Order Code RL30971
CRS Report for Congress
Received through the CRS Web
Latin America and the Caribbean:
Legislative Issues in 2001
August 2, 2001
K. Larry Storrs, Coordinator
Foreign Affairs, Defense, and Trade Division
J.F. Hornbeck, Nina M. Serafino,
Maureen Taft-Morales, and M. Angeles Villarreal
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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Latin America and the Caribbean:
Legislative Issues in 2001
Summary
This report provides an overview of the major legislative issues facing Congress
in 2001 relating to the Latin American and Caribbean region, and provides reference
and linkages to other reports covering the issues in more detail. The report is
organized by the regions and subregions of the Western Hemisphere.
At the hemispheric level, the major legislative issues include the implementation
of the Declaration and Action Plan of hemispheric leaders at Summit of the Americas
III in Quebec City, Canada, on April 20-22, 2001. This includes individual and
collective action to achieve the goal of creating a Free Trade Area of the Americas
(FTAA) by 2005, to promote democracy throughout the hemisphere, to strengthen
multilateral mechanisms for counter-narcotics activity, and to further sustainable
development and environmental protection in the region.
With neighbor Mexico in North America, the major bilateral issues for the United
States are related to trade, drug trafficking, and migration, as new President George
W. Bush seeks to advance friendly relations with new President Vicente Fox, the first
President of Mexico from an opposition party in over 70 years.
With regard to the Central American and Caribbean region, the major issues are
disaster relief and reconstruction in both Central America and the Caribbean,
earthquakes in El Salvador, implementation of the peace accords in Guatemala, and
dealing with Panama’s new control of the Panama Canal. President Bush has
announced a “Third Border Initiative” to strengthen the development of the smaller
Caribbean countries, and will be seeking ways to advance democracy in Cuba and
Haiti.
In the Andean region, the major issues are President Bush’s Andean Regional
Initiative for Colombia and regional neighbors, the Andean Trade Preference Act
(ATPA) under consideration for renewal, dealing with a new government in Peru, and
finding ways to engage the “maverick” government in Venezuela.
In the region encompassing Brazil and the Southern Cone countries of South
America, the major issues are dealing with trade disputes and conflicting views of
FTAA with the Brazilians, dealing with a serious economic crisis in Argentina, and
completing negotiations for a U.S.-Chile Free Trade Agreement with Chile.

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Contents
I. Hemispheric Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Summit of the Americas III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Free Trade Area of the Americas (FTAA) . . . . . . . . . . . . . . . . . . . . . . . . . 1
Democracy in Latin America and the Caribbean . . . . . . . . . . . . . . . . . . . . . 2
Drug Certification Process and the OAS Multilateral
Evaluation Mechanism (MEM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Sustainable Development and Environmental Protection . . . . . . . . . . . . . . 3
II. Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Fox Administration in Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Mexico-U.S. Bilateral Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
III. Central America and the Caribbean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Disaster Relief and Reconstruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Earthquakes in El Salvador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Guatemala and the Peace Accords . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Caribbean “Third Border Initiative” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cuba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Haiti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
IV. Andean Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Andean Regional Initiative (ARI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Andean Trade Preference Act (ATPA) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
V. Brazil and the Southern Cone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Argentina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Chile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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Latin America and the Caribbean:
Legislative Issues in 20011
I. Hemispheric Issues
Summit of the Americas III
Summit of the Americas III was held in Quebec City, Canada, from April 20-22,
2001, with 34 democratically elected Presidents and Prime Ministers from the
Western Hemisphere in attendance, including George W. Bush from the United
States. The hemispheric leaders dealt with three major themes: (1) Strengthening
Democracy, where they agreed to a democracy clause that specified that democratic
government was an essential condition for participation in the summit process; (2)
Creating Prosperity, where they agreed to advance toward the conclusion of the
agreement on the Free Trade Area of the Americas (FTAA) by January 2005; and (3)
Realizing Human Potential, where they agreed to initiatives to promote education,
health, and greater equity for women, youth, and indigenous peoples. Considerable
press coverage focused on the protesters who argue that free trade agreements benefit
business groups and the wealthy while resulting in the degradation of labor and
environmental standards.
For more information, see CRS Report RL30936, Summit of the Americas III,
Quebec City, Canada, April 20-22, 2001: Background, Objectives, and Results, by
K. Larry Storrs and M. Angeles Villarreal.
Free Trade Area of the Americas (FTAA)
A centerpiece of the Third Summit of the Americas discussions was the Free
Trade Area of the Americas (FTAA). Despite protests from various interest groups,
all countries except Venezuela signed the Declaration of Quebec City adopting the
bracketed or draft text of the FTAA and reaffirming the commitment to complete
negotiations of the FTAA by January 2005, with the agreement’s entry into force no
later than the end of the same year. The Declaration focuses on some of the most
1 For information on legislative issues in 2000, see CRS Report RS20474, Latin America:
Overview of Legislative Issues for Congress in 2000, coordinated by Mark P. Sullivan.
Although this report is organized by regions, it is important to remember that the term “Latin
America” is a cultural rather than a geographical term, and includes all countries where Latin-
based languages are spoken but does not include the English-speaking countries of the
Caribbean; hence the title Latin America and the Caribbean. “Latin America” includes
Mexico in North America, most countries in Central America and South America, and Cuba
and the Dominican Republic in the Caribbean where Spanish is spoken; Haiti in the Caribbean
where French is spoken; and Brazil in South America where Portuguese is spoken.

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controversial issues facing the Western Hemisphere countries. The Declaration
includes language stating the need to address the “challenge of environmental
management” and promoting “compliance with internationally recognized core labor
standards as embodied in the International Labor Organization Declaration on
Fundamental Principles and Rights at Work.” In addition, to the surprise of some,
President Bush gave a nod toward support for addressing labor and environmental
issues as well as negotiating antidumping, countervailing duty, and other trade remedy
measures. All these issues have been sufficiently contentious as to threaten progress
in negotiations if extreme positions emerge. How they ultimately will be resolved,
either in the United States or the Hemisphere, is difficult to predict.
For more information, see CRS Report RS20864, A Free Trade Area of the
Americas: Status of Negotiations and Major Policy Issues, by J. F. Hornbeck; CRS
Issue Brief IB95017, Trade and the Americas, by Raymond J. Ahearn; and CRS
Report RL30935, Agricultural Trade in the Free Trade Area of the Americas, by
Remy Jurenas.
Democracy in Latin America and the Caribbean
Latin America has made enormous strides in recent years in the development of
democracy, with all countries but Cuba led by democratically-elected heads of state.
Nonetheless, many government institutions in the region have proven ill-equipped to
deal with challenges to their further development, such as strong, often autocratic
presidents; violent guerrilla conflicts; militaries still not comfortable with civilian rule;
and narcotics trafficking and related crime and corruption. Furthermore, many
countries have encountered difficulties in promoting economic development in the
face of widespread poverty and highly skewed income distributions.
For more information, see CRS Report 98-684, Latin America and the
Caribbean: Fact Sheet on Leaders and Elections, by Mark P. Sullivan, as well as
references cited above on Summit of the Americas III and cited below on Haiti and
Peru.
Drug Certification Process and the OAS Multilateral
Evaluation Mechanism (MEM)
Since the mid-1980s, Congress has required the President to certify that drug
producing and drug-transit countries are cooperating fully with the United States in
counter-narcotics efforts in order to avoid a series of sanctions, including suspension
of U.S. foreign assistance and financing, and opposition to loans in the multilateral
development banks. The sanctions would also apply if the Congress, within 30
calendar days, passed a joint resolution of disapproval to overturn the presidential
certification, although any resolution would be subject to veto.
Over the years, spokesmen from many countries have complained about the
unilateral and non-cooperative nature of the drug certification requirements, and have
urged the United States to end the process and to rely upon various multilateral
methods of evaluation that have been developed recently. Mexico, often the focus of
congressional debate, particularly expressed dissatisfaction with the process, even

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though it was regularly certified as being a fully cooperative country. Following the
July 2000 election of opposition candidate Vicente Fox as President of Mexico, a
number of legislative measures were introduced to modify the drug certification
requirements, and these initiatives were mentioned when President Bush met with
President Fox in Mexico in mid-February 2001. Although President Bush certified
Mexico as fully cooperative in drug control efforts on March 1, 2001, a number of
legislators continue to press for modification of the existing certification process.
Acting to soften existing requirements, on April 5, 2001, the Senate Foreign
Relations Committee reported out a substitute version of S. 219, which would (1)
suspend the existing drug certification procedures for a 3-year trial period, and (2)
require the President to identify by October 1 of each year major drug-transit or major
illicit drug producing countries and to deny assistance to any country that has failed
demonstrably, during the previous 12 months, to make substantial efforts to adhere
to its obligations under international counternarcotics agreements. The measure
expresses the sense of Congress that the United States should at the earliest feasible
date in 2001 convene a multilateral conference of relevant countries to develop
multilateral drug reduction and prevention strategies. It also urges the President to
request legislative changes to implement the strategies no later than one year after
enactment.
One of the multilateral mechanisms most frequently mentioned is the Multilateral
Evaluation Mechanism (MEM) developed by the Inter-American Drug Abuse Control
Commission (CICAD) of the Organization of American States (OAS). Under the
MEM, all hemispheric countries are evaluated on the basis of 61 common criteria.
Representatives of each country evaluate all countries except their own. Hemispheric
leaders at Summit of the Americas III noted with satisfaction the first set of
evaluations and recommendations under the MEM procedures and called for
strengthening the MEM process and for strengthening hemispheric counter-narcotics
cooperation.
For more information, see CRS Report RL30892, Drug Certification
Requirements and Proposed Congressional Modifications in 2001; CRS Report
RL30949, Drug Certification Procedures: Side-by-side Comparison of Existing
Procedures and S. 219 as Reported; and CRS Report RL30950, Drug Certification
Procedures: A Comparison of Current Law and S. 219 as Reported, by K. Larry
Storrs.
Sustainable Development and Environmental Protection
Roughly 50% of the world’s tropical forests, 40% of its biological diversity, and
extensive freshwater and marine resources are located in the Latin American and
Caribbean region. The U.S. Agency for International Development (USAID) has
devoted about $65 million per year to environment programs in the region in recent
years, supporting sustainable forestry, improved hillside agriculture, conservation of
biological diversity, prevention of industrial pollution, and better water management.
In Brazil, for example, USAID, working with other bilateral and multilateral donors
and non-governmental organizations (NGOs), supports programs to conserve the
Brazilian rainforest. The programs’ goals are to suppress fires, and to develop and
train leaders for sustainable development activities that will reduce the extensive

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burning/clearing of tropical forests in Brazil’s vast Amazon region which allegedly
contributes to the loss of biological diversity and increased global warming.
For further information, see CRS Report RL30121, Brazil under Cardoso:
Politics, Economics, and Relations with the United States, by K. Larry Storrs; CRS
Report 97-291, NAFTA: Related Environmental Issues and Initiatives, by Mary E.
Tiemann; and CRS Electronic Briefing Book on “Global Climate Change” on the CRS
web site, [http://www.congress.gov/brbk/html/ebgcc1.html] as well as references to
Summit of the Americas III above. See also the explanation of USAID’s environment
programs in Latin America and the Caribbean at USAID’s web site
[http://www.usaid.gov/environment/lac.html].
II. Mexico

Fox Administration in Mexico
Vicente Fox of the conservative Alliance for Change was inaugurated as
President of Mexico on December 1, 2000, for a six year term, promising to promote
free market policies, to strengthen democracy and the rule of law, to fight corruption
and crime, and to end the conflictive situation in the state of Chiapas. Fox’s
inauguration ended 71 years of presidential control by the long dominant party. Since
his inauguration he worked with a divided Congress to obtain passage of his budget,
and he recently submitted fiscal and tax reforms calculated to produce resources for
his educational and social initiatives. However, the proposals have been controversial
because they remove tax exemptions on medicine and food.
President Fox has sought to resolve the conflictive situation in Chiapas by
submitting legislation to strengthen indigenous rights, withdrawing military from
certain areas, releasing some Zapatista prisoners, and calling for peace talks with the
rebels. The Zapatistas made a peaceful march from Chiapas to Mexico City from
February 24 to March 9 to generate support. They pressed their proposals in the
Chamber of Deputies on March 28, 2001, and eventually agreed to renew a peace
dialogue with the government. After the Mexican Congress passed a modified version
of the indigenous rights legislation on April 28, 2001, the Zapatistas denounced the
legislation as inadequate and withdrew from any dialogue with the Government.

President Fox has indicated that Mexico will pursue a more activist and
diversified foreign policy, with greater involvement in UN activities, and stronger ties
to Latin America and Europe. He has also indicated that it will be more aggressive
in defending the interests of Mexicans living in foreign countries, particularly those
in the United States, and he established a Special Office for Mexicans Abroad. On
various occasions, President Fox has indicated that he expects to have warm and
friendly relations with the United States, and he has called for greater cooperation
under NAFTA and for a more open border between the countries over time.
The United States Congress has closely followed political and economic
developments in Mexico, and is interested in President Fox’s efforts to advance
democracy, promote free market reforms, and resolve the conflictive situation in

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Chiapas because of the effects of these developments on bilateral relations and
because of the threat of possible instability on the southern border.
For more information, see CRS Issue Brief IB10070, Mexico-U.S. Relations:
Issues for the 107th Congress, by K. Larry Storrs.
Mexico-U.S. Bilateral Issues
The United States and Mexico have a special relationship under the North
American Free Trade Agreement (NAFTA), which removes trade and investment
barriers between the countries. The friendly relationship was strengthened by
President Bush’s meetings with President Fox in Mexico, Canada, and the United
States. Major bilateral issues of concern to Congress are trade, immigration, and drug
trafficking and border issues.
On February 16, 2001, President Bush met with President Fox in Guanajuato,
Mexico, and agreed on goals and principles that would form the basis for a full,
mature, and equitable “partnership for prosperity.” On migration issues, the two
presidents agreed to begin at the earliest opportunity cabinet-level negotiations aimed
at achieving short- and long-term agreements to constructively address migration and
labor issues between the countries. On border issues, they promised to work for the
economic and social development of border communities with a safe and orderly
environment They also agreed to form a new high-level working group under the
auspices of the Binational Commission, to identify specific steps to improve the
efficiency of border operations.
On trucking issues, they agreed to begin immediate discussions to implement the
North America Free Trade Agreement (NAFTA) panel decision allowing Mexican
trucks access to U.S. highways. On drug trafficking issues, they agreed to strengthen
law enforcement cooperation in accordance with each country’s national jurisdiction,
and on March 1, President Bush certified that Mexico had been fully cooperative in
drug control efforts. On energy issues, the presidents indicated that they would
consult with Canada to develop a North American approach to energy resources.
On April 21, 2001, Presidents Bush and Fox met in Quebec City, Canada, while
attending Summit of the Americas III with other hemispheric leaders. They affirmed
their support for concluding an agreement to create the Free Trade Area of the
Americas (FTAA) by 2005, and indicated that bilateral issues were being resolved
harmoniously.
On May 3, 2001, President Fox visited with President Bush in Washington, D.C.,
where both spoke at the annual meeting of the American Jewish Committee. The two
talked about temporary visas for Mexican workers and plans for long range energy
development among Mexico, the United States and Canada. President Fox
announced that Mexico had that very day arrested Adan Amezcua, one of the brothers
known as “the kings of amphetamines.” President Bush invited President Fox to
make an official state visit, September 5-7, 2001, and indicated that this would be the
first state visit of his Administration, and would highlight the warm friendship between
our two countries and peoples.

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For more information on bilateral relations, including trade, drug trafficking, and
migration issues, see CRS Issue Brief IB10070, Mexico-U.S. Relations: Issues for the
107th Congress; and CRS Report RL30886, Mexico’s Counter-Narcotics Efforts
under Zedillo and Fox, 1994 to 2001, by K. Larry Storrs; as well as CRS Report
RL30852, Immigration of Agricultural Guest Workers: Policy, Trends and
Legislative Issues, by Ruth Ellen Wasem and Geoffrey K. Collver; and the section on
NAFTA in the CRS Electronic Briefing Book on “Trade,” by J.F. Hornbeck, available
online [http://www.congress.gov/brbk/html/ebtra42.html]
III. Central America and the Caribbean
Disaster Relief and Reconstruction
Following the destruction caused by Hurricane George in the Caribbean and
Hurricane Mitch in Central America in late 1998, the United States responded with
some $312 million in emergency relief, and an additional $621 million in grant
assistance through AID and other agencies, funded through the 1999 Emergency
Supplemental Appropriations Act. Donors and country officials pledged to be better
prepared for disasters, and to “build back better” in reconstruction efforts, including
work to reduce poor conservation and land use practices that often contributed to the
severity of the disaster damage in the countries. Congress is interested in oversight
over this major project in Central America, with expenditure of the designated funding
continuing until the end of 2001.
For background, see CRS Report 98-1030, Central America: Reconstruction
after Hurricane Mitch, coordinated by Lois McHugh. For current status, see
USAID’s Hurricane Reconstruction Site on the web [http://hurricane.info.usaid.gov/].
Earthquakes in El Salvador
El Salvador experienced several major earthquakes in January and February 2001
that killed over a one thousand people, and displaced nearly two million people. The
United States and other countries have responded with emergency and relief
assistance. U.S. emergency assistance totaled nearly $10 million by mid-February
2001, with $6.1 million provided in response to the mid-January earthquake, and $3.3
million in response to the mid-February earthquake. When President Bush met with
Salvadoran President Francisco Flores in early March 2001, he said that the United
States had provided over $16 million in emergency relief assistance, and he pledged
to provide $52 million in reconstruction assistance in FY2001, and an equal or greater
amount in FY2002. He also notified the Salvadoran President of the U.S. Attorney
General’s decision to grant Temporary Protected Status (TPS) to Salvadoran
immigrants in the United States for a period of 18 months. The Salvadoran
government had expressed concern about the additional strain that returned
immigrants would place on already stretched resources. Some Members have
suggested the need for even more assistance to the country.

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For background, see CRS Report 98-1030, Central America: Reconstruction
after Hurricane Mitch, coordinated by Lois McHugh. For current status, see
USAID’s updates on Earthquake in El Salvador [http://usaid.gov/about/el_salvador/].
Guatemala and the Peace Accords
Guatemala is beginning the fifth year of implementation of the historic peace
accords signed in December 1996, which called for programs to transform Guatemala
into a more participatory and equitable society. The United States is the single largest
bilateral donor in this area, having offered $260 million in support over the four-year
period from 1997 to 2000. Additional support was pledged through FY2003,
although multilateral institutions are making larger contributions. Bush
Administration-requested assistance for FY2002 includes $24 million in development
assistance, $18 million in food assistance, and $10 million in Economic Support
Funds, largely to support the peace process. U.S. assistance helps the Guatemalan
Government to implement its social reform program, modernize the justice sector,
carry out land bank and titling programs, and encourage participation from marginal
communities.
For background, see CRS Report 98-1030, Central America: Reconstruction
after Hurricane Mitch, coordinated by Lois McHugh. For current status, see
USAID’s reports on Guatemala [http://www.usaid.gov/countries/gt/index2.html].
Panama
The 1977 Panama Canal Treaty terminated on December 31, 1999 and the
United States turned operation of the Panama Canal over to Panama on that date. All
U.S. troops withdrew from Panama and all U.S. military installations reverted to
Panamanian control. Under the terms of the 1977 Treaty on the Permanent Neutrality
and Operation of the Panama Canal, which has no termination date, Panama now has
responsibility for operating and defending the Canal. However, the treaty gives the
United States the right to use military force to reopen the Canal or restore its
operations.
In 1999, some Members of Congress and politicians in Panama suggested that
there was an opportunity for the United States to negotiate the use of facilities in
Panama for U.S. antidrug flights, similar to the Forward Operating Locations (FOLs)
arrangements being made with Ecuador, Aruba, and Curacao. However, in 2000,
Panamanian President Moscoso resisted a request from the United States to allow the
U.S. military to establish a military presence in Panama for antidrug flights, and in
September 2000, she announced that Panama would remain neutral regarding drug
trafficking problems between Colombia and the United States. Other U.S. interests
or concerns in Panama have included a controversy over the extent to which the
United States will clean up three hazardous firing ranges in Panama; and allegations
by some that China could threaten the operation of the Panama Canal because of its
links to a Hong Kong company operating ports at both ends of the Canal. Both the
State and Defense Departments and the Panama Canal Commission have asserted that
the operation of the ports by a Hong Kong company would not constitute a threat to
the Canal.

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For more information, see CRS Issue Brief IB92088, Panama-U.S. Relations
by Mark P. Sullivan and M. Angeles Villarreal.
Caribbean “Third Border Initiative”
At the 2001 Summit of the Americas in Quebec, Canada, President Bush
announced the “Third Border Initiative” for the Caribbean region. According to the
Administration, the initiative aims to deepen U.S. commitment to fighting the spread
of HIV/AIDS, to respond to natural disasters, and to make sure the benefits of
globalization are felt in even the smallest economies, particularly those in the
Caribbean, which can be seen as a “third border” of the United States. U.S.initiatives
include $20 million in HIV/AIDS funding, establishment of a teacher training “Center
for Excellence,” increased funding for Disaster Preparedness and Mitigation,
assistance to improve regional civil aviation oversight, and additional funding for anti-
corruption and anti-money laundering law enforcement efforts.
For information on the United States-Caribbean Trade Partnership Act, see the
section on CBI-NAFTA parity in the CRS Electronic Briefing Book on Trade, by
Vladimir N. Pregelj [http://www.congress.gov/brbk/html/ebtra5.html]. For more
information on the “Third Border Initiative,” see the U.S. Department of State,
Washington File, Fact Sheet: Caribbean “Third Border Initiative” on the State
Department website [http://usinfo.state.gov/regional/ar/summit/factb.htm].
Cuba
Bipartisan majorities in both houses of the 106th Congress supported easing
sanctions against Cuba. The 106th Congress passed legislation allowing the sale of
agricultural and medical products to Cuba as part of the FY2001 Agriculture
Appropriations bill (P.L. 106-387). The bill placed severe constraints on such sales,
however, permanently prohibiting private financing of agricultural exports to Cuba by
U.S. banks or by state and local governments. The bill also codified existing embargo
regulations by prohibiting the import of merchandise from Cuba and travel for tourism
to Cuba.
Several bills are pending in the 107th Congress, including several that would
allow some U.S. financing of medical and agricultural products to Cuba, permit travel
to Cuba, and/or lift the embargo on Cuba. On July 25, 2001, in action on the
Treasury Department Appropriations for FY2002 (H.R. 2590), the House approved
an amendment that would prohibit the Treasury Department from using funds to
enforce restrictions on travel to Cuba, but it rejected another amendment that would
affected the overall economic embargo. On July 16, President Bush extended for 6
months the waiver of Title III of the Helms-Burton law that allows U.S. nationals to
sue for damages persons who traffic in property confiscated in Cuba. The Clinton
administration had waived implementation of the law since its passage in 1996, in
exchange for the European Union dropping a World Trade Organization complaint
against the extraterritorial aspect of the law.

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For further information, see CRS Report RL30806, Cuba: Background and
Current Issues for Congress, and CRS Report RL30628, Cuba: Issues and
Legislation in the 106th Congress, by Mark P. Sullivan and Maureen Taft-Morales.
Haiti
Former President Jean-Bertrand Aristide was inaugurated on February 7, 2001
to a second, non-consecutive term. Aristide and his Fanmi Lavalas party swept
presidential and legislative elections on November 26, 2000. All of the major
opposition parties boycotted the elections, however, citing widespread fraud by
Aristide supporters and the unresolved dispute over May 2000 legislative elections.
Also on February 7, a coalition of 15 political parties, the Convergence
Democratique, formed an alternative government and repeated its call for new
elections.
As President-elect, Aristide negotiated an agreement with the outgoing Clinton
Administration in December 2000. Aristide pledged to make several political, judicial,
and economic reforms, including correcting the problems of the May elections, in
which Aristide supporters were awarded 10 disputed Senate seats. At the Summit of
the Americas on April 22, hemispheric leaders singled out Haiti as a country whose
problems are limiting its democratic and other development, and urged President
Aristide to carry through on his pledges to reform.
The Foreign Operations Appropriations bill for FY2001 (P.L. 106-429), signed
into law November 6, 2000, places several conditions on aid to Haiti. Section 520
prohibits providing assistance to Haiti except through regular notification procedures
to the Committees on Appropriations. Section 558 prohibits aid to the Government
of Haiti until it has held free and fair elections to seat a new parliament and is fully
cooperating with U.S. efforts to interdict illicit drug traffic through Haiti. Section
561 allows the Haitian government to purchase defense articles and services for the
Haitian Coast Guard, subject to regular notification procedures. The Senate
Committee on Appropriations’ report (H.Rept. 106-291) states, “Absent significant
political change, the Committee believes American aid should be suspended, except
for the most urgent humanitarian programs.” In compliance with the above
conditions, USAID currently provides humanitarian assistance only through non-
governmental organizations.
For further information see CRS Issue Brief IB96019, Haiti: Issues for
Congress, by Maureen Taft-Morales.
IV. Andean Region
Andean Regional Initiative (ARI)
President Bush announced in budget submissions and at the 2001 Summit of the
Americas III in Quebec, Canada, the “Andean Regional Initiative” that is extended to
provide $882.29 million in FY2002 economic and counter-narcotics assistance to
Colombia and regional neighbors to deal with drug trafficking and related activities.

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According to the Administration, distinctive features of the initiative, compared
to last year’s Plan Colombia assistance, are that the economic and social programs are
roughly equal to the counter-narcotics programs, and that more than half of the
assistance is directed at regional countries that are experiencing the spill-over effects
of illicit drug and insurgency activities. Assistance is requested for the following
countries:
! Colombia ($399 million), the major producer of cocaine and the central
challenge in dealing with guerrillas, paramilitaries; and drug traffickers;
! Peru ($206 million) and Bolivia ($143 million), where past successes in
reducing cocaine production could be threatened by expected progress in
Colombia;
! Ecuador ($76 million), the most exposed neighbor because of its proximity to
Colombian areas controlled by drug producers and guerrillas; and
! Brazil ($26 million), Venezuela ($21 million), and Panama ($11 million), where
the threat is primarily confined to common border areas with Colombia.
Critics of the Andean Regional Initiative argue that it is a continuation of what
they regard as the misguided approach of last year’s Plan Colombia, with an
overemphasis on military and counter-drug assistance, and with inadequate support
for human rights and the peace process in Colombia. Supporters argue that it
continues needed assistance to Colombia while providing more support for regional
neighbors and social and economic programs.
In action on the FY2002 foreign operations appropriations bill, H.R. 2506, the
House on July 24, reduced ARI funding to $826 million, while the Senate
Appropriations Committee voted on July 26 to reduce ARI funding to $718 million
and to add conditions on the aerial fumigation program. Four related reporting
requirements and a prohibition on the issuance of visas to members of illegal armed
groups in Colombia were included in the Foreign Relations Authorization for
FY2002-FY2003 (H.R. 1646) passed by the House on June 16, 2001.
For additional information, see CRS Report RL31016, Andean Regional
Initiative (ARI): FY2002 Assistance for Colombia and Neighbors, by K. Larry Storrs
and Nina M. Serafino; see also material available under Plan Colombia on the U.S.
Department of State’s International Information Programs Internet site
[http://usinfo.state.gov/regional/ar/colombia/].
Andean Trade Preference Act (ATPA)
For 10 years, the Andean Trade Preference Act (ATPA) has provided
preferential, mostly duty-free, treatment of selected U.S. imports from Bolivia,
Colombia, Ecuador, and Peru. It is scheduled to expire on December 4, 2001.
Enacted in 1991, ATPA was part of a broader Andean initiative to address the
growing drug trade problem in Latin America. ATPA reduces the cost of certain
imports in the United States, improving access to U.S. markets, which in turn is an
incentive for Andean workers (particularly farmers) to pursue economic alternatives
to the drug trade (e.g. growing coca). Because many Andean imports are not eligible
under ATPA, or enter the United States under other preferential trade arrangements,
most studies conclude that ATPA’s effects on trade diversification and reducing drug

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production have been positive, but nonetheless, small. ATPA supporters also argue
that there may be economic development and broader regional political cooperation
(good will) benefits related to ATPA, although they are even less tangible.
ATPA’s reauthorization provides the opportunity to evaluate its efficacy as a
counternarcotics policy tool. On a broad scale, ATPA is part of a larger "alternative
development" strategy, which, given the extraordinary profitability of coca
production, is fighting an uphill battle. Some analysts believe that for ATPA to be
considered successful, there must be some evidence of export diversification into
ATPA-eligible products, which to date is not overwhelming. One option suggested
is to expand the category of eligible products to include apparel, footwear, tuna, and
sugar, among other products. On March 13, 2001, Senator Graham introduced S.
525, the Andean Trade Preference Expansion Act (ATPEA), which would amend the
provisions and extend the trade preferences through October 1, 2005. The bill would
allow for selected apparel products to enter the United States free from duty and
quantitative restrictions, similar to benefits provided eligible countries under NAFTA
and the Caribbean Basin Trade Partnership Act. In addition, there is some interest in
considering adding Venezuela as a beneficiary country, which has not been acted on.
For further reading, see CRS Report RL30790, The Andean Trade Preference
Act: Background and Issues for Reauthorization, by J. F. Hornbeck.
Colombia
U.S. ties to Colombia have broadened extensively with Congress’ approval of
the Clinton Administration’s “Plan Colombia” legislation(P.L. 106-246), which has
stirred a new set of congressional concerns about the future of U.S. policy there. The
Bush Administration has requested some $399 million in FY2002 funding for
Colombia, which will be used to continue to carry out the “Plan Colombia”
programs. These focus on developing and sustaining three Colombian Army
Counternarcotics battalions (CACBs) to assist the Colombian National Police in the
fumigation of illicit narcotics crops and the dismantling of laboratories, beginning with
coca fumigation in the southern provinces of Putumayo and Caquetá.
Last year, Congress approved some $1.3 billion in regular and supplemental
FY2000 and FY2001 appropriations for “Plan Colombia” programs (some of which
will carry into FY2002). Congressional approval came in June 2000, as President
Andres Pastrana was completing the second year of a four-year term, unable to
advance significantly in the peace process he had launched to bring two leftist guerrilla
groups into the political system and grappling with a depressed economy. The
rationale for this “Push Into Southern Colombia” program was to debilitate the
powerful guerrillas by depriving them of the substantial income they derive from
taxing narcotics cultivation, processing, and marketing. The Congress also provided
substantial assistance for economic development, displaced persons, human rights
monitors, and administration of justice and other governance programs.
However, even as Plan Colombia-financed fumigation operations began in
Putumayo in December 2000, debate over the wisdom and prospects of success for
the policy intensified. The European nations that were expected to contribute
substantial amounts for economic development have been reluctant to contribute,

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alleging a U.S. “militarization” of the Pastrana plan. In addition, the Pastrana
government has been unable to come up with the $4 billion that it had expected to
contribute to its Plan Colombia. The missing funds raise another area of concern
because economic opportunities will be unavailable to those whose livelihoods are
being disrupted by coca fumigation, and others who may be attracted to guerrilla or
paramilitary groups because of economic deprivation.
On the human rights front, despite the Pastrana government’s efforts to curb the
rightist “paramilitaries” or “self-defense” groups and the Colombian military leaders
who have directly or indirectly supported them, the paramilitaries have conducted
several massacres since the beginning of 2001. (The largest of them occurred from
April 11-13 in several towns in western Cauca state, where an estimated 40 people
were killed). Finally, some question whether the net result of the U.S. initiative will
be just to push the cultivation of illegal narcotics, along with its attendant labor flows
and criminality, into neighboring countries, thus spreading Colombia’s instability
throughout the region.
For more information, see CRS Report RL30541, Colombia: Plan Colombia
Legislation and Assistance (FY2000-FY2001); and CRS Report RL30330,
Colombia:.Conditions and U.S. Policy Options, by Nina M. Serafino. See material
cited previously under the Andean Regional Initiative for tracking of FY2002
assistance to Colombia..
Peru
Peru was thrust into a major political crisis with the sudden resignation of
President Alberto Fujimori in November 2000, following allegations of electoral fraud
and a series of corruption and human rights scandals involving his top aide. An
interim government was formed according to constitutional rules of succession, and
the President of the Congress, Valentin Paniagua, was officially inaugurated President
on November 22, 2000. The interim government’s mandate was widely seen to be
threefold: (1) to hold free and fair elections in April and June 2001; (2) to begin to
restore the independence of democratic institutions by rooting out widespread
political corruption; and (3) to prevent the economy from sliding into recession.
Opposition leader Alejandro Toledo was inaugurated as President on July 28, 2001,
following the well regarded two-round presidential elections in April and June 2001.
A long-time anti-Fujimori opposition leader, he was elected on June 3, 2001, with
53% of the valid vote, against former left-leaning Peruvian President Alan Garcia with
47% of the vote.
In legislation and committee reports, the 106th Congress expressed concern about
the Clinton Administration’s provision of counter narcotics assistance to Peru’s
intelligence service, which was widely reported to be responsible for a wide array of
human rights violations. Since the fall of the Fujimori government, many observers
have also expressed concern regarding the former head of that intelligence service,
Vladimiro Montesinos, and his relationship to U.S. intelligence agencies and to
counter narcotics operations. Montesinos, was recently captured in Venezuela and
returned to Peru for trial.

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The Bush and Paniagua administration are currently disputing the details of an
accident in which an American missionary plane was shot down in Peru on April 20,
2001. A Central Intelligence Agency surveillance plane had reportedly identified the
plane to Peru’s military as a possible drug flight. The Peruvians subsequently shot
down the plane, killing a missionary woman and her infant daughter. The aerial drug
interdiction program has been suspended and is under review. According to press
reports, the Administration concluded in late July 2001 that sloppy procedures cast
blame on both Peru and the United States in the incident.
Members of Congress have also expressed concern regarding the case of Lori
Berenson, an American serving a life sentence in Peru on charges of treason.
Berenson was convicted in January 1996 by a secret Peruvian military tribunal of
helping plan a thwarted attack against the legislature by a guerrilla group. Many
Members of Congress have appealed to Peru for the release of, or a new, fair trial for
Berenson, who maintains her innocence. A new trial began in late March 2001 and
concluded with a new conviction in mid-June 2001.
For further information, see CRS Report RL30918, Peru: Recovery from Crisis,
and CRS Report RS20536, Peruvian Elections in 2000: Congressional Concerns and
Policy Approaches, by Maureen Taft-Morales.
Venezuela
Venezuela is led by President Hugo Chavez, a former military coup leader and
populist, who was elected in late 1998. He has mounted attacks on the legislature and
other institutions and many fear that he has authoritarian tendencies somewhat like
those of disgraced former President Fujimori in Peru. Chavez has established close
ties with Fidel Castro and other leftist leaders, and he often employs anti-U.S.
rhetoric. He has denounced Plan Colombia as a U.S.-dominated military strategy, and
he has denied the United States overflight rights over Venezuela territory. Reports
persist that he has established friendly relations with Colombian guerrillas.
At the 2001Summit of the Americas in Quebec City, President Chavez reserved
the position of Venezuela in the Declaration of leaders committing to move forward
to achieve an agreement on a Free Trade Area of the Americas (FTAA) by January
2005, and he also expressed alternative views on U.S. policy and Plan Colombia in
the region.
For additional information, see CRS Report RS20978, Venezuela under
Chavez: Political Conditions and U.S. Relations, by Mark P. Sullivan.
V. Brazil and the Southern Cone
Brazil
President Fernando Henrique Cardoso of the center-left Brazilian Social
Democracy Party (PSDB) is in his second and final term, elected twice largely
because of the success of the anti-inflation “Real Plan,” named for the country’s new

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currency, that he developed as Finance Minister. He governs with a coalition of
centrist and center right parties. Although the country experienced a financial crisis
in 1998-1999, and was forced to let the currency float and to negotiate a package of
assistance from the IMF when the value of the real fell dramatically, recovery has
been much more rapid than expected. The government coalition has recently suffered
some dissension as the parties compete for leadership positions in Congress and
prepare for the presidential elections in 2002.
In the foreign policy area, Brazil’s relations with the neighboring countries of
Argentina, Uruguay, and Paraguay, which together with Brazil form the Southern
Common Market (Mercosur), strengthened significantly in the 1990s, although
Brazil’s devaluation of the real and Argentina’s economic difficulties are posing new
challenges to the subregional bloc. Brazil and members of Mercosur have emerged
as the major advocates of a slower approach to achieving an agreement on a Free
Trade Area of Americas ( FTAA). Even so, relations with the United States have also
warmed considerably as demonstrated by President Cardoso’s recent visit to
Washington, D.C. The two countries are cooperating in many areas, despite
continuing trade disputes.
For additional information, see CRS Report RL30121, Brazil under Cardoso:
Politics, Economics, and Relations with the United States, by K. Larry Storrs, and
CRS Report 98-987, Brazil’s Economic Reform and the Global Financial Crisis, by
J.F. Hornbeck.
Argentina
In his meeting with Argentine President Fernando de la Rua on April 19 at the
White House, President Bush pledged to work with Argentina to expand regional
trade and expressed support for the government’s economic stabilization program.
Continuing recent economic problems have raised widespread concerns among
foreign lenders that Argentina may not be able to meet its debt obligations in 2001,
an outcome that could easily lead to financial crisis. In December 2000, Argentina
unveiled a financial package of $39.7 billion from the IMF and other lending
institutions to provide sufficient liquidity to avoid defaulting on its debt and to restore
investor confidence. If the economic situation appears to be leading to a financial
crisis, Congress may consider the possibility of U.S. intervention by providing
financial assistance.
President de la Rua had high public approval ratings in the first few months of
his administration, but increasing doubts over economic recovery, recent corruption
scandals, and unpopular spending cuts affecting government salaries and pension
payments have diminished public confidence in his abilities. Economic difficulties
have led to political problems for the President and have affected the governing
coalition in Argentina. In March 2001, President de la Rúa asked his entire cabinet
to resign in response to continuing economic problems. The newly-appointed
Economy Minister Ricardo Lopez Murphy resigned after only two weeks in office
because of growing opposition to his proposed austerity program which would have
cut $2 billion in government spending.

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The new Economy Minister, Domingo Cavallo, appointed on March 21, has been
more successful in gaining political approval of his economic reform package, which
includes plans to increase tax collection and other measures to reactivate the
economy. Mr. Cavallo has assured the IMF and foreign investors that Argentina
would meet fiscal targets for 2001 and would not need to obtain additional financial
aid. However, on April 23, the government called off a major bond auction after
lenders indicated their concerns about the economy and demanded interest rates of
over 30%. This has raised further concerns that Argentina might default on its debt,
which could lead to financial crisis there and other Latin American countries. In early
June 2001, former President Carlos Menem was arrested for alleged involvement in
a conspiracy to sell arms to Croatia and Ecuador. In mid-June 2001, Economy
Minister Cavallo announced a decision to end the decade-old policy of pegging the
peso to the dollar and to adopt multiple exchange rates to help Argentine exporters,
and at the end of July the Argentine Congress approved a very austere budget..
For more information, see CRS Report RS20781, Argentina: Political and
Economic Conditions and Relations with the United States, by M. Angeles Villarreal.
Chile
President Bush met with Chilean President Ricardo Lagos at the White House
on April 16, 2001. A U.S. State Department official characterized the meeting as
“extraordinarily good,” and said they discussed bilateral relations, trade, and regional
issues. Since 1994, U.S.-Chilean relations have centered on negotiating a free trade
agreement, with the hope initially that Chile would accede to the NAFTA. The
United States and Chile commenced formal negotiations on a bilateral trade
agreement on December 6-7, 2000, in Washington, D.C., despite the fact that the
President still lacks trade promotion (or “fast track”) authority, an issue confronting
the 107th Congress. Negotiations continued in 2001 in Chile, and the next round is
scheduled for May 2001 in Chile. The Bush Administration has indicated that an
agreement is not expected until late this year or early 2002. According to press
reports, Chile wants to model the free trade agreement on the NAFTA. Differences
on how to address labor and environmental issues are expected to be a big stumbling
block. The United States seeks changes in some of Chile’s agricultural policies, while
Chile has an interest in changing U.S. anti-dumping laws.
For background information see CRS Report RL30035, Chile: Political/
Economic Conditions and U.S. Relations, by Mark P. Sullivan. For more information
on U.S.-Chile trade relations, see CRS Issue Brief IB95017, Trade and the Americas,
by Raymond J. Ahearn, and the section on Chile-U.S. Free Trade Agreement in the
CRS Electronic Briefing Book on Trade, which is available online
[http://www.congress.gov/brbk/html/ebtra122.html], by J.F. Hornbeck.

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