 million for FY2007, butactual aid amounts for FY2007 are not yet available. The FY2008 request forEcuador is for $20.6 million, with the most dramatic cuts from FY2006 levelsoccurring in counternarcotics funds.

CRS Products:

CRS Report RS21687, Ecuador: Political and Economic Situation and U.S. Relations,by Clare Ribando.

CRS Report RS22548, ATPA Renewal: Background and Issues, by M. AngelesVillarreal.

Haiti

The main priorities for U.S. policy regarding Haiti during the 110th Congress arehow to continue to improve security, promote economic development, and strengthenfragile democratic processes now that an elected government is in place. Haiti’spriorities are many, and deeply intertwined; the Haitian government and theinternational donor community are implementing an interim assistance strategy thatattempts to addresses its many needs simultaneously. The challenge is to accomplishshort-term projects that will boost public and investor confidence, while alsopursuing long-term development plans to improve living conditions for Haiti’s vastpoor population.

President René Préval, who was inaugurated on May 14, 2006 to a five-yearterm, has outlined two main missions for his government: to build institutions andto establish conditions for private investment in order to create jobs. Building on

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drafts created by the interim government (2004-2006), the Préval Administration hasestablished an Interim Poverty Reduction Strategy for 2007-2009 to meet IMFrequirements for debt relief. International donors have pledged more than $1.5billion in economic assistance to Haiti, and President Préval enjoys broad supportfrom the donor community. His efforts to improve security conditions and reform thecountry’s dysfunctional police force received a boost in February 2007 when themandate of the United Nations Stabilization Mission in Haiti (MINUSTAH) wasextended for eight months.

The Bush Administration has expressed its support for the Préval government.On May 7, 2007, President Préval launched his first official visit to the United States.President Bush praised Préval for his efforts to improve economic conditions andestablish the rule of law in Haiti, and Préval responded by saying that his governmentseeks increased U.S. investment in Haiti. Préval has also pledged to cooperate withU.S. counternarcotics efforts. In FY2006, the United States provided $205.5 millionfor Haiti, including $47.3 million to combat HIV/AIDS. The Administrationrequested less, $198 million for FY2007; but actual aid amounts are not yet available.The Administration’s FY2008 request is for $223 million, including $83 million tocombat HIV/AIDS and $25.5 million for an integrated conflict mitigation programto target urban crime. The House-passed FY2008 State, Foreign Operations andRelated Programs Appropriations bill, H.R. 2764, approved June 22, 2007, fullyfunded most categories of assistance for Haiti, and provided an additional $10million in Development Assistance and an additional $2 million in Child Survivaland Health assistance than requested.

There is also bipartisan support in Congress for President Préval. On December9, 2006, the 109th Congress passed a special trade preferences bill for Haiti (theHaitian Hemispheric Opportunity through Partnership Encouragement/HOPE Act of2006, Title V, P.L.109-432). Supporters said the bill could generate 40,000 jobs inHaiti. Some U.S. textile interests opposed the bill because it would providepreferences to some garments with components originating in China and other partsof Asia. The 110th Congress is considering what levels of support to provide forsecurity enhancing measures in Haiti such as MINUSTAH’s disarmament,demobilization, and reintegration program, the Haitian government’s SocialReconciliation Plan, and police and judicial reform. In October 2006, theAdministration partially lifted the 15-year-old arms embargo against Haiti to allowarms and equipment to Haitian security units. Some Members have expressedconcern about doing so before the Haitian police force has been adequately vetted forthose accused of human rights violations or other crimes. An Administration goalof limiting illegal immigration has been challenged by some Members as notaffording adequate protection for Haitian asylum-seekers.

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CRS Products:

CRS Report RL32294, Haiti: Developments and U.S. Policy Since 1991 and CurrentCongressional Concerns, by Maureen Taft-Morales and Clare M. Ribando.

CRS Report RL34029, Haiti’s Development Needs and a Statistical Overview ofConditions of Poverty, by Maureen Taft-Morales and Demond AlexanderDrummer.

CRS Report RS21349, U.S. Immigration Policy on Haitian Migrants, by Ruth EllenWasem.

Mexico

Immigration and border security matters are dominating congressional interestin Mexico in 2007. The 109th Congress considered immigration reform, but did notenact any comprehensive reform measures. In September 2006, Congress approvedthe Secure Fence Act of 2006 (P.L. 109-367) to authorize the construction of a borderfence and other barriers along 700 miles of the U.S.-Mexico border as well as $1.2billion in initial funding for fence construction through the FY2007 Department ofHomeland Security Appropriations Act. Immigration reform legislation has beenintroduced in both the House and Senate in the 110th Congress. The Senate begandebate on the Comprehensive Immigration Reform Act of 2007 (S. 1348) in May2007. The Senate measure stalled after two cloture votes to end debate failed in June2007. Negotiations on the bill continue in the Senate. While the House has heldseveral hearings on immigration reform, it is unlikely to take up comprehensivereform if the Senate does not approve comprehensive immigration reform. PresidentBush continues to express support for comprehensive immigration reform includingincreased border security, a guest worker program, and the normalization of statusof some of the estimated 12 million illegal immigrants. Mexican President FelipeCalderón, like his predecessor President Vicente Fox, is critical of the border fence,and has charged that economic development would be a more effective means toreducing illegal Mexican migration to the United States. In 2005, there were anestimated 6.2 million undocumented Mexican migrants residing in the United States.

Drug cartel violence is also likely to be of concern to the 110th Congress.President Calderón has stated that cartel violence threatens the Mexican state. Helaunched anti-cartel efforts in nine states and deployed 24,000 Mexican soldiers andfederal police. U.S. Attorney General Alberto Gonzales has praised the efforts.Calderón's approval rating is up to 65% as a result of his willingness to combat thecartels. Critics worry about the militarization of the anti-cartel effort, citing allegedrights violations during the operations. The Mexican government is investigatingthese allegations. Some observers note that while the operations send an importantsignal to the cartels, a comprehensive strategy is needed to defeat them. Press reportsindicate that U.S. and Mexican officials are negotiating a regional security programto combat the cartels. For historical reasons, Mexico is hesitant to request increasedU.S. involvement in the country. President Calderón has maintained that he is notasking for help, but for the United States to bear its responsibility for U.S. drug

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consumption and the trafficking of weapons into Mexico. The pace of extraditionsfrom Mexico to the United States continued to increase rapidly in 2006 with a record63 extraditions, including accused drug kingpin Francisco Rafael Arellano Felix ofthe Tijuana cartel. President Calderón has indicated that he will use extradition asa major tool in combating drug traffickers, and Mexico has extradited 47 individualsto the United States as of June 1, 2007, including the alleged head of the Gulf cartel,Osiel Cárdenas Guillén, and three other senior drug traffickers. In June 2007,Mexican federal agents arrested the former governor of Quintana Roo, MarioVillanueva, upon his release from prison. The United States is seeking extraditionof the former governor who is alleged to have laundered millions of dollars for theJuárez cartel and ordered state police to protect cocaine shipments. In the past,extradition was a source of tension in U.S.-Mexico relations, with Mexico refusingto extradite criminals facing life sentences without the possibility of parole due to a2001 Mexican Supreme Court ruling such sentences amounted to cruel and unusualpunishment. In November 2005, in a partial reversal of its October 2001 ruling, theCourt found that life imprisonment without possibility of parole does not amount tocruel and unusual punishment. As a result of this decision, criminals facing lifeimprisonment may be extradited to the United States.

Trade issues will also continue to be a concern. Mexico is the United States’second largest trading partner, and is a party to the NAFTA along with Canada andthe United States. The three countries are currently seeking to maintaincompetitiveness with other regions through the Security and Prosperity Partnershipof North America (SPP). Resolution of trade disputes will continue to be a concern.Current trade disputes relate to U.S. market access for Mexican tuna and avocados.An ongoing dispute involves granting Mexican trucks access to U.S. highways. Along running dispute related to sugar and high-fructose corn syrup imports wasrecently resolved and Mexico repealed its 20% tax on soft drinks made with high-fructose corn syrup (HFCS).

CRS Products:

CRS Report RL33125, Immigration Legislation and Issues in the 109th Congress,coordinated by Andorra Bruno.

CRS Report RL32044, Immigration: Policy Considerations Related to Guest WorkerPrograms, by Andorra Bruno.

CRS Report RL32724, Mexico-U.S. Relations: Issues for Congress, by Colleen Cook.

CRS Report RS22462, Mexico’s 2006 Elections, by Colleen Cook.

CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, andImplications, by M. Angeles Villarreal.

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Nicaragua

Sandinista leader and former President Daniel Ortega was inaugurated Presidenton January 10, 2007. Ortega’s previous presidency (1985-1991) was marked by acivil war with U.S.-backed “contras,” authoritarian tendencies, and charges ofcorruption. Ortega, who lost the last three presidential elections, won only 37.9% ofthe vote but Nicaraguan law allowed him to avoid a run-off vote because he was9.6% ahead of the next closest candidate, Eduardo Montealegre of the NicaraguanLiberal Alliance (ALN). Montealegre, who was seen as the U.S. favored candidate,earned a seat in the legislature, due to his second-place finish. Ortega has notprovided specific policy plans in many areas, and has vacillated between anti-U.S.rhetoric and pragmatic reassurances that his second administration will respectprivate property and pursue free-trade policies. Reported conversations betweenOrtega and U.S. officials, including President Bush, indicate both sides are seekinga cooperative relationship..

The 90-member National Assembly was also elected in the Novemberelections. No party won an outright majority. The Sandinista National LiberationFront (FSLN) has 38 seats, the Constitutionalist Liberal Party (PLC) 25, the ALN22, and the Sandinista Renewal Movement (MRS) 5. In order to pass legislation, theFSLN relies on an informal alliance with the PLC, dominated by jailed formerPresident Arnoldo Aleman. The previous legislature, in which Ortega wasopposition leader of the FSLN, passed and then postponed the implementation ofconstitutional amendments at the root of political tensions towards the end of formerPresident Enrique Bolaños’ term (2002-2007). These amendments were to transfersignificant executive powers to the legislature in February 2007. In January 2007,however, the new legislature passed a bill proposed by President Ortegaconcentrating political power in the executive branch. The FSLN favors aconstitutional reform that will allow unlimited presidential re-elections.

The top U.S. priority in Nicaragua, according to the Administration’s FY2008budget request is “strengthening and consolidating democracy.” The United Statesalso seeks to foster economic development and trade. Nicaragua is the second poorestnation in the hemisphere after Haiti. In 2005, the Bush Administration signed a five-year, $175 million agreement with Nicaragua under the Millennium ChallengeAccount to promote rural development. The Administration has reduced otherforeign aid to Nicaragua by $14 million, from $50 million in FY2006 to a requested$36 million for FY2008. The Nicaraguan National Assembly approved the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) inOctober 2005 and passed related intellectual property and other reforms in March2006. It went into effect on April 1, 2006. CAFTA-DR supporters say the agreementwill promote economic growth, create jobs, and increase exports to the United States.The Nicaraguan government has resumed talks with the International Monetary Fundregarding a new three year Poverty Reduction and Growth Facility plan, with Ortegaexpressing his desire that a new plan prioritize the fight against poverty. The newgovernment’s primary anti-poverty initiative is the “zero hunger” plan which seeksto fight hunger and poverty in rural areas by providing 75,000 of the poorest familieswith milk cows and other livestock.

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Resolution of property claims by U.S. citizens and immigration are contentiousareas in U.S.-Nicaraguan relations. Nicaragua passed a law creating a new PropertyInstitute that could lead to the dismissal of property claim lawsuits arising fromexpropriations carried out by the Sandinista government in the 1980s. Itsimplementation has been delayed along with the other reforms. Nicaragua joinedMexico and other Central American countries in criticizing U.S. efforts to increaseborder enforcement and in demanding guest-worker programs. In May 2007, theDepartment of Homeland Security extended Temporary Protected Status (TPS) toabout 4,000 eligible Nicaraguans living in the United States until January 5, 2009.

CRS Products:

CRS Report RL33983, Nicaragua: The Election of Daniel Ortega and Issues in U.S.Relations, by Maureen Taft-Morales.

Panama

With four successive elected civilian governments, the Central American nationof 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 decisiveelectoral victory with almost 48% of the vote in a four-man race. He succeededPresident Mireya Moscoso of the Arnulfist Party, elected in 1999, whoseadministration was tainted by several high-profile corruption scandals. Torrijos’electoral alliance also won a majority of seats in the unicameral LegislativeAssembly.

The most significant challenges facing the Torrijos government have includeddealing with the funding deficits of the country’s social security fund; developingplans for the expansion of the Panama Canal; and combating unemployment andpoverty. In April 2006, the government unveiled its ambitious plans to build a thirdlane and new set of locks that will double the Canal’s capacity. In an October 2006referendum on the issue, 78% of voters supported the expansion project.

The United States has close relations with Panama, stemming in large part fromthe extensive linkages developed when the Panama Canal was under U.S. control andPanama hosted major U.S. military installations. The current bilateral relationship ischaracterized by extensive counternarcotics cooperation, assistance to help Panamaassure the security of the Canal, and negotiations for a bilateral free trade agreement(FTA). The United States provided Panama with $9.4 million in foreign aid inFY2006. The FY2007 request was for $11.7 million (final FY2007 foreign aidallocations are not yet available), and the FY2008 request is for $5.1 million.

After 10 rounds of negotiations, the United States and Panama announced theconclusion of an FTA on December 19, 2006, although U.S. officials stated the

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agreement was subject to additional discussions on labor and that the Administrationwould work with Congress to ensure strong bipartisan support. Subsequently,congressional leaders and the Bush Administration announced a bipartisan deal onMay 10, 2007, whereby pending FTAs, including that with Panama, would includeenforceable key labor and environmental standards. U.S. officials expect the FTAwith Panama to be signed before the end of June, after which it would be consideredby each country’s legislature. Most observers contend that the agreement will beeasily approved by Panama’s Legislative Assembly given the ruling party’s majorityand given overall public support for the agreement in the country.(Also see “U.S.-Panama Free Trade Agreement” above.)

CRS Products:

CRS Report RL30981, Panama: Political and Economic Conditions and U.S.Relations, by Mark P. Sullivan.

CRS Report RL32540, The Proposed U.S.-Panama Free Trade Agreement, by J. F.Hornbeck.

Peru

President Alan Garcia was elected to a second presidential term in June 2006,defeating populist Ollanta Humala 53% to 47%. Since taking office, Garcia hasembraced a free trade agreement with the United States, appointed a fiscalconservative as finance minister, and taken other steps to assure the internationalfinancial community that he is running the country as a moderate rather than as theleftist he had been in his early career. Garcia’s earlier presidency (1985-1990), wasmarked by hyper-inflation and a violent guerrilla insurgency. Garcia met withPresident Bush at the White House in October 2006 and in April 2007, at which timehe reiterated his support for a free trade agreement with the United States.

Garcia has indicated he will continue the pro-market economic policies of hispredecessor, Alejandro Toledo, who presided over one of the highest economicgrowth rates in Latin America throughout his term, with 6.7% growth in 2006. ButGarcia says he will also find ways to use trade to reduce the level of poverty in Peruand widen the distribution of economic growth, reassuring poor Peruvian citizensthat he is addressing their needs. Poverty is concentrated in rural and jungle areas,and among the indigenous population. Garcia’s initial high level of public supporthas dropped, as reflected in the poor showing of his APRA party in municipal andregional elections held on November 19, 2006.

The Peruvian government is committed to holding past presidents andgovernment officials accountable for abuses of power. Peru has requested theextradition of former President Alberto Fujimori (1990-2000) from Chile. TheChilean government arrested Fujimori in November 2005 and released him on bailin May 2006. In May 2007, the Chilean Supreme Court prosecutor recommendedthat Fujimori be extradited to Peru to face human rights abuse and corruption

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charges, as well as a “usurpation of power” charge. A day after this recommendationwas made, the Chilean Supreme Court ruled that Fujimori would have to remainunder house arrest until a decision on his extradition case was taken. Fujimori’salliance won 15 seats in the legislature and is expected to press for his exoneration.Fujimori is barred from holding office until 2010. Fujimori’s successor, AlejandroToledo, is facing charges of illicit association to commit a crime and falsification ofpublic documents. Toledo is accused of forging signatures on documents that allowedhis party to be eligible to run in the 2000 elections, which culminated in his victory.

Issues in U.S.-Peruvian relations include democracy, trade, drugs, and security.Democracy and human rights initiatives include the provision of $50 million overfive years, ending in 2007, to support the consolidation of democratic reform. TheUnited States completed negotiations for a U.S.-Peru Trade Promotion Agreement(PTPA) in December 2005; an agreement was signed in April 2006, which thePeruvian legislature ratified in June 2006. In May 2007, however, the BushAdministration and congressional leaders reached a bipartisan deal whereby pendingfree trade agreements would include enforceable key labor and environmentalstandards. U.S. congressional action on the PTPA has been postponed in part toallow congressional leadership and the Bush Administration to develop new text onthe labor and environmental standards. It still not clear how it will be integrated intothe agreement. In December 2006, Congress passed an extension of the AndeanTrade Promotion and Drug Eradication Act (P.L.109-432) for six months. Thatextension will run out on June 30 2007, but another six-month extension is possibleif Peru has entered into a free trade agreement with the United States before then.Legislation has been introduced in the 110th Congress, H.R. 1830 (Rangel), thatwould extend those benefits until September 30, 2009, although the BushAdministration supports a shorter extension of the trade preferences.

Peru is a major illicit drug-producing and transit country. The Garciaadministration told the Bush Administration that Peru would extradite convicted drugtraffickers to the United States while in April 2007, Garcia announced a tough anti-drug policy, reaffirming his government’s commitment to coca eradication, despiteprotests by coca growers. The Administration requested $98.5 million in FY2007Andean Counterdrug Initiative (ACI) funds for Peru, less than one-fourth of thefunding Colombia receives. The FY2008 ACI request for Peru is a reduction ofalmost two-thirds from FY2006 funding levels, from $107 million to $37 million.Peru says it is meeting ACI objectives and will argue against the reductions.

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CRS Products:

CRS Report RS22430, Peru: 2006 Elections and Issues for Congress, by MaureenTaft-Morales.

CRS Report RS22391, U.S.-Peru Trade Promotion Agreement, by M. AngelesVillarreal.

CRS Report RS22548, ATPA Renewal: Background and Issues for Congress, by M.Angeles Villarreal.

CRS Report RL33370, Andean Counterdrug Initiative (ACI) and Related FundingPrograms: FY2007 Assistance, by Connie Veillette.

Venezuela

Under the populist rule of President Hugo Chávez, first elected in 1998 andmost recently reelected to a six-year term in December 2006, Venezuela hasundergone enormous political changes, with a new constitution and unicamerallegislature, and even a new name for the country, the Bolivarian Republic ofVenezuela. U.S. officials and human rights organizations have expressed concernsabout the deterioration of democratic institutions and threats to freedom ofexpression under President Chávez, who has survived several attempts to oust himfrom power. The government has benefitted from the rise in world oil prices, whichhas sparked an economic boom and allowed Chávez to increase expenditures onsocial programs associated with his populist agenda. Since he was reelected,President Chávez has announced new measures to move the country towardsocialism. Chávez’s closure of a popular Venezuelan television station (RCTV) thatwas critical of the government in late May 2007 has sparked student-led protests andinternational condemnation.

The United States traditionally has had close relations with Venezuela, thefourth major supplier of foreign oil to the United States, but there has been frictionin relations with the Chávez government. U.S. officials have expressed concernsabout President Chávez’s military arms purchases, his relations with such countriesas Cuba and Iran, his efforts to export his brand of populism to other Latin Americancountries, and concerns about the state of democracy. A dilemma for U.S.policymakers has been how to press the Chávez government to adhere to democraticprinciples without taking sides in Venezuela’s polarized political conflict. Decliningcooperation on anti-drug and anti-terrorism efforts has also been a U.S. concern. In2005 and 2006, President Bush designated Venezuela as a country that has faileddemonstrably to adhere to its obligations under international narcotics agreements,and in 2006, the Department of State prohibited the sale of defense articles andservices to Venezuela because of its lack of cooperation on anti-terrorism efforts.

Congressional concerns regarding Venezuela focus on human rights andpolitical conditions in the country, energy issues, and the overall status of bilateralrelations and U.S. policy. On May 24, 2007, the Senate approved S.Res. 211 (Lugar)

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expressing profound concerns regarding freedom of expression and Venezuela’sdecision not to renew the license of RCTV. In the House, the FY2008 State, ForeignOperations and Related Programs Appropriations bill, H.R. 2764, approved June 22,2007, includes a provision providing $10 million for international broadcasting toVenezuela. The language of the provision was added by a Mack amendment(H.Amdt. 358) approved by voice vote June 21, 2007. The Administration’s FY2008foreign aid budget request included $3 million in Development Assistance forsupport to Venezuelan civil society and $50,000 in International Military Educationand Training. Also in the House, two human rights resolutions have been introduced:H.Con.Res. 50 (Fortuño) and H.Con.Res. 77 (Weller). Another House resolution,H.R. 435 (Klein), would express concern about the relationships between the leadersof Iran and Western Hemisphere countries such as Venezuela. Two Senate bills, S.193 (Lugar), the Energy Diplomacy and Security Act of 2007, and S. 1007, theUnited States-Brazil Energy Cooperation Pact of 2007, would increase hemisphericcooperation on energy issues.

CRS Products:

CRS Report RL32488, Venezuela: Political Conditions and U.S. Policy, by Mark P.Sullivan.