Agricultural Trade between Central America and the US
The Central America Free Trade Agreement including the Dominican Republic (CAFTA-DR) is the United States’ single largest Free Trade Agreement (FTA) in terms of parties involved, bringing together five Central American countries and the Dominican Republic. Having now been in place for more than a decade, CAFTA-DR has benefited all parties involved, particularly in terms of agricultural trade.
Agricultural Trade between Central America and the US
Since 2008, El Salvador’s Gross Domestic Product (GDP, official exchange rate) has grown from US$21.4 billion to US$26.8 billion in 2016. Likewise, Guatemala’s GDP has grown from US$39.1 billion in 2008 to US$68.6 in 2016, while Nicaragua’s GDP has gone from US$8.5 billion in 2008 to US$13.2 billion in 2016 and Costa Rica’s GDP has increased from US$30.6 billion in 2008 to US$57.4 billion in 2016. Similarly, the GDP of Honduras has grown from US$13.8 billion in 2008 to US$21.5 billion in 2016 and the GDP of the Dominican Republic has increased from US$48.3 billion in 2008 to US$71.6 billion in 2016.
Furthermore, these nations participating in the CATA-DR have intensified competitive agricultural exports towards the United States, which totaled US$5.8 billion in 2017 and were led by bananas, coffee, and pineapples. In the case of Nicaragua, its main agricultural exports towards the United States during 2015 were coffee, totaling US$224 million, and rolled tobacco, accounting for US$137 million. Meanwhile, in the case of the Dominican Republic, the main agricultural exports towards the United States in 2016 included rolled tobacco, representing US$602 million, and raw sugar, totaling US$91.6 million.
Simultaneously, the United States has benefitted from cheaper and more varied selection of agricultural goods as well as a year round supply of otherwise limited foodstuffs. On the other hand, the United States has also multiplied its agricultural exports towards CAFTA-DR markets from an aggregate total of US$1.6 billion in 2003 to US$4.3 billion in 2017, particularly in the livestock, fresh fruit, vegetables, poultry, dairy, and grain sectors.
Today, the largest economy amongst the United States’ partners participating in the CAFTA-DR is the Dominican Republic. The Dominican Republic has a total population of almost 11 million citizens and the average age of its citizens is 28 years old. Likewise, some 81% of Dominicans live in an urban setting, notably the capital city of Santo Domingo with its 3 million inhabitants. Currently, the Dominican Republic’s economy is divided into 6% agriculture, 34% manufacturing, and 60% services. Furthermore, it is estimated that the agricultural industry employs 14% of the national labor force, while manufacturing employs 21% and services employ another 65%. Lastly, in the Dominican Republic, the agriculture industry utilizes 52% of the national territory, while another 40% is forested.
In terms of trade, the Dominican Republic is the world’s 69th largest export economy. Overall, during 2016, the country imported US$17.7 billion worth of goods and exported US$8.7 billion, resulting in a trade deficit of US$9 billion. Meanwhile, the Dominican Republic’s main trading partners are the United States, Haiti, India, China, Mexico, and Canada.