Order Code RL33828
Latin America and the Caribbean:
Issues for the 110th Congress
January 23, 2007
Mark P. Sullivan, Coordinator
Specialist in Latin American Affairs
Foreign Affairs, Defense, and Trade Division
Colleen W. Cook, J. F. Hornbeck, Clare M. Ribando,
Maureen Taft-Morales, Connie Veillette, M. Angeles Villarreal
Foreign Affairs, Defense, and Trade Division

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Latin America and the Caribbean:
Issues for the 110th Congress
Summary
Over the past two decades, the Latin America and Caribbean region has made
enormous strides in terms of political and economic development. Twelve countries
held successful elections for head of government in 2006, including a close election
in Mexico, and in 2007, five other countries have elections scheduled. Although the
region overall experienced an economic setback in 2002-2003, it has rebounded since
2004, and most recently experienced an average growth rate over 5% in 2006.
Despite this progress, several nations face considerable challenges that threaten
political stability or pose challenges for U.S. interests and policy in the region. These
include persistent poverty, violent guerrilla conflicts, autocratic leaders, drug
trafficking, increasing crime, and the rise of a new form of populism in several
countries.
In the 110th Congress, legislative and oversight attention to Latin America and
the Caribbean will likely focus on continued counternarcotics efforts, especially in
the Andean region; potential immigration reform and increased border security,
which have been key issues in relations with Mexico; efforts to deal with potential
threats to democracy and the rise of populism in such nations as Venezuela, Bolivia,
and Ecuador; debate over the best means to foster political change in Communist
Cuba; and trade issues, including the potential consideration of implementing
legislation for free trade agreements (FTAs).
Curbing the flow of illicit drugs from Mexico and South America into the
United States has been a key component of U.S. relations with Latin America for
almost two decades. Since 2000, the centerpiece of this policy has been the Andean
Counterdrug Initiative (ACI) aimed at supporting Colombia and its neighbors in
eradicating the production of illicit drugs. From FY2000-FY2006, the United States
provided around $5 billion for the ACI.
In the trade arena, the United States signed FTAs with Colombia and Peru in
2006, and also completed negotiations for an agreement with Panama late in the year.
Implementing legislation for all three countries could be introduced early in the 110th
Congress. Congressional interest also will be drawn to the scheduled expiration of
fast track Trade Promotion Authority (TPA) in July 2007.
The 110th Congress will also likely maintain an oversight interest in potential
terrorist threats in Latin America, as well as efforts to counter the trafficking of
persons in the region, the rise of violent gangs in Central America, and continued
efforts against HIV/AIDS in the Caribbean, where infection rates in some countries
are among the highest outside sub-Saharan Africa.
This report, an overview of U.S. relations with Latin America and the
Caribbean, focuses on the role of Congress and congressional concerns, and will be
updated periodically. For further information, see the CRS products listed after each
topic.

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Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Conditions in the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Regional Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Foreign Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Andean Counterdrug Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Free Trade Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
U.S.-Peru Trade Promotion Agreement . . . . . . . . . . . . . . . . . . . . . . . . 10
U.S.-Colombia Trade Promotion Agreement . . . . . . . . . . . . . . . . . . . 10
U.S.-Panama Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Free Trade Area of the Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Migration Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Terrorism Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
HIV/AIDS in the Caribbean and Central America . . . . . . . . . . . . . . . . . . . . 16
Gangs in Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Afro-Latinos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Trafficking in Persons in Latin America and the Caribbean . . . . . . . . . . . . 19
Country Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Cuba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Dominican Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Haiti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Nicaragua . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
List of Figures
Figure 1. Map of Latin America and the Caribbean . . . . . . . . . . . . . . . . . . . . . . . 5

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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 the
past two decades in political development, with all countries but Cuba having regular
free and fair elections for head of state. Despite this democratic progress, several
nations face considerable challenges that could threaten political stability, including
persistent poverty, violent guerrilla conflicts, autocratic leaders, drug trafficking,
increasing crime, and the rise of radical populism. In some countries, weaknesses
remain in the state’s ability to deliver public services, ensure accountability and
transparency, 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 of
conservative candidate Felipe Calderón over leftist Andrés López Obrador elicited
a dramatic response from López Obrador who protested the electoral outcome.
Presidents were re-elected in four races — Brazil, Colombia, Guyana, and Venezuela
— and in five countries, former heads of government returned to power — Costa
Rica, Haiti, Nicaragua, Peru, and St. Lucia. In 2007, presidential elections are
scheduled in Argentina (October) and Guatemala (November), and in the Caribbean,
parliamentary elections are due in the Bahamas (May), Jamaica (October), and
Trinidad and Tobago (October). (For a listing of recent and forthcoming elections,
see CRS Report 98-684, Latin America and the Caribbean: Fact Sheet on Leaders
and Elections.)
In terms of economic growth, while the Latin America and Caribbean region
overall experienced a gross domestic product decline of 0.6% in 2002 and only a
modest growth rate of 1.5% in 2003, the region rebounded with an estimated average
growth rate of 5.9% in 2004, surpassing even the most optimistic predictions.
1 This report draws from the various CRS reports listed after each topic. General sources
used for this report include major newspapers covering the region, such as the Miami
Herald, New York Times, and Washington Post; country reports from the Economist
Intelligence Unit; articles from various daily, weekly, and monthly publications of
LatinNews.com; congressional hearings and reports; and reports, press releases, and
congressional budget justifications from such agencies as the State Department, the U.S.
Agency for International Development, and the Office of the United States Trade
Representative.

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CRS-2
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 Dominican
Republic, Grenada, Trinidad and Tobago and Venezuela all registering growth rates
over 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 a
growth rate of 5.3% for the region, with Antigua and Barbuda, Argentina, the
Dominican Republic, Trinidad and Tobago, and Venezuela leading the way with
growth rates over 8%.2
The Andean region still faces considerable challenges, including the rise of
populism in several countries. Colombia continues to be threatened by drug
trafficking organizations and by two left-wing guerrilla groups and a rightist
paramilitary group, all of which, combined, have been responsible for thousands of
deaths each year. The election of Bolivian indigenous leader Evo Morales as
President in December 2005 complicated U.S. relations given Morales’ efforts to
decriminalize coca growing. In Ecuador, Rafael Correa, a left-leaning U.S.-trained
economist won the November 2006 presidential elections and has vowed to reform
Ecuador’s political system, renegotiate Ecuador’s foreign debt, and reassert state
control over foreign oil companies operating in the country. Venezuela under
President Hugo Chávez has been plagued by several years of political polarization,
although Chávez’s rule has been solidified since 2004 when he survived a recall
referendum. He won another six-year term decisively in early December 2006, in
large part because windfall oil profits have allowed his government to boost social
spending significantly. In Peru, the presidential electoral victory in June 2006 of
former President Alan García over retired military officer Ollanta Humala, an
admirer of Hugo Chávez, eased U.S. concerns about the future of democracy in the
country and the future of U.S.-Peruvian relations.
In Central America, countries such as El Salvador, Honduras, and Nicaragua
emerged from the turbulent 1980s and 1990s with democratic institutions more
firmly entrenched, yet violent crime is a major problem in all countries. Honduras
and Nicaragua are among the poorest countries in the hemisphere. While Guatemala
has made significant progress in improving the government’s human rights policy,
significant problems remain. In Nicaragua, former President and Sandinista party
leader Daniel Ortega won the November 2006 presidential election. Observers are
uncertain how his government will proceed since his campaign vacillated between
anti-U.S. rhetoric and reassurances that his government would respect private
property, free trade policies, and work toward a cooperative relationship with the
United States.
The diverse Caribbean region, which includes some of the hemisphere’s richest
and poorest nations, also faces significant challenges. The AIDS epidemic in the
region, where infection rates are among the highest outside of sub-Saharan Africa,
has been a major challenge for economic and social development in several countries.
2 U.N. Economic Commission for Latin America and the Caribbean (ECLAC), “Preliminary
Overview of the Economies of Latin America and the Caribbean,” December 2006.

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CRS-3
Caribbean nations remain vulnerable to destruction by hurricanes and tropical storms
as demonstrated in the 2004 and 2005 hurricane season. Haiti — the hemisphere’s
poorest nation — continues to be plagued by political and security problems. For
many observers, the new government of President René Préval marks the beginning
of a new era. Préval’s goals include building governmental institutions and
establishing conditions for foreign investment in order to create jobs. Cuba remains
a hardline communist state with a human rights situation that has deteriorated
significantly since 2003. In July 2006, Cuban leader Fidel Castro’s announcement
that he was temporarily ceding political power to his brother in order to recover from
surgery prompted widespread speculation about the island’s political future 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 include
economic, political and security concerns. Geographic proximity has ensured strong
economic linkages between the United States and the region, with the United States
being the major trading partner and largest source of foreign investment for most
countries in the region. Free trade agreements with Mexico and Canada, Chile, and
Central America and the Dominican Republic have augmented U.S. economic
linkages with the region. The region is also the largest source of migration, both
legal and illegal, with geographic proximity and economic conditions in the region
being major factors in the migration. Curbing the flow of illicit drugs from Mexico
and South America into the United States has been a key component of U.S. relations
with Latin America for almost two decades. Latin American nations, largely
Venezuela and Mexico, supply the United States with just over one-third of its
imported oil, but there have been concerns about the security of the region as an oil
supplier because of Mexico’s declining oil reserves and periodic threats by
Venezuela’s President to cut oil exports to the United States.
In the aftermath of the Cold War, U.S. policy interests in Latin America and the
Caribbean shifted away from security concerns and focused more on strengthened
economic relations, but the September 2001 terrorist attacks in the United States
resulted in security interests re-emerging as a major U.S. interest. As a result,
bilateral and regional cooperation on anti-terrorism efforts have intensified. The
Bush Administration has described the Caribbean region as America’s third border,
with events in the region having a direct impact on the homeland security of the
United States. Cooperation with Mexico on border security and migration issues has
also been a key component of the bilateral relationship.
In general, Administration officials set forth three priorities for the United States
in Latin America and the Caribbean: promoting democracy; advancing free trade; and
advancing poverty alleviation and social justice.3 As noted above, Latin America has
made enormous strides in terms of political and economic development over the past
25 years, with considerable U.S. support, but such conditions as persistent poverty,
especially in Haiti, and the rise of populism in such countries as Venezuela, Bolivia,
3 U.S. Department of State, “Future Engagement and Partnership with Latin America,” R.
Nicholas Burns, Under Secretary for Political Affairs, November 20, 2006.

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and Ecuador will continue to pose challenges for U.S. interests and policy in the
region. Fostering cooperation on such issues as drug trafficking, terrorism, crime,
and poverty reduction will remain key components of U.S. policy in the region.
In the 110th Congress, legislative and oversight attention to Latin America and
the Caribbean will likely focus on: continued counternarcotics efforts, especially in
Mexico and the Andean region; potential immigration reform and increased border
security; efforts to deal with threats to democracy in such nations as Venezuela as
well as the rise of populism in several Latin American countries; debate over the best
means to foster political change in Communist Cuba; trade issues, including the
potential consideration of several free trade agreements with Colombia, Peru, and
Panama; and continued support to Haiti, the hemisphere’s poorest nation. The
Congress will also likely maintain an oversight interest in potential terrorist threats
in Latin America, as well as efforts to counter the trafficking of persons in the region,
the rise of violent gangs in Central America, and continued efforts against HIV/AIDS
in the Caribbean, where infection rates in some countries are among the highest
outside sub-Saharan Africa.

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Figure 1. Map of Latin America and the Caribbean

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CRS-6
Regional Issues
U.S. Foreign Assistance
The United States maintains a variety of foreign assistance programs in Latin
America and the Caribbean, including security assistance, counternarcotics,
economic development, and trade capacity building programs. Aid to the region
increased during the 1960s with the Alliance for Progress and during the 1980s with
aid to Central America. Since 2000, U.S. assistance has focused on counternarcotics
especially in the Andean region. In FY2006, aid levels to Latin America and the
Caribbean comprised about 11.8% of the worldwide bilateral aid budget.
Appropriations for FY2007 have not been finalized, and will likely be
determined in early 2007. Amounts requested for FY2007 would reduce this ratio
to 10.6%, despite concerns expressed by some Members of Congress about
decreasing levels of aid to the region. Current aid levels could increase as more
countries are deemed eligible for Millennium Challenge Account grants. A
restructuring of foreign aid programs, led by the newly created position of Director
of Foreign Assistance at the State Department, got underway in 2006. Its effects on
regional and program allocations will not be known until the FY2008 budget is sent
to Congress in February 2007.
The annual Foreign Operations Appropriations bills have been the vehicles by
which Congress provides funding for, and sets conditions on, foreign assistance
programs. For FY2006, U.S. assistance to Latin America and the Caribbean
amounted to an estimated $1.68 billion, the major portion of which, $919 million,
was allocated to the Andean region, largely through the Andean Counterdrug
Initiative discussed in more detail below. Mexico and Central America received
$292 million, while the Caribbean received $307 million. Brazil and the Southern
Cone of South America received an estimated $36 million. The United States also
maintains programs of a regional nature that totaled an estimated $133 million in
FY2006.
The FY2007 request of $1.6 billion represented the lowest levels of U.S. foreign
assistance to the region in more than four decades, measured in constant dollars. The
FY2007 request was 3% lower than FY2006. The largest proposed decrease
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 Support Funds
included trade assistance for signatory countries of the Dominican Republic-Central
America-United States Free Trade Agreement. The Child Survival and Health
Account would be cut by 9%.
Aid programs are designed to achieve a variety of goals, from poverty reduction
to economic growth. Child Survival and Health (CSH) funds focus on combating
infectious diseases and promoting child and maternal health. Development
Assistance (DA) funds improvements in key areas — such as trade, agriculture,
education, the environment, and democracy — in order to foster sustainable
economic growth. Economic Support Funds (ESF) assist countries of strategic

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CRS-7
importance to the United States and fund programs relating to justice sector reforms,
local governance, anti-corruption, and respect for human rights. P.L. 480 food
assistance is provided to countries facing emergency situations, such as natural
disasters. Counternarcotics programs seek to assist countries to reduce drug
production, to interdict trafficking, and to promote alternative crop development.
Foreign Military Financing (FMF) provides grants to nations for the purchase of U.S.
defense equipment, services, and training.
U.S. support to counter the HIV/AIDS epidemic in the region is provided
through programs administered by several U.S. agencies, although the U.S. Agency
for International Development (USAID) is the lead agency in the international fight
against 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 provides
sizable aid grants to a few low-income nations that have been determined, through
a competitive process, to have the strongest policy reform records and where new
investments are most likely to achieve their intended development results. In 2005,
the Millennium Challenge Corporation (MCC) approved five-year compacts with
Honduras ($215 million) and Nicaragua ($175 million), and in 2006 it approved a
five-year compact with El Salvador ($461 million). Both Guyana and Paraguay have
received threshold assistance from the MCC to help assist the countries become
eligible for an MCC compact. Other Latin American or Caribbean nations could be
eligible to receive assistance in future years.
CRS Products:
CRS Report 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 to
Latin America, by Clare M. Ribando.
CRS Report RL33420, Foreign Operations (House)/State, Foreign Operations, and
Related Programs (Senate): FY2007 Appropriations, by Connie Veillette, Susan
B. Epstein, and Larry Nowels.
CRS Report RL32427, Millennium Challenge Account, by Curt Tarnoff.
CRS Report RL33491, Restructuring Foreign Aid: The Role of the Director of
Foreign Assistance in Transformational Development, by Connie Veillette.

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Andean Counterdrug Initiative
The Andean Counterdrug Initiative (ACI) is the primary U.S. program that
addresses counternarcotics and alternative development in the Andean region of
South America. The ACI supports Plan Colombia, a six-year plan developed by the
Colombian government in 1999 to combat drug trafficking and related guerrilla
activity. The 110th Congress could reconsider the ACI program during the
appropriations process in 2007. Some critics have argued that it has been ineffective
in reducing drug production, while supporters claim that it has helped stabilize
Colombia, a strong U.S. ally.
The ACI program is regional in nature because organizations in countries
bordering Colombia also produce and traffic in narcotics and because it is affected
by other cross-border issues. The ACI began in 2000, when Congress passed
legislation providing $1.3 billion in interdiction and development assistance (P.L.
106-246) for Colombia and six regional neighbors: Bolivia, Peru, Ecuador,
Venezuela, Brazil, and Panama. Funding for ACI from FY2000 through FY2006
totaled 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, to
upgrade aging aircraft. On June 9, 2006, the House passed H.R. 5522, the FY2007
Foreign Operations Appropriations Act, that makes significant changes to the way
foreign aid to Colombia is provided but largely approves the Administration’s request
with regard to funding levels. The Senate Appropriations Committee reported its
version of the Foreign Operations bill on June 29, 2006, which would provide $699.4
million for ACI, a decrease of $22 million. Both the House and Senate bills maintain
reporting requirements from previous appropriations bills. Congress did not
complete the Foreign Operations bill, instead passing three continuing resolutions to
maintain funding into 2007. The budget request for FY2008 will be presented to
Congress in February 2007.

Supporters of U.S. policy argue that assistance to Colombia is necessary to help
a democratic government besieged by drug-supported leftist and rightist armed
groups. Assistance to Colombia’s neighbors, according to supporters, is merited
because of an increasing threat from the spillover of violence and drug production
from Colombia. While some critics agree with this assessment, they argue that U.S.
assistance overemphasizes military and counter-drug assistance and provides
inadequate support for protecting human rights. Critics also assert that U.S.
assistance is disproportionately targeted to eradication of crops and military training
rather than to alternative development projects that could provide alternative
livelihoods for growers who voluntarily give up illicit crops.
For a broader discussion of Colombia beyond the ACI, see section on
“Colombia” below.

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CRS Products:
CRS Report RL33370, Andean Counterdrug Initiative (ACI) and Related Funding
Programs: 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 the
Andes, by Connie Veillette and Caroline Navarette-Frias.
Free Trade Agreements
For many reasons, trade has been one of the most enduring and dynamic issues
in U.S.-Latin American relations, with U.S. trade policy changing with
circumstances and priorities. When Latin American countries faced economic,
social, and political upheaval in the 1970s and 1980s, the United States responded
with unilateral (one-way) trade preferences to assist the region with economic growth
and development. Years later, as economic growth and trade liberalization became
the norm, U.S. trade policy shifted toward an emphasis on free trade agreements
(FTAs), which entail mutual benefits and responsibilities. By implementing the
North American Free Trade Agreement (NAFTA), the U.S.-Chile FTA, and the
Dominican Republic-Central America-United States Free Trade Agreement
(CAFTA-DR) — still not implemented for the Dominican Republic and Costa Rica
— countries effectively gave up trade preferences given them under the Generalized
System of Preferences (GSP) and the Caribbean Basin Initiative (CBI). Currently,
newly negotiated FTAs with the Andean countries present the same tradeoff with
respect to unilateral preferences extended under the Andean Trade Preference Act
(ATPA). In addition, all preferential agreements are set to expire before the close of
the 110th Congress and in as much as some key Members of Congress have raised
concerns about renewing them, there may be some pressure on those Latin American
countries not contemplating an FTA with the United States to reconsider their
options.
U.S. trade policy in the region faces other policy questions. The proposed
hemispheric-wide Free Trade Area of the Americas (FTAA) has stalled over
disagreements between Brazil and the United States, and the Southern Common
Market (Mercado Común del Sur — Mercosur) seems to be expanding its customs
union approach to regional integration as an alternative to the U.S. backed FTAA.
It is in this context, as well as the faltering World Trade Organization negotiations,
that proposed U.S. bilateral FTAs recently concluded with Panama, Peru, and
Colombia may find their way to the 110th Congress. Two other factors may
determine how early Congress considers one or more of these FTAs. First is the
scheduled expiration of the Trade Promotion Authority Act of 2002 on July 1, 2007,
the act which contains expedited legislative procedures — trade promotion authority
(TPA) typically used to consider reciprocal trade agreements’ implementing

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legislation. A second is the possibility of changing the labor provisions in
agreements already negotiated, as called by some Members of Congress.
U.S.-Peru Trade Promotion Agreement. On April 12, 2006, the United
States and Peru signed the U.S.-Peru Trade Promotion Agreement (PTPA). The
PTPA negotiations began in May 2004, when the United States, Colombia, Peru, and
Ecuador participated in the first round of negotiations for a U.S.-Andean free trade
agreement. After talks among the four countries failed, Peru continued negotiations
with the United States and the two countries concluded an agreement in December
2005. On January 6, 2006, President Bush notified the Congress of his intention to
enter into a free trade agreement with Peru. Implementing legislation has not been
introduced. Under TPA, the PTPA would be considered by the Congress on an
expedited basis that is limited in debate and with no amendments. TPA procedures
require the President to submit the draft agreement and implementing legislation to
Congress, but with no time limit to do so. However, as noted above, TPA is
scheduled to expire on July 1, 2007. In Peru, the Peruvian Congress voted 79-14 to
approve the PTPA in June 2006.
The PTPA would likely have a have a small net economic effect on the United
States because of the small size of Peru’s economy in relation to the U.S. economy.
The PTPA’s labor provisions are the most controversial. Supporters of the
agreement argue that Peru has ratified all eight International Labor Organization
(ILO) core labor standards and that the PTPA would reinforce Peru’s labor reform
measures of recent years. Critics would like to see the PTPA include enforceable ILO
labor standards and argue that Peru has failed to comply with U.S. internationally
recognized worker rights and ILO standards. In considering the agreement,
policymakers may look at the labor provisions but may also take into account Peru’s
commitments to labor reforms and alleviating poverty. The United States currently
extends duty-free treatment to selected imports from Peru under the Andean Trade
Preferences Act (ATPA), a regional trade preference program that expires at the end
of June 2007. In 2005, 44% of all U.S. imports from Peru received preferential duty
treatment. In the absence of a PTPA, and if the ATPA is not renewed, Peruvian
goods entering the United States would be subject to higher duties.
The U.S. trade deficit with Peru was $2.82 billion in 2005. The major U.S.
import from Peru is gold, followed by refined copper, and kerosine and other oils,
while the leading U.S. exports to Peru are gasoline, engineering machinery parts, and
office and data processing machinery.
U.S.-Colombia Trade Promotion Agreement. On February 27, 2006, the
United States and Colombia announced the conclusion of a U.S.-Colombia bilateral
free trade agreement. A free trade agreement with Colombia was originally intended
to be part of a broader U.S.-Andean free trade agreement FTA, but after negotiations
failed and the Peru Trade Promotion Agreement was concluded, Colombia continued
negotiations with the United States on a bilateral basis. The two countries finalized
the text of the agreement on July 8, 2006.4 President Bush notified Congress on
4 Brevvi, Rosella, International Trade Daily, “President Notifies Congress of Intent to Sign
(continued...)

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August 24, 2006, of his intention to sign the U.S.-Colombia Trade Promotion
Agreement (CTPA). The CTPA was signed on November 22, 2006. Implementing
legislation has not been introduced. Under TPA, there is no deadline for the President
to submit the final text of the agreement and draft implementing legislation to
Congress after the agreement is signed, but as noted above, TPA authority is
scheduled to expire on July 1, 2007.
If ratified, the CTPA would likely have a have a small net economic effect on
the United States because of the relatively small size of Colombia’s economy in
relation to the U.S. economy. The United States currently extends duty-free
treatment to selected imports from Colombia under the ATPA, a regional trade
preference program that expires at the end of June 2007. In 2005, 51% of all U.S.
imports from Colombia received preferential duty treatment under this program. In
the absence of a CTPA, and if the ATPA is not renewed, many Colombian products
entering the U.S. market may be subject to higher duties.
The U.S. trade deficit with Colombia was $3.43 billion in 2005. The dominant
U.S. import from Colombia is crude oil, followed by coal, and other petroleum oils,
while the leading U.S. export items are corn, vinyl chloride, and office and data
processing machinery parts.
U.S.-Panama Free Trade Agreement. On November 16, 2003, President
Bush formally notified Congress of his intention to negotiate a bilateral FTA with
Panama. Negotiations commenced in April 2004 and after an extended hiatus, the
tenth and final round concluded on December 19, 2006. The negotiations were
delayed by two factors. The first was difficulty in coming to an agreement on
sensitive agriculture issues, particularly sanitary and phytosantiary (SPS) measures.
The second was the Panamanian government’s decision to put off negotiations for
much of 2006 while it focused the nation’s attention on another controversial issue,
the national referendum on the Panama Canal expansion project. The canal
expansion referendum passed on October 22, 2006, and so attention turned again to
completing the FTA negotiations. With the encroaching July 1, 2007 scheduled
expiration of the TPA in mind, negotiators on both sides appeared to move quickly
to find common ground.
Panama is largely a services-based economy, which distinguishes it, and the
trade negotiations with the United States, from those of its Central American
neighbors. The proposed U.S.-Panama FTA is a comprehensive agreement similar
to other bilateral FTAs entered into by the United States. According to a summary
provided by the United States Trade Representative (USTR), 88% of U.S. exports
become duty free right away, with remaining tariffs phased out over a ten-year
period. Approximately half of U.S. farm exports to Panama would achieve duty-free
status immediately, with many products restricted by tariff-rate quotas winning
additional market access, as do Panamanian sugar exports to the United States.
Tariffs on other farm products are phased out over 15-19 years, giving Panama’s
most sensitive sectors time to adjust to free trade. Panama and the United States
4 (...continued)
Colombia FTA,” Aug. 25, 2006.

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signed a detailed bilateral agreement to resolve SPS issues. Panama agreed to
recognized U.S. food safety inspection as equivalent to Panamanian standards, which
will expedite entry of U.S. meat and poultry exports. The FTA also includes
additional provisions for services 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 the final text has
yet to be released.
The U.S. trade surplus with Panama was $1.8 billion in 2005. Major U.S.
exports to Panama include oil and mostly capital- and technology-intensive
manufactured goods such as aircraft, pharmaceuticals, machinery, medical
equipment, and motor vehicles. U.S. imports from Panama include seafood, repaired
goods, gold, sugar, and coffee.
Free Trade Area of the Americas. The proposed FTAA was originally
conceived over 10 years ago as a regional (presumably WTO-plus) trade agreement
that would include 34 nations of the Western Hemisphere. Since then, three drafts
of an incomplete agreement have been released, but the original January 2005 date
for signing it has long since passed. At the center of the delay are deep differences
dividing the United States and Brazil, the co-chairs of the Trade Negotiating
Committee, which is charged with defining the framework under which the FTAA
negotiations can continue. The United States and Brazil agreed at the November
2003 Miami Ministerial to a two-tier approach that would include a set of “common
rights and obligations” to which all countries would agree, augmented by optional
plurilateral arrangements for countries wishing to make deeper reciprocal
commitments. To date, the United States and Brazil have been unable to define how
this two-tier concept would work, and the United States has declined Brazil’s offer
to move ahead with the “4+1” market access talks with the Mercosur (Southern
Common Market) countries (Brazil, Argentina, Uruguay, Paraguay, and as of July 1,
2006, Venezuela).
The breadth of an emerging resistence to the FTAA became clearer at the fourth
Summit of the Americas held on November 4-5, 2005, in Mar del Plata, Argentina.
Amidst dramatic and sometimes violent protests against President George W. Bush
and the FTAA, which was not scheduled as the major topic of this summit, it became
clear that Latin America was divided over how to proceed. A total of 29 countries
supported restarting negotiations, and the United States pushed to set a specific date
in 2006. The Mercosur countries rejected this idea, arguing that the conditions for
a balanced and equitable FTAA did not yet exist. Venezuela lobbied independently
to end any further effort on the FTAA and called for a unified resistence against U.S.
policies and presence in Latin America. On July 4, 2006, Venezuela formally joined
Mercosur as its first new full member since its inception in 1991. Although
Mercosur has resisted the FTAA, Venezuela is the only country in Latin America to
reject the idea unequivocally. With Venezuela’s new-found status as a member of
Mercosur, the United States may find it even more difficult to isolate its unabashedly
negative influence on the FTAA negotiations.
The Summit declaration called for a time to reflect on the problems of the
FTAA process while awaiting the outcome of the WTO Doha Round, particularly
with respect to agricultural issues. Given that the WTO talks have also bogged

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down, it seems unlikely that the FTAA will find the support to move ahead in the
near future, particularly with Venezuela now potentially influencing policy in the
Mercosur group. In the meantime, both Brazil and the United States are meeting on
an informal bilateral basis and continue to court other Latin American countries to
join them in subregional trade pacts, making the future of U.S. trade policy in the
region less certain.
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 Angeles
Villarreal.
CRS Report RS22391, U.S.-Peru Trade Promotion Agreement, by Angeles Villarreal.
CRS Report RL31870, The Dominican Republic-Central America-United States Free
Trade Agreement (CAFTA-DR), by J. F. Hornbeck.
CRS Report RS20864, A Free Trade Area of the Americas: Status of Negotiations and
Major 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 illegal
migration to the United States. The overwhelming majority of Latin American
immigrants come from Mexico, Central America, and the Caribbean. Factors
contributing to Latin American migration to the United States include family ties,
poverty, a shortage of good jobs, and proximity to the United States. Latin American
governments, most notably Mexico under President Vicente Fox, lobbied for
comprehensive immigration reform in the United States and the creation of a guest
worker program that would normalize the status of illegal migrant workers and
facilitate circular migration patterns so that workers return to their countries of origin.
The 109th Congress considered immigration reform, but did not enact any
comprehensive reform measures, and the 110th Congress is likely to consider similar
measures. Latin American nations were disappointed by the failure of immigration
reform in the 109th Congress and the approval of a border fence along 700 miles of
the U.S.-Mexico border. After President Bush signed the Secure Fence Act of 2006
(P.L. 109-367), Mexico, with the support of 27 other nations, denounced the
proposed border fence at the Organization of American States.
Mexico is the largest source of legal migrants to the United States and is also
believed to be the largest source of illegal immigrants. According to the Pew
Hispanic Center, undocumented Mexican migrants accounted for 56% of the

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estimated 11.5 to 12 million illegal immigrants in the United States in 2005.5 In
February 2006, the Mexican Congress approved a concurrent resolution on migration
and border security in which Mexico acknowledges that its workers will continue to
emigrate until there are more opportunities in Mexico. The resolution also accepts
the need to revisit its migration policies to consider enforcement of its northern and
southern borders, enforcement of Mexican immigration laws that respects the human
rights of migrants, and the need to combat human trafficking. Perhaps most relevant,
the Mexican resolution states that the Mexican government does not promote illegal
migration and calls for the development of a guest worker program in the United
States under the principle of shared responsibility. The resolution commits Mexico
to enforcing legal emigration “if a guest country offers a sufficient number of
appropriate visas to cover the biggest possible number of workers and their families,
which, until now cross the border without documents because of the impossibility of
obtaining them.”6
Mexico benefits from illegal migration in at least two ways: (1) it is a “safety
valve” that dissipates the political discontent that could arise from higher
unemployment in Mexico; and (2) it is a source of remittances by workers in the
United States to families in Mexico, estimated to be over $20 billion in 2006.7
President Calderón announced the creation of a new jobs program in January 2007
in an effort to boost Mexican development and decrease migration pressures.
In recent years, several Latin American economies have benefitted from
remittances received from workers in the United States, motivating diplomats to push
for immigration reform that will protect the status of their nationals in the United
States and in other receiving countries. In 2006, migrants sent an estimated $60
billion to their home countries, with Mexico, Colombia, and Brazil receiving the
largest amounts of remittances. The Inter-American Development Bank (IDB)
estimates that remittances from the United States have grown 51% since 2004.
Remittances to El Salvador in 2006 were the equivalent of almost 18% of that
country’s gross domestic product.8
In addition to concerns over immigration reform, El Salvador, Honduras, and
Nicaragua advocate for extensions of their eligibility for temporary protected status
(TPS). TPS is a discretionary, humanitarian benefit granted to eligible nationals after
the Secretary of Homeland Security determines that a country has been affected by
ongoing armed conflict, natural disaster, or other extraordinary conditions that limit
the affected country’s ability to accept the return of its nationals from the United
States. Honduras and Nicaragua were designated for TPS in January 1999 in
response to devastation from Hurricane Mitch. U.S. Citizenship and Immigration
5 Pew Hispanic Center, “The Size and Characteristics of the Unauthorized Migrant
Population in the U.S.,” by Jeffrey Passel, March 7, 2006.
6 “Mexico-U.S.: Migration and Border Security,” Embassy of Mexico, February 2006.
7 “Cenbank: Remittances Hit Record High in Jan.-Nov.,” Business News Americas, Jan. 11,
2007.
8 “Cenbank: Remittances Reach US$3.3 bn in 2006,” Business News Americas, Jan. 22,
2007.

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Services (USCIS) estimates that 75,000 Hondurans and 4,000 Nicaraguans benefit
from TPS. The most recent extension of TPS is due to expire on July 5, 2007. El
Salvador was previously designated for TPS from 1990 to 1992 in accordance with
Section 303 of the Immigration Act of 1990 which established TPS. It was again
designated in March 2001 following a series of earthquakes in January 2001. USCIS
estimates that 225,000 Salvadorans benefit from TPS. The current extension expires
September 9, 2007.
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 Worker
Programs, by Andorra Bruno.
CRS Report RS20844, Temporary Protected Status: Current Immigration Policy and
Issues, by Ruth Ellen Wasem and Karma Ester.
CRS Report RL32235, U.S. Immigration Policy on Permanent Admissions, by Ruth
Ellen Wasem and Karma Ester.
Terrorism Issues
U.S. attention to terrorism in Latin America intensified in the aftermath of the
September 2001 terrorist attacks on New York and Washington, with an increase in
bilateral and regional cooperation. Latin American nations strongly condemned the
attacks, and took action through the Organization of American States (OAS) to
strengthen hemispheric cooperation. OAS members signed an Inter-American
Convention Against Terrorism in 2002. The Senate agreed to the resolution of
advice and consent on the Convention in the 109th Congress and the United States
ratified it in November 2005.
In its April 2006 report on global terrorism, the State Department highlighted
threats in Colombia, Peru, and the tri-border area of Argentina, Brazil, and Paraguay,
but stated that there were no known operational cells of Islamic terrorists in the
hemisphere. Cuba has remained on the State Department’s list of state sponsors of
terrorism since 1982, which triggers a number of economic sanctions. In May 2006,
the Department of State, pursuant to Arms Export Control Act, added Venezuela to
its annual list of countries not cooperating on antiterrorism efforts, which triggered
prohibitions 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 will likely continue to monitor potential terrorist threats in
Latin America and the region’s cooperation with the United States on antiterrorism
efforts, and will consider the Administration’s FY2008 request for Anti-Terrorism
Assistance to the region in Foreign Operations appropriations legislation.

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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 have
negative consequences for economic and social development in several countries, and
continued increases in HIV infection rates threaten future development prospects.
In contrast to other parts of Latin America, the mode of HIV transmission in several
Caribbean and Central American countries has been primarily through heterosexual
contact, making the disease difficult to contain because it affects the general
population. The countries with the highest prevalence or infection rates are Belize,
the Bahamas, Guyana, Haiti, and Trinidad and Tobago, with rates between 2% and
4%; and Barbados, the Dominican Republic, Honduras, Jamaica, and Suriname, with
rates between 1% and 2%.
The response to the AIDS epidemic in the Caribbean and Central America has
involved a mix of support by governments in the region, bilateral donors (such as the
United States, Canada, and European nations), regional and multilateral
organizations, and nongovernmental organizations (NGOs). Many countries in the
region have national HIV/AIDS programs that are supported through these efforts.
U.S. government funding for HIV/AIDS in the Caribbean and Central America
has increased significantly in recent years. Aid to the region rose from $11.2 million
in FY2000 to an estimated $92.7 million in FY2006, in large part because of the
inclusion of Guyana and Haiti as focus countries in the President’s Emergency Plan
for AIDS Relief (PEPFAR). The FY2007 request was for $113 million, with $25
million for Guyana and $63 million for Haiti. Final action on FY2007 Foreign
Operations appropriations was not completed in 2007, so the 110th Congress likely
will face early action on that, as well as consideration of the President’s FY2008
foreign aid budget request. The 109th Congress approved H.R. 1409 (P.L. 109-95),
which authorizes assistance for orphans and other vulnerable children in developing
countries, including in the Caribbean.
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 Malaria
Spending: FY2004-FY2007, by Tiaji Salaam-Blyther.

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Gangs in Central America
The 110th Congress is likely to maintain an oversight interest in the effects of
crime and gang violence in Central America, and its spillover effects on the United
States. Since February 2005, more than 1,274 members of the violent Mara
Salvatrucha (MS-13) gang have been arrested in cities across the United States,
according to the FBI. These arrests have raised concerns about the transnational
activities of Central American gangs. Citizens in several Central American countries
have consistently identified crime and gang violence among the top issues of popular
concern. Governments throughout the region are struggling to find the right
combination of suppressive and preventive policies to effectively deal with the gang
problem as well as more effective ways to solve related issues such as police
corruption, overcrowded prisons, and weak judicial systems. Gang violence may
threaten political stability, inhibit social development, and discourage foreign
investment in Central America.

Many analysts predict that illicit gang activities may accelerate illegal
immigration, 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 United
States. Many experts argue that the repressive anti-gangs laws adopted by El
Salvador and Honduras have failed to reduce violence and homicides in those
countries, and that law enforcement solutions alone will not solve the gang problem.
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-risk
youth — are addressed in a holistic manner, the problem will continue to escalate.
Several U.S. agencies have been actively engaged on both the law enforcement
and preventive side of dealing with Central American gangs. The National Security
Council (NSC) created an inter-agency task force to develop a comprehensive, three-
year strategy to deal with international gang activity. The strategy, which is now
being implemented, states that the U.S. government will pursue coordinated anti-
gang activities through five broad areas: diplomacy, repatriation, law enforcement,
capacity enhancement, and prevention.
In the 109th Congress, legislation was introduced — S. 853 (Lugar) and H.R.
2672 (Harris), the North American Cooperative Security Act — that included
provisions to increase cooperation among U.S., Mexican, and Central American
officials in the tracking of gang activity and in the handling of deported gang
members. Similar provisions were included in both House and Senate versions of
broader immigration legislation, H.R. 4437 (Sensenbrenner) and S. 2611 (Specter),
which were considered but not enacted.
CRS Products:
CRS Report RS22141, Gangs in Central America, by Clare Ribando.

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Afro-Latinos
As in past years, the 110th Congress is likely to maintain an interest in the
situation of Afro-Latinos in Latin America. In recent years, people of African
descent in the Spanish- and Portuguese-speaking nations of Latin America — also
known as “Afro-Latinos” — have been demanding increased rights and
representation. Afro-Latinos comprise some 150 million of the region’s 540 million
total population, and, along with women and indigenous populations, are among the
poorest, most marginalized groups in the region.9 Afro-Latinos have formed groups
that, with the help of international organizations, are seeking political representation,
human rights protection, land rights, and greater social and economic rights and
benefits. Improvement in the status of Afro-Latinos could be difficult and
contentious, however, depending on the 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
programs are funded through USAID, the State Department, the Inter-American
Foundation (IAF), the Peace Corps, and the National Endowment for Democracy
(NED). They include agricultural, micro-credit, health, democracy, and bilingual
education programs. While some foreign aid is specifically targeted towards Afro-
Latinos, most is distributed broadly through programs aimed at helping all
marginalized populations. Some Members may support increasing U.S. assistance
to Afro-Latinos, while others may oppose, particularly given the limited amount of
development assistance available for Latin America.
During the 109th Congress, the House passed H.Con.Res. 175, recognizing the
injustices suffered by African descendants of the transatlantic slave trade in all of the
Americas and recommending that the United States and the international community
work to improve the situation of Afro-Latino communities. S o m e M e m b e r s o f
Congress also expressed specific concerns about the situation of Afro-Colombians
affected by the conflict in Colombia. Legislation was introduced — H.R. 4886
(McGovern) the Colombian Temporary Protected Status Act of 2006 — that would
have made Colombian nationals, 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 other peace-building communities in Colombia and urged the
Secretary of State to monitor acts of violence committed against them. The Senate
Appropriations Committee report to the FY2007 foreign operations appropriations
bill (H.R. 5522; S.Rept. 109-277) would have required the State Department to
certify that the Colombian military is not violating the land and property rights of
Afro-Colombians.
9 Inter-American Development Bank, “The Region: Race Latin America’s Invisible
Challenge,” Washington, DC, January 1997.

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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 a
country and across international borders, is a lucrative criminal activity that is of
major concern to the United States and the international community. Trafficking in
persons affects nearly every country and region in the world. While most trafficking
victims still appear to originate from South and Southeast Asia or the former Soviet
Union, human trafficking is a growing problem in Latin America and the Caribbean.
Countries in Latin America serve as source, transit, and destination countries for
trafficking victims. Latin America is also a primary source for the estimated 14,500
to 17,500 people that are trafficked to the United States each year. According to the
State Department, trafficking is increasingly tied to organized criminal groups who
exploit undocumented migrants, especially in the U.S.- Mexico border region.
Congress has taken a leading role in fighting human trafficking by passing the
Victims of Trafficking and Violence Protection Act of 2000 (P.L. 106-386) and the
Trafficking Victims Protection Reauthorization Act of 2003 (P.L. 108-193). As a
result of that legislation, the State Department and other U.S. agencies provided more
than $94.7 million in anti-trafficking assistance to foreign governments in FY2005
(latest available data).
On June 5, 2006, the State Department released its sixth annual report on human
trafficking, Trafficking in Persons Report (TIP) dividing countries into four groups
according to the efforts they were making to combat trafficking. Tier 3 countries are
those that have not made an adequate effort to combat trafficking and are subject to
sanctions. In the 2006 TIP report, Belize, Cuba, and Venezuela were the only
countries identified as Tier 3 in the region, a significant improvement from 2005 and
2004, but six others — including Brazil and Mexico — were on the Tier 2 Watch
List and could fall into the Tier 3 category by 2007. In September 2006, President
Bush announced that Belize would not be subject to sanctions because its
government had taken significant counter-trafficking actions, but Venezuela and
Cuba would be sanctioned.
During the 109th Congress, the Senate approved the ratification of the United
Nations Protocol to Prevent, Suppress, and Punish Trafficking in Persons. The
United States became a party to the Protocol on December 3, 2005. Congress also
passed the Trafficking Victims Reauthorization Act of 2005 (P.L. 109-164). This
law will provide some $361 million over the next two years to combat trafficking in
persons.
The 110th Congress will likely continue to monitor both U.S. and international
efforts to fight human trafficking, especially in regions such as Latin America, where
it is an emerging problem, and will may address human trafficking as part of its

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authorization, appropriations, and oversight activities. Legislation already has been
introduced, H.R. 270 (Smith), that would authorize funds for anti-trafficking
programs for FY2008 through FY2010. Another legislative initiative, H.R. 1
(Pelosi), Implementing the 9/11 Commission Recommendations Act of 2007,
approved by the House on January 9, 2007, contains provisions that would provide
increased funding and equipment to strengthen the Human Smuggling and
Trafficking Center within the Department of Homeland Security.
CRS Products:
CRS Report RL33200, Trafficking in Persons in Latin America and the Caribbean, by
Clare Ribando.
CRS Report RL30545, Trafficking in Persons: The U.S. and the International
Response, by Francis Miko.
Country Issues
Bolivia
In the past few years, Bolivia has experienced extreme political unrest resulting
in the country having six presidents since 2001. President Evo Morales, an
indigenous leader of the leftist Movement Toward Socialism (MAS) party, was
elected in a convincing first-round victory on December 18, 2005 with 54% of the
votes. He was inaugurated to a five-year term on January 22, 2006. The MAS won
control of the lower chamber of the Bolivian Congress, 12 of 27 seats in the Senate,
and three of the country’s nine governorships.
During his first year in office, President Morales moved to fulfill his campaign
promises to decriminalize coca cultivation, to nationalize the country’s natural gas
industry, and to 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.
Any progress that President Morales has made on advancing these campaign
pledges has been overshadowed in recent months by an escalating domestic crisis
between the MAS government in La Paz and opposition leaders in the country’s
wealthy eastern provinces. In August 2006, many Bolivians hoped that the
constituent assembly elected in July would be able to carry out meaningful
constitutional reforms and effectively respond to the eastern province’s ongoing
demands for regional autonomy. Four months later, the assembly is in shambles and
the eastern provinces have launched large protests against the Morales government
that some observers say could escalate out of control.
For some 20 years, U.S. interest in Bolivia has centered on its role as a coca
producer and 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

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2006 because of the Morales government’s questionable commitment to combating
illegal drugs, its increasing ties with Venezuela and Cuba, and the natural gas
industry nationalization. In September 2006, President Bush again designated
Bolivia as a major drug production country and expressed concerns about the
Morales’ governments counternarcotics efforts. In FY2006, Congress provided an
estimated $116.6 million in foreign assistance to Bolivia, including some $79.2
million in counternarcotics funds. For FY2007, the Administration proposed
spending $99.8 million on Bolivia, including roughly $66 million in counternarcotics
funds. Foreign Operations programs are currently operating under the terms of a
continuing appropriations resolution (H.R. 5631/P.L. 109-289, as amended) which
provides funding at the FY2006 level or the House-passed FY2007 level, whichever
is less. The continuing appropriations resolution expires on February 15, 2007. In
December 2006, Congress voted to extend trade preferences for Bolivia, along with
Colombia, Ecuador, and Peru, under the Andean Trade Preferences and Drug
Eradication Act through June 30, 2007.
The 110th Congress is likely to consider what level of foreign assistance Bolivia
should receive, and whether its existing trade preferences should be extended.
CRS Products:
CRS Report RL32580, Bolivia: Political and Economic Developments and
Implications for U.S. Policy, by Clare Ribando and Connie Veillette.
CRS Report RL33163, Drug Crop Eradication and Alternative Development in the
Andes, by Connie Veillette and Caroline Navarette-Frias.
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. President
Lula defeated Geraldo Alckmin, former governor of the state of São Paulo, of the
Brazilian Social Democratic Party (PSDB), in a run-off presidential election held on
October 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, but
failing to carry the more prosperous southern and western states or São Paulo, the
country’s industrial and financial hub. In the second round, Brazilians, though
divided by class and region, effectively voted in favor of continuing macroeconomic
stability under a second Lula Administration despite the corruption scandals that had
involved Lula’s party, including many of his closest advisers, during the first term.
Despite winning on a leftist platform in 2002, President Lula maintained the
orthodox economic policies associated with his predecessor, even surpassing fiscal
and monetary targets. Inflation and interest rates have been on a downward trend,
and Brazil’s credit rating has improved, but economic growth remains modest (2.3%

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in 2005). In 2003, President Lula gained congressional approval of social security
and tax reforms, and in 2004, a new law to increase private investment in public
infrastructure projects. Despite these achievements, legislative progress stalled in
2005, and President Lula has been criticized for failing to develop effective social
programs to address the perennial problems of land redistribution, social inequality,
and crime.
President Lula has been working to make cabinet appointments and form a
governing coalition capable of pushing his agenda through Brazil’s notoriously
fractured legislature. His immediate task will be to boost Brazil’s economic growth,
which many analysts predict could depend on enacting unpopular structural reforms,
and to address the issues of crime and violence. Some analysts predict that ongoing
investigations of President Lula’s PT party may undermine the strength of his second
term in office.
Relations with the United States have been generally positive, although
President Lula has made relations with neighboring countries in the Southern
Common Market (Mercosul) his first priority, and has sought to strengthen ties with
nontraditional partners, including India and China. Congressional interest in Brazil
is likely to center 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 Brazil under the Generalized System of Preferences (GSP), but
set thresholds that may limit trade preferences for some Brazilian exports compared
to previous years. Interest in Brazil also centers on its role as a stabilizing force in
Latin America, especially with respect to Venezuela and Bolivia. Brazil’s nuclear
enrichment capabilities and its role as an ethanol producer have generated growing
interest in Congress. Brazil is also a key U.S. ally whose cooperation is sought on
issues that include counternarcotics efforts; human rights concerns, such as race
relations and trafficking in persons; the environment, including protection of the
Amazon; and HIV/AIDS prevention.

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.
CRS Report RL33699, Brazil’s Agricultural Production and Exports: Selected Data,
by Logan Rishard Council and Charles Hanrahan.
Colombia
Colombian President Alvaro Uribe was re-elected on May 28, 2006, with 62%
of the vote. Parties loyal to President Uribe also won a majority of both houses of
congress in the March 2006 congressional elections. His second term has thus far
been marred by scandals, including a Supreme Court investigation into the alleged
paramilitary ties of several pro-Uribe congressmen. President Uribe has been a strong

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ally of the United States and a supporter of U.S. counternarcotics efforts in the region
and, through the Andean Counterdrug Initiative, Colombia is the largest U.S. foreign
aid recipient in Latin America. Beyond ACI, congressional interest in Colombia
relates to human rights conditions; trade; the expansion of U.S. assistance for
counterterrorism and infrastructure protection; the health and environmental
consequences of aerial fumigation of drug crops; the progress of alternative
development to replace drug crops; the level of risk to U.S. personnel in Colombia,
including the continued captivity of three American hostages by the Revolutionary
Armed Forces of Colombia (FARC); and the current demobilization talks between
the Colombian government and paramilitaries.
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
United States.10 Illegally armed groups of both the left and right are believed to
participate in the drug trade. In March 2006, the United States indicted fifty
commanders of the FARC for drug trafficking. The United States has also requested
the extradition of 23 paramilitary leaders on drug trafficking charges. In 2004,
Congress raised the cap on military personnel allowed to be deployed in Colombia
in support of Plan Colombia from 400 to 800 for military personnel and from 400 to
600 for civilian contractors (FY2005 Ronald W. Reagan National Defense
Authorization Act, P.L. 108-375). Since FY2002, Congress has authorized support
for a unified campaign against narcotics trafficking and activities of organizations
designated as terrorist organizations by the Department of State.
On July 15, 2003, the Uribe Administration announced an agreement with
leaders of the paramilitary United Self-Defense Forces of Colombia (AUC) that led
to the demobilization of nearly 31,000 paramilitaries as of July 2006. An estimated
2,000 paramilitaries remain outside of the disarmament process, and there are
credible reports that paramilitary groups are re-organizing in several regions of
Colombia.11 The demobilization process has been controversial. Critics maintain
that there is no mechanism to ensure that demobilizing leaders fully disclose their
crimes in exchange for reduced sentence and likely protection from extradition to the
United States. Critics also are concerned that the demobilization process does not
address the criminal enterprises, such as narcotics trafficking, that financed the
AUC’s political operations and that the paramilitaries are re-organizing, not
demobilizing. 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 of
restitution to their victims.
The issue of drug trafficking is exacerbated by humanitarian conditions resulting
from more than 40 years of civil conflict. Colombia has the second largest population
of internally displaced persons (IDPs) in the world, behind Sudan. The U.S.
Committee for Refugees and the Colombian government report that there are 3
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 to
the Permanent Council on the Mission to Support the Peace Process in Colombia
(MAPP/OEA), August 30, 2006.

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million IDPs in Colombia, with an estimated 160,000 to 250,000 newly displaced in
2005. There are also nearly 258,000 Colombian refugees and asylum seekers outside
of Colombia. U.S. efforts to resettle Colombian refugees, begun in 2002, have been
limited due to provisions of the REAL ID Act of 2005 (included in P.L. 109-13),
which bars admission to the United States of persons who have provided material
support to terrorist groups. One hundred and fifteen Colombian refugees were
admitted into the United States in FY2006. In 2005, the United Nations High
Commissioner for Refugees (UNHCR) stopped referring Colombians for
resettlement to the United States because of this issue. (Also see sections above on
“Andean Counterdrug Initiative” and “U.S.-Colombia Trade Promotion
Agreement.”)
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 Funding
Programs: FY2007 Assistance, by Connie Veillette.
CRS Report RL33163, Drug Crop Eradication and Alternative Development in the
Andes, by Connie Veillette and Caroline Navarette-Frias.
CRS Report RS22419, U.S.-Colombia Trade Promotion Agreement, by Angeles
Villarreal.
Cuba
Since the early 1960s, U.S. policy toward Cuba under Fidel Castro has consisted
largely of isolating the communist nation through comprehensive economic
sanctions, which have been significantly tightened by the Bush Administration,
including restrictions on travel, private humanitarian assistance, and payment terms
for U.S. agricultural export to Cuba. A second component of U.S. policy has
consisted of support measures for the Cuban people, including private humanitarian
donations 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 the
world’s last remaining Communist nations. Unlike past years, however, Congress
will be examining policy toward Cuba in the context of Fidel Castro’s temporary, and
potentially permanent, departure from the political scene because of health
conditions, which could foster a re-examination of U.S. policy. While there has been
broad agreement in Congress on the overall objective of U.S. policy toward Cuba —
to help bring democracy and respect for human rights to the island — there have been
several schools of thought on how best to achieve that objective. Some advocate
maximum pressure on the Cuban government until reforms are enacted, while others
argue for lifting some U.S. sanctions that they believe are hurting the Cuban people,

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or as part of a strategy of lifting sanctions incrementally in response to positive
changes in Cuba. Still others call for a swift normalization of U.S.-Cuban relations.
Over the past several years, Congress has continued its high level of interest in
Cuba with a variety of legislative initiatives regarding sanctions and human rights.
While one or both houses have at times approved legislative provisions that would
ease U.S. sanctions on Cuba, ultimately these provisions have been stripped out of
the final enacted measures. President Bush has regularly threatened to veto various
appropriations bills if they contained provisions weakening the embargo.
In the 109th Congress, legislative action on several FY2007 appropriations
measures was not completed, so some action will need to be taken in early 2007.
House-passed H.R. 5522 would have funded FY2007 democracy projects, and House
and Senate versions of the bill had contrasting provisions on anti-drug cooperation.
House-passed H.R. 5576 would have prohibited funds from being used to implement
tightened restrictions on financing for agricultural exports to Cuba. The Senate
version of H.R. 5384 would have liberalized travel related to the sale of agricultural
and medical goods to Cuba. The House-passed version of H.R. 55672 and the Senate-
reported version of H.R. 5672 would have funded Cuba broadcasting.

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, by
Mark P. Sullivan.
CRS Report RL33622, Cuba after Fidel Castro: U.S. Policy Implications and
Approaches, 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. Economic
Sanctions: Status and Implementation, by Remy Jurenas.
Dominican Republic
President Leonel Fernández of the Dominican Liberation Party (PLD), who
served as President previously (1996-2000), took office on August 16, 2004.
President Fernández has entered the second half of his four-year term in a relatively
strong position. He has presided over a period of rapid economic growth (an
estimated 10% in 2006), enjoys continued popular support, and now has a majority
in both legislative chambers. He has restored confidence in the Dominican economy
and enacted some fiscal reforms recommended by the International Monetary Fund

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since signing a $665 million standby agreement with the Fund in February 2005. In
addition, President Fernández launched an anti-crime initiative in 2005 that has been
relatively successful. Analysts predict that Fernández has a good chance of being re-
elected in May 2008 if he is able to address the country’s ongoing problems with
corruption and electricity shortages. President Fernández seeks to maintain close ties
with the United States and to improve relations with neighboring Haiti. His
government has been criticized, however, for mistreating Haitians and Dominico-
Haitians. The Dominican government has yet to comply with a 2005 ruling against
it by the Inter-American Court of Human Rights, which mandated the provision of
identity documents to Dominicans of Haitian descent.
On September 6, 2005, the Dominican Republic approved the CAFTA-DR. The
country was scheduled to implement the agreement on July 1, 2006, but that date was
postponed. In late 2006, the Dominican Congress approved a package of laws that
bring the country into compliance with the CAFTA-DR, but it is still finalizing new
tax measures needed to compensate for the loss of tariff revenue (an estimated $750
million) that is expected to result from CAFTA-DR. The Dominican Republic is
expected to implement the CAFTA-DR in early 2007.
Congressional interest in the Dominican Republic in the 110th Congress is likely
to center on trade, counter-narcotics, regional security, migration, and human rights
matters. For FY2006, the United States allocated an estimated $27 million to the
Dominican Republic. The Administration requested an estimated $35 million for
FY2007, but Congress has not yet completed action on the FY2007 Foreign
Operations spending measure.
CRS Products:
CRS Report RS21718, Dominican Republic: Political and Economic Conditions and
U.S. Relations, by Clare Ribando.
CRS Report RL31870, The Dominican Republic-Central America-United States Free
Trade Agreement (CAFTA-DR), by J. F. Hornbeck.
Ecuador
On January 15, 2007, Rafael Correa, a left-leaning, U.S.-trained economist, was
inaugurated to a four-year term as President of Ecuador. Correa defeated Alvaro
Noboa, 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 the
vote as compared to Noboa’s 43%. Correa has vowed to dramatically reform
Ecuador, a country whose economy is currently expanding because of high oil prices,
but whose political institutions are extremely fragile. He has promised to call a
constituent assembly with power to reform the country’s constitution and dissolve its
legislature, to renegotiate Ecuador’s international debt, and to reassert state control
over foreign oil companies operating in the country. These proposals, though popular
among many Ecuadorians, have prompted serious concerns among foreign investors.
Many analysts predict that Correa will have a difficult time enacting his agenda given

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that his party lacks representation in the legislature, a notoriously fractured institution
that is now dominated by Noboa’s party.
Ecuador has traditionally had close relations with the United States, although
recent trade disputes have strained bilateral relations. Ecuador continues to work
with the United States on counternarcotics matters, but negotiations for a bilateral
free trade agreement were suspended indefinitely in May 2006 following Ecuador’s
decision to expel a U.S. oil company, Occidental, from the country without
compensation for an alleged breach of contract. U.S. officials congratulated Correa
on his recent victory and pledged to cooperate with his government, but have also
expressed concerns about his ties with Hugo Chávez of Venezuela and his stated
policies regarding trade, energy, and counternarcotics matters.
Several key issues could complicate U.S.-Ecuadorian relations early in the 110th
Congress. For example, Correa opposes completing negotiations of a free trade
agreement with the United States, and is not willing to restart negotiations as a
condition to continue receiving U.S. trade preferences under the Andean Trade
Preferences and Drug Eradication Act (ATPDEA), which are due to expire on June
30, 2007. President-elect Correa has recently confirmed that his government will not
renew the lease on the U.S. air base at Manta, which is currently used for U.S. aerial
counter-drug detection and monitoring operations, when it expires in 2009. He has
expressed reservations about any Ecuadorian involvement in Plan Colombia and
publicly opposed the Colombian army’s incursions into Ecuadorian territory and the
Colombian government’s recent resumption of aerial fumigation along the Ecuador-
Colombian border. Some observers have urged both Congress and Administration
officials not to antagonize Correa, but to use pragmatic, low-profile means to urge
him to maintain open-market and democratic policies. Others fear that Correa may
attempt to implement some of the same type of populist and anti-democratic
measures that Chávez has undertaken in Venezuela.
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. Angeles
Villarreal.
Haiti
The main issue for U.S. policy regarding Haiti during the 110th Congress will
be how to continue to improve security, promote economic development, and
strengthen fragile democratic processes now that an elected government is in place.
Haiti’s priorities are many, and deeply intertwined; the Haitian government and the
international donor community are implementing an interim assistance strategy that
addresses its many needs simultaneously. The current challenge is to accomplish
short-term projects that will boost public and investor confidence, while at the same
time pursuing long-term development plans that will improve living conditions for

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Haiti’s vast poor population and construct government institutions capable of
providing services and stability. The Haitian government is working with
international donors, including the United States, to develop a long-term poverty
reduction plan. Donors are also looking at how to ensure transparency as they begin
providing funds directly to the government rather than through non-governmental
organizations.
On December 9, 2006, the 109th Congress passed a special trade preferences bill
for Haiti (the Haitian Hemispheric Opportunity through Partnership
Encouragement/HOPE Act of 2006, Title V, P.L.109-432). Supporters said the bill
could generate 40,000 jobs in Haiti. Some U.S. textile interests opposed the bill
because it would provide preferences to some garments with components originating
in China and other parts of Asia. The incoming Senate Finance Committee Chairman
reportedly promised to hold a hearing in the 110th Congress, so that textile industry
representatives may testify on the impact they say the bill will have (National
Journal, December 11, 2006). The HOPE legislation was presented as a
compromise; it had more restrictive country of origin rules for apparel components
than the Haiti Economic Recovery Opportunity Act (HERO, H.R. 4211/S. 1937) that
had been reintroduced for consideration in the fall of 2005.
The 110th Congress will likely consider the levels of support to provide for
security enhancing measures in Haiti such as the UN Stabilization Mission in Haiti
(MINUSTAH)’s disarmament, demobilization, and reintegration program, the
Haitian government’s Social Reconciliation Plan, and police and judicial reform.
The Administration partially lifted the 15-year-old arms embargo against Haiti to
allow arms and equipment to Haitian security units. Some Members have expressed
concern about doing so before the Haitian police force has been adequately vetted for
those accused of human rights violations or other crimes. An Administration goal
of limiting illegal immigration has been challenged by some Members as not
affording adequate protection for Haitian asylum-seekers. The Bush Administration
requested $198 million for Haiti for FY2007. Child survival and health, development
assistance, and counternarcotics assistance funds would be decreased. HIV/AIDS
funding would be increased as part of the President’s Emergency Plan for AIDS
Relief .
President René Préval, who was inaugurated on May 14, 2006, to a five-year
term, has asked for U.S. support for public works projects. Préval said he would
cooperate fully with counter narcotics efforts, though he recently criticized U.S. anti-
drug efforts as inadequate. He outlined his government’s two main missions to be
building institutions as provided for in the constitution — including the new
municipal posts elected on December 3, 2006 — and creating conditions for private
investment in order to create jobs. His initial focus has been on improving security,
although crime and kidnaping have increased in recent months.

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CRS Products:
CRS Report RL32294, Haiti: Developments and U.S. Policy Since 1991 and Current
Congressional Concerns, by Maureen Taft-Morales.
CRS Report RL33156, Haiti: International Assistance Strategy for the Interim
Government and Congressional Concerns, by Maureen Taft-Morales.
CRS Report RS21349, U.S. Immigration Policy on Haitian Migrants, by Ruth Ellen
Wasem.
CRS Report RS21839, Haitian Textile Industry: Impact of Proposed Trade
Assistance, by Bernard A. Gelb.
Mexico
Immigration and border security matters are likely to dominate congressional
interest in Mexico in 2007. The 109th Congress considered immigration reform, but
did not enact any comprehensive reform measures. In September 2006, Congress
approved the Secure Fence Act of 2006 (P.L. 109-367) to authorize the construction
of a border fence and other barriers along 700 miles of the U.S.-Mexico border as
well as $1.2 billion in initial funding for fence construction through the FY2007
Department of Homeland Security Appropriations Act. In the 109th Congress, both
the House and Senate approved immigration reform measures (H.R. 4437 and S.
2611, respectively), but were not able to resolve key differences in the bills.
Principal sticking points included the House provision that would criminalize
unlawful presence and Senate provisions to adjust the status of certain illegal
immigrants. President Bush continues to express support for comprehensive
immigration reform including increased border security, a guest worker program, and
the normalization of status of some of the estimated 12 million illegal immigrants.
Mexican President Felipe Calderón, like his predecessor President Vicente Fox, is
critical of the border fence, and has charged that economic development would be a
more effective means to reducing illegal Mexican migration to the United States. In
2005, there were an estimated 6.2 million undocumented Mexican migrants residing
in the United States.
Drug cartel violence in northern Mexico and Michoacán is also likely to be of
concern to the 110th Congress. President Calderón has stated that cartel violence
threatens the Mexican state. He launched anti-cartel efforts in the border city of
Tijuana and in the western state of Michoacán shortly after taking office. Both
efforts involve the Mexican army, navy, and federal police officers. U.S. Attorney
General Alberto Gonzales has praised the efforts. Others are critical, stating that the
initiatives are more show than substance and are unlikely to effectively weaken
Mexico’s drug cartels. The pace of extraditions from Mexico to the United States
continued to increase rapidly in 2006 with a record 63 extraditions, including accused
drug kingpin Francisco Rafael Arellano Felix of the Tijuana cartel. President
Calderón has indicated that he will use extradition as a major tool in combating drug
traffickers. Extradition had been a source of tension in U.S.-Mexico relations, with

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Mexico refusing to extradite criminals facing life sentences without the possibility
of parole due to a 2001 Mexican Supreme Court ruling that found that such sentences
amounted to cruel and unusual punishment. In November 2005, in a partial reversal
of its October 2001 ruling, the Court found that life imprisonment without possibility
of parole does not amount to cruel and unusual punishment. As a result of this
decision, criminals facing life imprisonment 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 and
the United States. The three countries are currently seeking to maintain
competitiveness with other regions through the Security and Prosperity Partnership
of North America (SPP). Resolution of trade disputes will continue to be a concern.
An ongoing dispute involves granting Mexican trucks access to U.S. highways.
Another long running dispute related to sugar and high-fructose corn syrup imports
was recently resolved and Mexico has agreed to repeal 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 Worker
Programs, 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, and
Implications, by M. Angeles Villarreal.
Nicaragua
Sandinista leader and former President Daniel Ortega was inaugurated President
on January 10, 2007. Ortega’s previous presidency, from 1985-1991, was marked by
a civil war with U.S.-backed “contras,” authoritarian tendencies, and charges of
corruption. Ortega, who lost the last three presidential elections, won only 37.9% of
the vote. But Nicaraguan law allowed him to avoid a run-off vote because he was
9.6% ahead of the next closest candidate, Eduardo Montealegre of the Nicaraguan
Liberal Alliance (ALN). What the Ortega government’s positions will be is unclear,
as he did not provide specific policy plans during the campaign and continues to
vacillate between anti-U.S. rhetoric and pragmatic reassurances that his second
administration will respect private property and pursue free-trade policies. Reported
conversations between Ortega and U.S. officials, including President Bush, indicate
both sides are seeking a cooperative relationship, however. Ortega’s cabinet

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appointments include both Sandinista loyalists and supporters of a free market
economy.
The 90-member National Assembly was also elected in the November
elections. No party won an outright majority. The Sandinista National Liberation
Front (FSLN) has 38 seats, the Constitutional Liberal Party (PLC) 25, the ALN 22,
and the Sandinista Renewal Movement (MRS) 5. Montealegre, who gained 28.3%
of the vote, is a Harvard-educated banker and former finance minister who split from
the conservative Liberal party dominated by Aleman, and advocated continued
political reform. He was regarded by many as the U.S.-favored candidate. He will
have a seat in the legislature. The previous legislature, in which Ortega was
opposition leader of the FSLN, passed and then postponed the implementation of
constitutional amendments at the root of political tensions towards the end of former
President Enrique Bolaños’ term (2002-2007). These amendments will transfer
significant executive powers to the legislature in February 2007, unless Ortega’s
newly elected government seeks to change them.
U.S. concerns include development and trade. Nicaragua is the second poorest
nation in the hemisphere, rating only above Haiti. Nicaragua’s poverty is widespread
and acute. More than two-thirds of the rural population live in poverty. Some social
indicators have shown little or no improvement since 1993. In 2005, the Bush
Administration signed a five-year, $175 million agreement with Nicaragua under the
Millennium Challenge Account to promote rural development. The National
Assembly approved the U.S.-Dominican Republic-Central America Free Trade
Agreement (CAFTA-DR) in October 2005 and passed related intellectual property
and other reforms in March 2006. It went into effect on April 1, 2006. CAFTA-DR
supporters say the agreement will promote economic growth, create jobs, and
increase exports to the United States. Ortega has not yet stated the policies his
government proposes to achieve his stated goal of ending poverty.
Resolution of property claims by U.S. citizens and immigration are contentious
areas in U.S.-Nicaraguan relations. Nicaragua passed a law, scheduled to go into
effect in 2007, creating a new Property Institute that could lead to the dismissal of
property claim lawsuits arising from expropriations carried out by the Sandinista
government in the 1980s. Nicaragua joined Mexico and other Central American
countries in criticizing U.S. efforts to increase border enforcement and in demanding
guest-worker programs. In February 2006, the Department of Homeland Security
extended Temporary Protected Status (TPS) for about 4,000 eligible Nicaraguans
living in the United States until July 5, 2007. Other issues of concern to Congress
include improving respect for human rights, improving civilian control over defense
policy, increasing Nicaragua’s capacity to combat transnational crimes such as
trafficking in people and narcotics, reforming the judicial system and implementing
good governance.

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CRS Products:
CRS Report RL32322, Central America and the Dominican Republic in the Context of
the Free Trade Agreement (DR-CAFTA) with the United States, coordinated by
K. Larry Storrs.
Panama
With four successive elected civilian governments, the Central American nation
of Panama has made notable political and economic progress since the 1989 U.S.
military intervention that ousted the regime of General Manuel Noriega from power.
The current President, Martín Torrijos of the Democratic Revolutionary Party (PRD),
was elected in May 2004 and inaugurated to a four-year term on September 1, 2004.
Torrijos, the son of former populist leader General Omar Torrijos, won a decisive
electoral victory with almost 48% of the vote in a four-man race. He succeeded
President Mireya Moscoso of the Arnulfist Party (PA), elected in 1999, whose
administration was tainted by several high-profile corruption scandals. Torrijos’
electoral alliance also won a majority of seats in the unicameral Legislative
Assembly.
The most significant challenges facing the Torrijos government have included
dealing with the funding deficits of the country’s social security fund; developing
plans for the expansion of the Panama Canal; and combating unemployment and
poverty. After protests and a protracted strike by construction workers, doctors, and
teachers in 2005, the Torrijos government was forced to modify its plans for
reforming the social security fund. In April 2006, the government unveiled its
ambitious plans to build a third lane and new set of locks that will double the Canal’s
capacity. In an October 2006 referendum on the issue, 78% of voters supported the
expansion project.
The United States has close relations with Panama, stemming in large part from
the extensive linkages developed when the Panama Canal was under U.S. control and
Panama hosted major U.S. military installations. The current bilateral relationship is
characterized by extensive cooperation on counternarcotics efforts, assistance to help
Panama assure the security of the Canal and its border with Colombia, and beginning
in April 2004, negotiations for a bilateral free trade agreement. The United States
provided Panama with $19 million in foreign aid in FY2005, and an estimated $14.4
million in FY2006. The FY2007 request was for $17.4 million, with $4 million under
the Andean Counterdrug Initiative and $3.2 million in development assistance.
After 10 rounds of negotiations, the United States and Panama announced the
conclusion of a free trade agreement on December 19, 2006. U.S. Trade
Representative Susan Schwab stated, however, that the agreement is subject to
additional discussions on labor, and that the Administration would work with both
sides of the aisle in Congress to ensure strong bipartisan support before submitting
it to the 110th Congress. Panama has sought an FTA as a means of increasing U.S.
investment in the country, while the Bush Administration has stressed that an FTA,

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in addition to enhancing trade, would further U.S. efforts to strengthen support for
democracy and the rule of law. (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
Since taking office on July 28, 2006, President Alan Garcia has embraced a free
trade agreement with the United States, appointed a fiscal conservative as finance
minister, and taken other steps to assure the international financial community that
he is running the country as a moderate rather than as the leftist he had been in his
early career. Garcia’s earlier presidency (1985-1990), characterized by many
observers as disastrous, was marked by hyper-inflation and a violent guerrilla
insurgency. He also sought to reassure poor citizens that he is addressing their needs
by pledging austerity measures such as halving the Government Palace’s annual
spending and redirecting the funds to a rural irrigation project. Garcia has indicated
he will continue the pro-market economic policies of his predecessor, President
Alejandro Toledo, who presided over one of the highest economic growth rates in
Latin America throughout his term, with 6.7% growth in 2006. But Garcia says he
will also find ways to use trade to reduce the level of poverty in Peru — over half the
population lives below the poverty line — and widen the distribution of economic
growth. Poverty is concentrated in rural and jungle areas, and among the indigenous
population. Garcia’s initially high level of public support has begun to drop,
however, as reflected in the poor showing of his APRA party in municipal and
regional elections held on November 19, 2006.
The former President was elected again on June 4, 2006, defeating populist
Ollanta Humala 53% to 47%. A retired army officer who led an uprising against
then-President Alberto Fujimori, Humala espoused nationalist, anti-globalization
policies. Many observers were concerned that Humala had authoritarian tendencies.
Now the opposition leader, Humala was charged in August 2006 with murder in
connection to his military actions in the 1990s.
The Chilean government arrested former President Fujimori (1990-2000) in
November 2005, released him on bail in May 2006, and is processing Peru’s request
for his extradition on over 20 charges of corruption and human rights violations.
Fujimori’s alliance won 15 seats in the legislature and is expected to press for his
exoneration. Fujimori is barred from holding office until 2010. In December 2006,
Peru’s prosecutor’s office criticized Fujimori’s delaying tactics and said it expected
the Chilean courts to make an initial ruling on extradition in April 2007.

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Issues in U.S.-Peruvian relations include trade, drugs, security, and democracy.
The United States completed negotiations for a U.S.-Peru Trade Promotion
Agreement (PTPA) in December 2005; an agreement was signed in April 2006,
which the Peruvian legislature ratified in June. Some Members of the U.S. Congress
have expressed concern over unresolved trade disputes with Peru and whether the
PTPA’s labor standards should be revised to better comply with International Labor
Organization standards. In December 2006, Congress passed an extension of the
Andean Trade Promotion and Drug Eradication Act (P.L.109-432) for six months,
with a further six-month extension possible if a country enters into a free trade
agreement with the United States. While implementing legislation has not been
introduced, President Bush pledged to push for the PTPA’s passage when he met
with President Garcia at the White House in October 2006.
Peru is a major illicit drug-producing and transit country. Garcia’s
Administration has already begun a dialogue with coca growers on drug policy and
told the Bush Administration that Peru would extradite convicted drug traffickers to
the United States. The Administration requested $98.5 million in FY2007 Andean
Counterdrug Initiative funds for Peru, less than one-fourth of the funding Colombia
receives. Congress has yet to complete deliberations on FY2007 spending measures.
Democracy and human rights initiatives include the provision of $50 million over
five years, ending in 2007, to support consolidating democratic reform.
CRS Products:
CRS Report RS22430, Peru: 2006 Elections and Issues for Congress, by Maureen
Taft-Morales.
CRS Report RS22391, U.S.-Peru Trade Promotion Agreement, by M. Angeles
Villarreal.
CRS Report RS22548, ATPA Renewal: Background and Issues for Congress, by M.
Angeles Villarreal.
CRS Report RL33370, Andean Counterdrug Initiative (ACI) and Related Funding
Programs: FY2007 Assistance, by Connie Veillette.
Venezuela
Under the populist rule of President Hugo Chávez, first elected in 1998 and
most recently re-elected to a six-year term in December 2006, Venezuela has
undergone enormous political changes, with a new constitution, a new unicameral
legislature, and even a new name for the country, the Bolivarian Republic of
Venezuela. U.S. officials and human rights organizations have expressed concerns
about the deterioration of democratic institutions and threats to freedom of
expression under President Chávez, who has survived several attempts to oust him
from power. The government has benefitted from the rise in world oil prices, which
has sparked an economic boom. As a result, Chávez has been able to increase

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expenditures on anti-poverty and other social programs associated with his populist
agenda. In the country’s December 3, 2006 presidential elections, President Chávez
defeated opposition candidate Manuel Rosales 63% to 37% in a process that, despite
various problems, was judged by international observers to be satisfactory. Since he
was re-elected, President Chávez has announced new measures to move the country
toward socialism.
The United States traditionally has had close relations with Venezuela, the
fourth major supplier of foreign oil to the United States, but there has been friction
in relations with the Chávez government. U.S. officials have expressed concerns
about President Chávez’s plans for military arms purchases, his relations with such
countries as Cuba and Iran, and his efforts to export his brand of populism to other
Latin American countries. A dilemma for U.S. policymakers has been how to press
the Chávez government to adhere to democratic principles without taking sides in
Venezuela’s polarized political environment. Declining cooperation on anti-drug and
anti-terrorism efforts has also been a U.S. concern. In 2005 and 2006, President
Bush designated Venezuela as a country that has failed demonstrably to adhere to its
obligations under international narcotics agreements, and in May 2006, the
Department of State prohibited the sale of defense articles and services to Venezuela
because of its lack of cooperation on anti-terrorism efforts.
In the 109th Congress, the FY2006 Foreign Operations appropriations measure
(P.L. 109-102) provided $2 million in Democracy Funds for Venezuela, and $2.2
million in assistance under the Andean Counterdrug Initiative. For FY2007, the
Administration requested $1 million in ACI funding, $1.5 million in ESF for
democracy initiatives, and $45,000 for International Military Education and Training.
The House-passed FY2007 Foreign Operations appropriation bill, H.R. 5522, would
have provided no ACI funding for Venezuela, while the Senate Appropriations
Committee report to the bill (S.Rept. 109-277) recommended full funding of the
Administration’s ACI and ESF requests. Final action on FY2007 foreign aid
appropriations was not completed by the end of the year, leaving the 110th Congress
to complete action in 2007.
As over the past several years, the 110th Congress will likely focus on oversight
hearings on conditions in Venezuela, energy security, and the overall status of
bilateral relations and U.S. policy, with legislative initiatives likely focusing on
funding for U.S. democracy and anti-drug initiatives in Venezuela, the human rights
situation, and energy security.
CRS Products:
CRS Report RL32488, Venezuela: Political Conditions and U.S. Policy, by Mark P.
Sullivan.

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