Order Code RL33828
Latin America and the Caribbean:
Issues for the 110th Congress
Updated July 2, 2008
Mark P. Sullivan, Coordinator
Specialist in Latin American Affairs
Foreign Affairs, Defense, and Trade Division
Marisabel Cid, Colleen W. Cook, J. F. Hornbeck, Justin Rivas,
Clare Ribando Seelke, Maureen Taft-Morales, 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. Regular free and
fair elections have become the norm. So far in 2008, Paraguay and the Caribbean
nations of Barbados, Belize, and the Dominican Republic have held national
elections, and Grenada is scheduled to have to hold parliamentary elections on July
8, 2008. Although the region overall experienced an economic setback in 2002-
2003, it has rebounded since 2004, most recently experiencing an estimated growth
rate of 5.6% in 2007. Despite this progress, several nations face considerable
challenges that affect U.S. interests and policy in the region. These include poverty,
guerrilla conflicts, autocratic leaders, drug trafficking, and high rates of crime and
violence.
U.S. interests in Latin America and the Caribbean are diverse, and include
economic, political and security concerns. Geographic proximity has ensured strong
economic linkages between the United States and the region, with the United States
being the major trading partner and largest source of foreign investment for most
countries in the region. Free trade agreements with Mexico and Canada, Chile,
Central America and the Dominican Republic (CAFTA-DR), and most recently with
Peru have augmented U.S. economic linkages with the region. The region is also the
largest source of migration, both legal and illegal, with geographic proximity and
economic conditions in the region being major factors in the migration. Curbing the
flow of illicit drugs from Colombia and Mexico into the United States has been a key
component of U.S. relations with Latin America for almost two decades. Latin
American nations, largely Venezuela and Mexico, supply the United States with just
over one-third of its imported oil, but there have been concerns about the security of
the region as an oil supplier.
Legislative action on Latin America and the Caribbean in the second session of
the 110th Congress to date has included the extension of several preferential trade
programs (for the Andean and Caribbean regions and Haiti) and initial funding of
the Administration’s proposed Mérida Initiative for Mexico and Central America to
support antidrug and anticrime efforts. In other pending business, the House verison
of legislation to reauthorize the President’s Emergency Plan for AIDS Relief would
add 14 Caribbean countries to the list of focus countries under the program. The
House Appropriations Committee version of the FY2009 Financial Services and
General Government Appropriations bill has provisions that would ease restrictions
on family travel to Cuba and U.S. agricultural exports to Cuba. On other trade
issues, Congress potentially could consider implementing legislation for free trade
agreements with Colombia and Panama.
This report provides an overview of U.S. relations with Latin America and the
Caribbean and focuses on the role of Congress and congressional concerns. It will
be updated periodically. For further information, see the CRS products listed after
each topic.

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Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Conditions in the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Regional Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
U.S. Foreign Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Andean Counterdrug Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Mérida Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
U.S. Trade Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Andean Trade Preferences Extension . . . . . . . . . . . . . . . . . . . . . . . . . 13
U.S.-Peru Trade Promotion Agreement . . . . . . . . . . . . . . . . . . . . . . . . 13
U.S.-Colombia Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . . 14
U.S.-Panama Trade Promotion Agreement . . . . . . . . . . . . . . . . . . . . . 15
Haiti HOPE II Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Free Trade Area of the Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Migration Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Terrorism Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
HIV/AIDS in the Caribbean and Central America . . . . . . . . . . . . . . . . . . . . 22
Gangs in Central America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Afro-Latinos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Trafficking in Persons in Latin America and the Caribbean . . . . . . . . . . . . 25
Country Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Cuba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Ecuador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Guatemala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Haiti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Nicaragua . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Panama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
List of Figures
Figure 1. Map of Latin America and the Caribbean . . . . . . . . . . . . . . . . . . . . . . . 6
List of Tables
Table 1. U.S. Foreign Assistance to Latin America and the Caribbean,
FY2007-FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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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, and
high rates of crime and violence. In some countries, weaknesses remain in the state’s
ability to deliver public services, ensure accountability and transparency, and advance
the rule of law.
Since 2006, 21 nations in the region have held successful elections. Twelve
nations alone held elections for head of state in 2006, and in 2007, five nations held
elections: Argentina, Bahamas, Guatemala, Jamaica, and Trinidad and Tobago. This
year, the Caribbean nations of Barbados and Belize held parliamentary elections in
January and February respectively, in which incumbent parties were defeated.
Paraguay held presidential elections in April, which resulted in the victory of
opposition candidate Fernando Lugo over the long-ruling Colorado Party, while
elections in the Dominican Republic in May saw the re-election of an incumbent
President Leonel Fernandez. Looking ahead, Grenada’s parliamentary elections have
been called for July 8, 2008. (For a listing of recent and forthcoming elections, see
CRS Report 98-684, Latin America and the Caribbean: Fact Sheet on Leaders and
Elections.)
In terms of economic growth, while the Latin America and Caribbean region
overall experienced a gross domestic product decline of 0.5% in 2002 and only a
modest growth rate of 2.1% in 2003, the region rebounded with an estimated average
growth rate of 6.2% in 2004, surpassing even the most optimistic predictions.
Countries that had suffered the deepest recessions — Argentina, Uruguay, and
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
Venezuela — all experienced significant economic growth in 2004, and even per
capita income for the region as a whole increased by almost 5%. Growth continued
in subsequent years, with rates of 4.6% growth in 2005, 5.6% in 2006, and an
estimated growth rate of 5.6% in 2007. In 2007, countries with the highest growth
rates were Panama, with growth over 9%; Argentina, Peru, and Venezuela, with
growth rates between 8 and 9%; and Colombia, Costa Rica, the Dominican Republic,
and Uruguay, with rates of between 7 and 8%. Countries with the lowest economic
growth rates were Dominica, with 1% growth; Jamaica, with 1.5% growth, and
Ecuador with 2.7% growth.2 (For information on development indicators in the
region, see CRS Report RS22657, Latin America and the Caribbean: Fact Sheet on
Economic and Social Indicators.)
The Andean region still faces considerable challenges, including the rise of
populism in Venezuela, Bolivia, and Ecuador. In Venezuela, President Hugo Chávez
won another six-year term decisively in December 2006, but lost a December 2007
constitutional reform referendum that would have removed presidential term limits
and allowed him to run again in 2012. The election of Bolivian indigenous leader
Evo Morales as President in 2005 complicated U.S. relations given Morales’ efforts
to decriminalize coca growing. Under the Morales government, Bolivia has become
increasingly divided over the issues of constitutional reform and regional autonomy.
In Ecuador, Rafael Correa, a left-leaning U.S.-trained economist won the November
2006 presidential elections and has vowed to reform Ecuador’s political system,
renegotiate Ecuador’s foreign debt, and reassert state control over foreign oil
companies operating in the country.
Colombia continues to be threatened by drug trafficking organizations and by
terrorist groups, but the government of President Alvaro Uribe has overseen the
demobilization of more than 31,000 paramilitaries and made significant progress in
combating the Revolutionary Armed Forces of Colombia (FARC). This year the
FARC has suffered significant setbacks with the deaths of several of its top leaders,
including Manuel Marulanda. Colombia’s March 1, 2008 bombing and raid of a
FARC camp in Ecuador prompted condemnation from Colombia’s neighbors, and
increased tensions in relations with Ecuador and Venezuela. Captured FARC
computer files from the raid also raised questions about potential Ecuadoran and
Venezuelan government ties to FARC.

In Central America, countries such as El Salvador, Honduras, and Nicaragua
emerged from the turbulent 1980s and 1990s with democratic institutions more
firmly entrenched, yet violent crime is a major problem in all countries. Honduras
and Nicaragua are among the poorest countries in the hemisphere. In Guatemala, the
center-left government of Alvaro Colom took office in mid-January 2008 after
elections in 2007 that proved to be the most violent since 1985. The new
government’s success will depend on its ability to build coalitions since no party in
the legislature holds a majority. In Nicaragua, former President and Sandinista party
leader Daniel Ortega won the November 2006 presidential election. Ortega has faced
an increasingly united opposition in the legislature, which has impeded any
2 U.N. Economic Commission for Latin America and the Caribbean (ECLAC), “Preliminary
Overview of the Economies of Latin America and the Caribbean,” December 2007.

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CRS-3
substantial legislative initiatives or policy changes. Critics have raised questions
about the Ortega government’s lack of transparency in finances, and increasingly
authoritarian actions.
The diverse Caribbean region, which includes some of the hemisphere’s richest
and poorest nations, also faces significant challenges. The AIDS epidemic in the
region, where infection rates are among the highest outside of sub-Saharan Africa,
has been a major challenge for economic and social development in several countries.
Caribbean nations remain vulnerable to destruction by hurricanes and tropical storms
as demonstrated in the 2004 and 2005 hurricane seasons, and most recently with
Hurricane Dean in August 2007. Haiti — the hemisphere’s poorest nation —
continues to be plagued by economic, political, and security problems. While for
many observers, President René Préval’s May 2006 inauguration marked the
beginning of a new era, a food crisis in April 2008 led to violent protests and the
removal of the country’s prime minister. Since Fidel Castro stepped down from
power in 2006, Cuba’s political succession from Fidel to Raúl Castro has been
characterized by a remarkable degree of stability. Since Raúl’s official assumption
of the presidency in February 2008, the government has implemented a number of
economic changes that from the outside might not seem substantial, but are
significant for a government that has heretofore followed a centralized communist
economic model. While additional economic changes under Raúl Castro are likely,
few expect there will be any change to the government’s tight control over the
political system, which is backed up by a strong security apparatus.
U.S. 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,
Central America and the Dominican Republic (CAFTA-DR), and most recently with
Peru have augmented U.S. economic linkages with the region. The region is also the
largest source of migration, both legal and illegal, with geographic proximity and
economic conditions in the region being major factors in the migration. Curbing the
flow of illicit drugs from Mexico and South America into the United States has been
a key component of U.S. relations with Latin America for almost two decades. Latin
American nations, largely Venezuela and Mexico, supply the United States with just
over one-third of its imported oil, but there have been concerns about the security of
the region as an oil supplier because of Mexico’s declining oil reserves and periodic
threats by Venezuela’s President to cut oil exports to the United States.
In the aftermath of the Cold War, U.S. policy interests in Latin America and the
Caribbean shifted away from security concerns and focused more on strengthened
economic relations, but the September 2001 terrorist attacks in the United States
resulted in security interests re-emerging as a major U.S. interest. As a result,
bilateral and regional cooperation on anti-terrorism efforts have intensified. The
Bush Administration has described the Caribbean region as America’s third border,
with events in the region having a direct impact on the homeland security of the

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CRS-4
United States. Cooperation with Mexico on border security and migration issues has
also been a key component of the bilateral relationship.
Bush Administration officials outline four themes or pillars of U.S. policy in the
Americas: consolidating democracy; promoting prosperity, which includes advancing
free trade; investing in people; and protecting the democratic state, which includes
support for Colombia through the Andean Counterdrug Program and support for
Mexico and Central America through the Mérida Initiative.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 and the rise of populism in such countries as Venezuela, Bolivia,
and Ecuador will continue to pose challenges for U.S. interests and policy in the
region. Fostering cooperation on such issues as drug trafficking, terrorism, crime,
and poverty reduction will remain key components of U.S. policy in the region.
Legislative action on Latin America and the Caribbean in the second session of
the 110th Congress has included the extension of several preferential trade programs
for the region and initial funding of the Administration’s proposed Mérida Initiative
for Mexico and Central America to support antidrug and anticrime efforts. In
February 2008, Congress extended trade benefits for Andean nations through
December 2008 (P.L. 110-191). In June, Congress approved the 2008 farm bill (P.L.
110-246) that included provisions to extend two preferential trade programs: the
Haiti HOPE Act was expanded and extended for 10 years; and the Caribbean Basin
Trade Partnership Act (CBTPA) was extended for two years until September 30,
2010. In late June 2008, Congress appropriated $465 million in FY2008 and FY2009
supplemental assistance (P.L. 110-252) for the Mérida Initiative, while earlier in the
month the House voted to authorize $1.6 billion for the program over three years,
FY2008-FY2010 (H.R. 6028).
In other pending business, the House verison of reauthorization legislation for
the President’s Emergency Plan for AIDS Relief (PEPFAR), H.R. 848, approved in
April 2008, would add 14 Caribbean countries to the list of focus countries under
PEPAR; the Senate version of the bill does not have such a provision. The House
Appropriations Committee version of the FY2009 Financial Services and General
Government Appropriations bill has provisions that would ease restrictions on family
travel to Cuba and on payment procedures for the sale of U.S. agricultural exports to
Cuba. On other trade issues, legislation action on implementing legislation for a free
trade agreement with Colombia pursuant to expedited procedures was forestalled by
the House in April 2008 (when it approved H.Res. 1092), and it remains uncertain
whether and how Congress will consider implementing legislation in the future.
Action on a free trade agreement with Panama to date has been tied up because of
U.S. concerns over the selection of Pedro Miguel Gonzalez – wanted in the United
States for the murder of a U.S. serviceman in 1992 – as president of Panama’s
legislature for a one-year term that expires at the end of August 2008.
3 U.S. Department of State, “The Western Hemisphere: 2007 in Review and Looking Ahead
to 2008,” Thomas A. Shannon, Assistant Secretary of State for Western Hemisphere Affairs,
January 22, 2008.

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CRS-5
Additional congressional oversight hearings on Latin America in the second
session have focused on a variety of policy issues: the implications of Cuba’s
political succession on future developments in Cuba and the region; the crisis in the
Andean region prompted by Colombia’s March 2008 raid on a FARC camp in
Ecuador; efforts to strengthen border security, which has been a key issue in relations
with Mexico; and China’s growing interest in Latin America and the implications for
U.S. policy.

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Figure 1. Map of Latin America and the Caribbean

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CRS-7
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 largely focused on
counternarcotics especially in the Andean region, but more recently is being
expanded to Mexico.
Aid programs are designed to achieve a variety of goals, from poverty reduction
to economic growth. Child Survival and Health (CSH) funds focus on combating
infectious diseases and promoting child and maternal health. Development
Assistance (DA) funds improvements in key areas — such as trade, agriculture,
education, the environment, and democracy — in order to foster sustainable
economic growth. Economic Support Funds (ESF) assist countries of strategic
importance to the United States and fund programs relating to justice sector reforms,
local governance, anti-corruption, and respect for human rights. P.L. 480 food
assistance is provided to countries facing emergency situations, such as natural
disasters. Counternarcotics programs funded through the International Narcotics
Control and Law Enforcement (INCLE) and the Andean Counterdrug Program (ACP,
formerly known as the Andean Counterdrug Initiative) accounts seek to assist
countries to reduce drug production, to interdict trafficking, and to promote
alternative crop development. Foreign Military Financing (FMF) provides grants to
nations for the purchase of U.S. defense equipment, services, and training. U.S.
support to counter the HIV/AIDS epidemic in the region is provided largely through
Global HIV/AID Initiative (GHAI) funding, but also through some CSH funding. The
United States also provides contributions to multilateral efforts, such as the Global
Fund to Fight AIDS, Tuberculosis, and Malaria.
The Bush Administration’s FY2009 foreign aid request for Latin America is for
$2.05 billion, compared to an estimated $1.47 billion in FY2008 and $1.55 billion
provided in FY2007 provided in the regular foreign aid appropriations measures.
The FY2009 request reflects an increase of almost 40% over that being provided in
FY2008 in the regular foreign aid appropriations measure. However, if FY2008
supplemental assistance for the Mérida Initiative ($417 million in FY2008) is
included in the comparison, the FY2009 budget request is almost 9% over the $1.88
billion estimated to be provided in FY2008. (See Table 1.)
In the FY2009 request for Latin America, four foreign aid funding accounts had
significant increases over the estimated amount being provided in regular FY2008
foreign aid funding: Andean Counterdrug Program (ACP) funding, up 27%; Foreign
Military Financing, up 40%; Development Assistance (DA), up 48%; and
International Narcotics Control and Law Enforcement (INCLE) assistance, up almost
600% because of funding for the Mérida Initiative. Three accounts had significant
decreases: Child, Survival, and Health (CSH) assistance, down almost 22%;
Economic Support Funds (ESF), down about 31%; and P.L. 480 food aid, down 20%

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CRS-8
(although food aid provided can often increase depending on need). A substantial
portion of the increase in Development Assistance in the FY2009 request can be
explained by shifts from ESF funding that in the past were being used for
counternarcotics and other program areas. Comparing FY2008 estimates to the
FY2009 request, almost $89 million in ESF was shifted to the Development
Assistance account. This occurred in several countries – Bolivia, the Dominican
Republic, Ecuador, Guatemala, Mexico, and Peru.
Table 1. U.S. Foreign Assistance to Latin America and the
Caribbean, FY2007-FY2009
(U.S. $ millions)
FY2007
FY2008
FY2008
FY2009
FY2009
(actual)
(estimate)
Supplemental
Bridge Fund
(request)
(estimate)
Supplemental
(estimate)
1,553
1,467
417
48
2,049
Source: U.S. Department of State, Congressional Budget Justification for Foreign Operations,
FY2009; H.R. 2642, Supplemental Appropriations Act (enrolled as agreed to by House and Senate).
As noted above, the large increase in the INCLE account is because of the
Mérida Initiative, which would increase security cooperation with Mexico and
Central America to combat the threats of drug trafficking, transnational crime, and
terrorism. In legislative action in late June 2008 (H.R. 2642/P.L. 110-252), Congress
provided $417 million for the Mérida Initiative in FY2008 supplemental assistance
and $48 million in FY2009 bridge fund supplemental assistance. In the FY2009
request, the Mérida Initiative would be funded with $550 million from the INCLE
account, including $450 for Mexico and $100 million for Central America under the
Western Hemisphere Regional Program. (For more, see “Mérida Initiative” below.)
Child Survival and Health (CSH) assistance to the region would decline in the
FY2009 request, with cutbacks in CSH for many countries in the region including
Bolivia, the Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, and
Peru. CSH funding for both the Central America Regional Program and the Latin
American and Caribbean Regional Program would decline significantly, by over
70%, from that being provided in FY2008.
There was little change in other foreign aid funding accounts in the FY2009
request. The Global HIV/AIDS Initiative (GHAI) account request for $112 million
for Haiti and Guyana was identical to that being provided in FY2008. Proposed
funding from the International Military Education and Training (IMET) and Non-
proliferation, Anti-terrorism, Demining, and Related Programs (NADR) accounts
would increase, but these are relatively small programs for the region.
Looking at the top foreign aid recipients in the region, five countries –
Colombia, Mexico, Haiti, Peru, and Bolivia – account for the lion’s share of U.S.
assistance going to Latin America; about 73% of the FY2009 request for the region

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will go to these five countries. As it has been for the past eight years, Colombia is
the single largest aid recipient in the region, and would receive about $543 million
or about 26% of assistance going to the region in FY2009. The United States has
not traditionally provided large amounts of foreign assistance to Mexico, but the
FY2009 request includes almost $501 million, accounting for about 24% of aid to the
region, with almost $478 million of that under the Mérida Initiative that would
increase security cooperation with Mexico to combat the threats of drug trafficking,
transnational crime, and terrorism. Assistance to Haiti has increased significantly
over the past several years as the United States has provided support to the Préval
government. The FY2009 request for Haiti is for almost $246 million, or about 12%
of assistance to the region. Peru and Bolivia have received significant assistance
over the past eight years under the Andean Counterdrug Initiative, now known as the
Andean Counterdrug Program. In the FY2009 request, Peru would receive $103
million and Bolivia $100 million.
The Millennium Challenge Account (MCA) is a new initiative that provides
sizable aid grants to a few low-income nations that have been determined, through
a competitive process, to have the strongest policy reform records and where new
investments are most likely to achieve their intended development results. In 2005,
the Millennium Challenge Corporation (MCC) approved five-year compacts with
Honduras ($215 million) and Nicaragua ($175 million), and in 2006 it approved a
five-year compact with El Salvador ($461 million). Both Guyana and Paraguay have
received threshold assistance from the MCC to help assist the countries become
eligible for an MCC compact. Other Latin American or Caribbean nations could be
eligible to receive assistance in future years.
CRS Products
CRS Report RL34299, U.S. Foreign Assistance to Latin America and the Caribbean:
FY2006-FY2008, coordinated by Connie Veillette.
CRS Report RL33337, Article 98 Agreements and Sanctions on U.S. Foreign Aid to
Latin America, by Clare Ribando Seelke.
CRS Report RL34023, State, Foreign Operations and Related Programs: FY2008
Appropriations, by Connie Veillette, and Susan B. Epstein.
CRS Report RL32427, Millennium Challenge Account, by Curt Tarnoff.
CRS Report RL33491, Restructuring Foreign Aid: The Role of the Director of
Foreign Assistance in Transformational Development, by Connie Veillette.
Andean Counterdrug Program
The Andean Counterdrug Program (ACP), referred to as the Andean
Counterdrug Initiative (ACI) until FY2008, is the primary U.S. foreign assistance
program that supports counternarcotics activities in the Andean region of South
America. Colombia, the main source country for cocaine entering the United States

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and a strong U.S. ally in South America, has received the bulk of ACP funding.
However, the ACP program is regional in nature because organizations in countries
bordering Colombia also produce and traffic in narcotics. The ACP program began
in 2000, when Congress passed legislation providing $1.3 billion in interdiction and
development assistance (P.L. 106-246) for Colombia and six regional neighbors:
Bolivia, Peru, Ecuador, Venezuela, Brazil, and Panama. Funding for ACP from
FY2000 through FY2008 totaled approximately $6 billion.
For FY2008, the Administration requested $442.8 million for the ACP program,
with $367 million requested for programs in Colombia. This request was lower than
in previous years due in part to the Administration’s decision to transfer alternative
development programs from the ACP account to the Economic Support Fund (ESF)
account. The FY2008 Consolidated Appropriations Act (P.L. 110-161) provided
some $319.8 million for ACP programs, a reduction of $123.1 million from the
Administration's request, but transferred some ACP activities to the ESF and
International Narcotics Control and Law Enforcement (INCLE) accounts. As in
previous years Colombia received the overwhelming majority of ACP funding,
totaling roughly $244.6 million for interdiction and eradication programs. Other
countries receiving ACP assistance included Bolivia ($30 million), Ecuador ($7
million), Peru ($36.5 million), Brazil ($1 million) and Panama ($1 million).
Venezuela no longer receives ACP funding. For FY2008, Congress provided
roughly $194 million in ESF funding for alternative development/institution building
programs and $41.9 million in INCLE funding for human rights and rule of law
programs in Colombia. The Administration had not requested any INCLE funding
for Colombia. In total, Congress increased economic and social aid to Colombia by
some $84 million in FY2008.
The FY2009 request for the ACP is for $406.8 million, slightly less than what
was requested in FY2008. The FY2009 request seeks to increase ACP funding for
eradication and interdiction programs in Colombia by 35% over the FY2008 enacted
levels. The request includes funding at or slightly above FY2008 enacted levels for
Bolivia, Brazil, Ecuador, Peru, and Panama.
The ACP program has helped improve security conditions in Colombia and
aided the Uribe government’s efforts against the leftist Revolutionary Armed Forces
of Colombia (FARC) guerrilla group, but has not reduced drug production in the
Andean region. A June 2008 report by the U.N. Office on Drugs and Crime found
that although yields were down, the coca acreage planted in the Andean region
increased by 16% in 2007. Supporters of U.S. counterdrug policy argue that
assistance to Colombia is necessary to help a democratic government confront drug-
supported leftist and rightist illegally armed groups. Assistance to Colombia’s
neighbors, according to supporters, is merited because of an increasing threat from
the spillover of violence and drug production from Colombia. While some critics
agree with this assessment, they argue that U.S. assistance overemphasizes military
training and crop eradication rather than alternative development projects that could
provide alternative livelihoods for growers who voluntarily give up illicit crops.
Critics also assert that U.S. assistance provides inadequate support for the protection
of human rights.

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For a broader discussion of Colombia beyond the ACP, see section on
“Colombia” below.
CRS Products
CRS Report RL32250, Colombia: Issues for Congress, by Colleen Cook and Clare
Ribando Seelke.
CRS Report RL34543, International Drug Control Policy, by Liana Sun Wyler.
Mérida Initiative
Increasing violence perpetrated by drug cartels, youth gangs, and other criminal
groups is threatening citizen security and democracy in Mexico and Central America.
Some 90% of the drugs entering the United States pass through the Mexico-Central
America corridor. On October 22, 2007, the United States and Mexico announced
the Mérida Initiative, a multi-year proposal for $1.4 billion in U.S. assistance to
Mexico and Central America aimed at combating drug trafficking, gangs, and
organized crime in the region.
The Administration requested $500 million for Mexico and $50 million for
Central American countries in its FY2008 supplemental appropriations request, and
another $450 million for Mexico and $100 million for Central American countries
in the FY2009 budget request. The proposed funding for Mexico is largely in the
form of equipment and training to help support the Mexican government’s anti-drug
efforts. The proposed funding for Central America aims to support a regional anti-
gang strategy and to bolster the capacity of Central American governments to inspect
and interdict drugs, goods, arms and people.
On June 11, 2008, the House approved H.R. 6028 (Berman), the Merida
Initiative to Combat Illicit Narcotics and Reduce Organized Crime Authorization Act
of 2008 by a vote of 311 to 106. The bill would authorize $1.6 billion over three
years, FY2008-FY2010, for both Mexico and Central America, $200 million more
than originally proposed by President Bush.
In terms of appropriations legislation, in late June 2008, Congress appropriated
$465 million in FY2008 and FY2009 supplemental assistance for Mexico and
Central America in the FY2008 Supplemental Appropriations Act, H.R. 2642 (P.L.
110-252). In the act, Mexico receives $352 million in FY2008 supplemental
assistance and $48 million in FY2009 bridge fund supplemental assistance, while
Central America, Haiti, and the Dominican Republic receive $65 million in FY2008
supplemental assistance. The measure has human rights conditions softer than
compared to earlier House and Senate versions, largely because of Mexico’s
objections that some of the conditions would violate its national sovereignty. The
language in the final enacted measure reduced the amount of funding subject to
human rights conditions, from 25% to 15%, removed conditions that would have
required the Mexican government to try military officials accused of abuses in

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civilian courts and to enhance the power of its National Human Rights Commission,
and softened the language in other conditions.
CRS Products
CRS Report RS22837, Mérida Initiative: Proposed U.S. Anticrime and Counterdrug
Program for Mexico and Central America, by Colleen Cook, Rebecca G. Rush,
and Clare Ribando Seelke.
CRS Report RL32724, Mexico-U.S. Relations: Issues for Congress, by Colleen Cook,
Rebecca Rush, and Mark P. Sullivan.
CRS Report RS22141, Gangs in Central America, by Clare Ribando Seelke.
CRS Report RL34543, International Drug Control Policy, by Liana Sun Wyler.
U.S. Trade Policy
Trade, as a critical component of commercial and foreign economic policy, has
been one of the most enduring and dynamic issues in U.S.-Latin American relations.
U.S. trade policy has evolved over time, adjusting to changes in both U.S. interests
and altered circumstances and priorities in the region. When Latin American
countries faced economic, social, and political upheaval in the 1970s and 1980s, the
United States sought to support and influence the region with unilateral (one-way)
trade preference programs intended to encourage export-led economic growth and
development. This concept was also the basis for the Haiti HOPE Act, which was
expanded and extended for ten years in June 2008. By the 1990s, the rebound of
economic growth and new-found interest in trade liberalization created an opening
for U.S. trade policy to shift toward reciprocal free trade agreements (FTAs). Among
the major differences with trade preferences, FTAs are negotiated between parties,
have more comprehensive, mutual obligations, and are permanent, not requiring
periodic congressional renewal.
By implementing the North American Free Trade Agreement (NAFTA), the
U.S.-Chile FTA, the U.S.-Peru FTA, and the Dominican Republic-Central America-
United States Free Trade Agreement (CAFTA-DR) — still not implemented by Costa
Rica — countries exchanged their unilateral trade preferences provided under the
Generalized System of Preferences (GSP), the Caribbean Basin Initiative (CBI), the
Caribbean Basin Trade Partnership Act (CBTPA), and the Andean Trade Preference
Act (ATPA) for reciprocal benefits under the FTAs. Currently, newly negotiated
FTAs with Panama and Colombia present the same tradeoff with respect to unilateral
preferences extended to them under either the CBI or the ATPA. In June 2008,
Congress extended unchanged the CBTPA for two years until September 30, 2010
(H.R. 6124/P.L. 110-246, Title XV, Section 15408). Congress has been opting for
short-term extensions of the ATPA, which will expire on December 31, 2008.

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

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The PTPA will likely have a small net economic effect on the United States
because of the small size of Peru’s economy. In 2007, Peru had a nominal GDP of
$109 billion, approximately 0.8% the size of the U.S. GDP of $13.8 trillion. The
United States currently extends duty-free treatment to selected imports from Peru
under the Andean Trade Preferences Act (ATPA), a regional trade preference
program that expires at the end of December 2008. In 2007, 57% of all U.S. imports
from Peru received preferential duty treatment under ATPA. U.S. imports from Peru
account for 0.3% of total U.S. imports, and U.S. exports to Peru account for 0.3% of
total U.S. exports. The U.S. trade deficit with Peru was $1.44 billion in 2007. The
major U.S. import item from Peru is gold, followed by refined copper, and petroleum
light oils, while the leading U.S. export items to Peru are gasoline, transmission
apparatus, and office and data processing machinery parts.
U.S.-Colombia Free Trade Agreement. On August 24, 2006, President
Bush notified Congress of his intention to enter into the U.S.-Colombia Free Trade
Agreement (CFTA), a bilateral free trade agreement between the United States and
Colombia. The two countries signed the agreement on November 22, 2006.
Implementing legislation for a U.S.-Colombia Free Trade Agreement (CFTA) (H.R.
5724/S. 2830) was introduced in the 110th Congress on April 8, 2008 pursuant to
Title XXI (Bipartisan Trade Promotion Authority Act of 2002) of the Trade Act of
2002 (P.L. 107-210). The House leadership, however, considered that the President
had submitted the implementing legislation without sufficient coordination with
Congress. On April 10, 2008, the House approved H.Res. 1092 by a vote of 224 to
195 to make certain provisions in § 151 of the Trade Act of 1974 (P.L. 93-618)
establishing expedited procedures inapplicable to the CFTA implementing
legislation.
The CFTA is highly controversial and it is currently unclear whether or how
Congress will consider implementing legislation in the future. The most controversial
issue is the ongoing violence against trade unionists in Colombia. Some Members
of Congress oppose the CFTA because of concerns about the violence against labor
union activists and because of the perceived negative effects of trade on the U.S.
economy. The Bush Administration and some Members of Congress believe that
Colombia has made significant advances to combat violence and instability and
views the pending trade agreement as a national security issue in that it would
strengthen a key democratic ally in South America. In his response to U.S.
congressional concerns, President Uribe has stated on several occasions that he
would make every effort to ensure that these concerns were addressed and that the
situation in Colombia had improved substantially under his administration. Some
Members of Congress have stated they would like to see evidence of progress in this
area before supporting the agreement.
A CFTA would likely have a small net economic effect on the United States
because of the relatively small size of Colombia as a trading partner when compared
to others partners and regions. Colombia’s gross domestic product (GDP) in 2007
was $173 billion, approximately 1.2% of U.S. GDP ($13.8 trillion in 2007). The
United States currently extends duty-free treatment to selected imports from
Colombia under the Andean Trade Preference Act (ATPA), a regional trade
preference program that expires on December 31, 2008. Approximately 90% of U.S.
imports from Colombia enter the United States duty-free, while U.S. exports to

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Colombia face duties up to 20%. Economic studies on the impact of a U.S.-Colombia
free trade agreement (FTA) have found that, upon full implementation of an
agreement, the impact on the United States would be positive but very small. In the
absence of a CFTA, and if the ATPA is not renewed, many Colombian products
entering the U.S. market would be subject to higher duties. Since 1996, the U.S.
trade balance with Colombia went from a surplus to a deficit of $1.4 billion in 2007.
The dominant U.S. import from Colombia is crude oil, followed by coal, and coffee,
while the leading U.S. export items are corn (maize), automatic data processing
machine parts and accessories, and vinyl chloride.
U.S.-Panama Trade Promotion Agreement. On June 28, 2007,
representatives of the United States and Panama signed a free trade agreement (FTA)
after two and a half years and ten rounds of negotiations. Negotiations concluded on
December 16, 2006, with an understanding that further changes to labor,
environment, and intellectual property rights (IPR) chapters would be made pursuant
to detailed congressional input. These changes were agreed to in late June 2007,
clearing the way for the proposed FTA’s signing in time to be considered under the
expiring TPA. The proposed U.S.-Panama FTA incorporates changes based on
principles outlined in the “New Trade Policy for America,” which requires that both
countries adopt as fully enforceable commitments the five basic labor rights defined
in the United Nations International Labor Organization’s (ILO) Fundamental
Principles and Rights at Work and its Follow-up (1998) Declaration, numerous
multilateral environmental agreements (MEAs), and pharmaceutical IPR provisions
that potentially may hasten Panama’s access to generic drugs.
Panama’s legislature ratified the FTA 58 to 4 on July 11, 2007, but there is one
highly sensitive issue that remains to be resolved for the United States. In September
2007, the Panamanian National Assembly elected Pedro Miguel González Pinzón to
a one-year term as President of the legislative body. Although a deputy in the
National Assembly since 1999, his elevation to President of the Legislature drew the
attention of the U.S. Congress because he is also known for his alleged role in the
June 10, 1992 murder of a U.S. serviceman in Panama. A Panamanian court
acquitted him of the charge in 1997, but the United States does not recognize the
verdict and maintains an outstanding warrant for his arrest. His continued presence
as National Assembly President has been one factor delaying consideration of the
FTA by the U.S. Congress. This situation could change if he is not re-elected to a
second term in the September 1, 2008 election.
The U.S. trade surplus with Panama was $3.4 billion in 2007. Major U.S.
exports to Panama include oil and mostly capital- and technology-intensive
manufactured goods such as aircraft, pharmaceuticals, machinery, medical
equipment, and motor vehicles. U.S. imports from Panama include seafood, repaired
goods, gold, sugar, and coffee. Panama, however, is largely a services-based
economy, which distinguishes it, and the trade negotiations with the United States,
from those of its Central American neighbors. The proposed U.S.-Panama FTA is
a comprehensive agreement similar to other bilateral FTAs entered into by the United
States. Some 88% of U.S. exports would become duty free right away, with
remaining tariffs phased out over a ten-year period. Nearly half of U.S. farm exports
to Panama would achieve duty-free status immediately, with many products restricted
by tariff-rate quotas. Tariffs on other farm products are phased out over 16 years.

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The FTA includes provisions for services trade, telecommunications, intellectual
property rights, labor, environment, and government procurement, while providing
support for trade capacity building. The two countries also signed a detailed bilateral
agreement to resolve SPS market access issues.
Haiti HOPE II Act. To assist Haiti with rebuilding its economy by
encouraging investment and job creation in the once vibrant apparel sector, the 109th
Congress passed the Haitian Hemispheric Opportunity through Partnership
Encouragement (HOPE) Act in December 2006 (P.L. 109-432). The act provided
duty-free treatment for select apparel imports from Haiti that are made in part from
less expensive third country (e.g. Asian) yarns and fabrics, provided Haiti meets
eligibility criteria related to labor, human rights, and anti-terrorism policies. To
enhance the effectiveness of these provisions, the 110th Congress expanded them in
June 2008 when it passed the Food, Conservation, and Energy Act of 2008 (H.R.
6124/P.L. 110-246) — the 2008 farm bill, Title XV of which includes the Haitian
Hemispheric Opportunity through Partnership Encouragement (HOPE) Act of 2008
(HOPE II Act).
The original HOPE Act did not result in the expected growth in apparel exports,
Congress expanded the preferences, also making them easier to use. Support for
HOPE II was based on the dominant role of the U.S. market as the main destination
for Haitian apparel exports and the fact that apparel assembly is Haiti’s core export
sector and essential for its economic well-being because it generates up to 80% of the
country’s foreign exchange used to finance Haiti’s large food import bill, among
other needs. In 2007, apparel constituted over 80% of Haiti’s total exports and 93%
of exports to the United States (81% knit, 12% woven articles), so the sector provides
one potential avenue for employment growth. The preferences also support textile
firms in the Dominican Republic, which have an expanding co-production
arrangement with Haiti.
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.
Amid dramatic and sometimes violent protests against President George W. Bush and

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the FTAA, which was not scheduled as the major topic of this summit, it became
clear that Latin American and Caribbean countries were divided over how to proceed.
A total of 29 countries supported restarting negotiations, and the United States
pushed to set a specific date in 2006. The Mercosur countries rejected this idea,
arguing that the conditions for a balanced and equitable FTAA did not yet exist.
Venezuela lobbied independently to end any further effort on the FTAA and called
for a unified resistence against U.S. policies and presence in Latin America. On July
4, 2006, Venezuela agreed to join Mercosur as its first new full member since its
inception in 1991, although Brazil and Paraguay have yet to ratify the agreement.
Although Mercosur has collectively resisted the FTAA, Venezuela is the only
country in Latin America to reject the idea unequivocally. With Venezuela’s new-
found influence on Mercosur, the United States may find it even more difficult to
isolate its unabashedly negative attitude on the FTAA negotiations.
The Summit Declaration called for time to reflect on the problems of the FTAA
process while awaiting the outcome of the WTO Doha Round, particularly with
respect to agricultural issues. Given that the WTO talks have also bogged down, it
seems unlikely that the FTAA will find the support needed to move ahead in the near
future, particularly with Venezuela now potentially influencing policy in the
Mercosur group. In the meantime, both Brazil and the United States are meeting on
an informal bilateral basis and continue to court other Latin American countries to
join them in their respective subregional trade pacts, reinforcing the significance of
U.S. trade initiatives as a key element of U.S. foreign policy in the region.
CRS Products
CRS Report RL32540, The Proposed 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 RL33951, U.S. Trade Policy and the Caribbean: From Trade
Preferences to Free Trade Agreements, by J. F. Hornbeck.
CRS Report RS22879, Haiti: Legislative Responses to the Food Crisis and Related
Development Challenges, by Clare Ribando Seelke and J. F. Hornbeck.
CRS Report RS22548, ATPA Renewal: Background and Issues, by M. 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: Major Policy Issues and
Status of Negotiations, by J. F. Hornbeck.
CRS Report 98-840, U.S.-Latin America Trade: Recent Trends, by J. F. Hornbeck.

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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. 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.
In the 110th Congress, immigration reform has been stymied since June 2007
when the Senate failed to invoke cloture and limit debate on two comprehensive
reform measures, S. 1348 (Reid) and S. 1639 (Kennedy). While the House held
several hearings on immigration reform, the Senate’s action made it unlikely that the
House would take up any comprehensive reform on its own. President Bush had
expressed support for comprehensive immigration reform including increased border
security, a guest worker program, and the normalization of status of some of the
estimated 12 million illegal immigrants. Most observers believe that Congress is
unlikely to revisit comprehensive immigration reform in the second session of the
110th Congress.
Mexico is the largest source of legal migrants to the United States and is also
believed to be the largest source of illegal immigrants. According to the Pew
Hispanic Center, undocumented Mexican migrants accounted for 56% of the
estimated 11.5 to 12 million illegal immigrants in the United States in 2005.4 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 respect the human
rights of migrants, and the need to combat human trafficking. Perhaps most relevant,
the Mexican resolution states that the Mexican government does not promote illegal
migration and calls for the development of a guest worker program in the United
States under the principle of shared responsibility. The resolution commits Mexico
to enforcing legal emigration “if a guest country offers a sufficient number of
appropriate visas to cover the biggest possible number of workers and their families,
which, until now cross the border without documents because of the impossibility of
4 Pew Hispanic Center, “The Size and Characteristics of the Unauthorized Migrant
Population in the U.S.,” by Jeffrey Passel, March 7, 2006.

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obtaining them.”5 Mexico enacted a new human trafficking law in November 2007,
which improves upon existing legal framework to prevent and sanction trafficking
in persons, as well as protect victims.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 almost $24 billion in 2007.7
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. The
IDB also estimates that remittances to Central America rose to $12.1 billion in 2007.
In addition to concerns over immigration reform, El Salvador, Honduras, and
Nicaragua advocate for extensions of their eligibility for temporary protected status
(TPS). TPS is a discretionary, humanitarian benefit granted to eligible nationals after
the Secretary of Homeland Security determines that a country has been affected by
ongoing armed conflict, natural disaster, or other extraordinary conditions that limit
the affected country’s ability to accept the return of its nationals from the United
States. Honduras and Nicaragua were designated for TPS in January 1999 in
response to devastation from Hurricane Mitch. U.S. Citizenship and Immigration
Services (USCIS) estimates that 75,000 Hondurans and 4,000 Nicaraguans benefit
from TPS. In May 2007, the Secretary of Homeland Security announced an
extension of TPS for Honduras and Nicaragua through January 5, 2009. El Salvador
was previously designated for TPS from 1990 to 1992 in accordance with Section
303 of the Immigration Act of 1990 which established TPS. It was again designated
in March 2001 following a series of earthquakes in January 2001. USCIS estimates
that 225,000 Salvadorans benefit from TPS. The Department of Homeland Security
recently extended El Salvador's TPS designation through March 9, 2009.
Another issue in U.S. relations with Latin America and the Caribbean is the
increase in deportations in recent years. U.S. deportations to the region constitute the
overwhelming majority of U.S. deportations worldwide.8 In FY2007, for example,
5 “Mexico-U.S.: Migration and Border Security,” Embassy of Mexico, February 2006.
6 Mexican Federal Congress website, Ley Para Prevenir y Sancionar La Trata De Personas:
[http://www.diputadoes.gob.mx.LeyesBilio/pdf/LPSTP.pdf]
7 Inter-American Development Bank, “Remittances to Latin America and the Caribbean
2007,” 2008.
8 These are formal deportations, consisting of those who are placed in removal proceedings,
(continued...)

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the Department of Homeland Security deported almost 238,000 aliens worldwide,
with 228,504 of those, or 96%, going to Latin American and Caribbean countries.
Overall in FY2007, almost 40% of those deported to Latin America and the
Caribbean were removed based on a criminal conviction.9 For a number of countries,
particularly in the Caribbean, a majority of those deported were removed on criminal
grounds. In Mexico, one of the major concerns about the increase in deportations is
the stress that it has put on border communities, where a majority of the deportees
arrive. In the Caribbean and Central America, policymakers have been most
concerned about their countries’ abilities to absorb the large number of deportees,
which pose challenges for social service providers, and the effect of criminal
deportees on crime. Officials from the region have called on the United States to
provide better information on deportees with criminal records and to provide
reintegration assistance to help returning nationals.
CRS Products
CRS Report 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. In its April 2008 Country Reports on Terrorism,
the State Department highlighted threats in Colombia and concerns about support
from the region to Middle East terrorist groups. According to the report, “there were
no known operational cells of Islamic terrorists” in the region, but it maintained that
“pockets of ideological supporters and facilitators in South America and the
Caribbean lent financial, logistical, and moral support to terrorist groups in the
Middle East.” Overall, the report maintained that the threat of a transnational
terrorist attack remained low for most countries in the hemisphere. The report also
8 (...continued)
and do not include voluntary departures. For more information see CRS Report RL33351,
Immigration Enforcement Within the United States, coordinated by Alison Siskin.
9 Deportation statistics provided to CRS by the Department of Homeland Security,
Immigration and Customs Enforcement, Office of Detention and Removal.

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stated that regional governments “took modest steps to improve their
counterterrorism capabilities and tighten border security” but that progress was
limited by “corruption, weak government institutions, ineffective or lack of
interagency cooperation, weak or non-existent legislation, and reluctance to allocate
sufficient resources.” It also noted that most hemispheric nations had solid
cooperation with the United States on terrorism issues, especially at the operational
level, with excellent intelligence, law enforcement, and legal assistance relations.
Cuba has remained on the State Department’s list of state sponsors of terrorism
since 1982, which triggers a number of economic sanctions. The State Department’s
April 2008 terrorism report pointed to Cuba’s opposition to U.S. counterterrorism
policy and its hosting of dozens of U.S. fugitives from justice. Cuba’s retention on
the terrorism list, however, has been controversial, with critics arguing that domestic
political considerations have kept Cuba on the list.
In May 2008, for the third year in a row, the Department of State, pursuant to
Arms Export Control Act, included Venezuela on the annual list of countries not
cooperating on antiterrorism efforts, which triggers a ban on all U.S. commercial
arms sales and re-transfers to Venezuela. (Cuba also has been on that list for many
years.) The State Department’s terrorism report stated that “it remained unclear to
what extent the Venezuelan government provided support to Colombian terrorist
organizations,” but information on captured computer files from Colombia’s March
2008 raid of a Revolutionary Armed Forces of Colombia (FARC ) camp in Ecuador
has raised questions about alleged support of the FARC by the Venezuelan
government of Hugo Chávez. In a turn of events, on June 8, 2008, President Chávez
publicly urged the FARC to end its armed struggle, and release all hostages.
The United States provides Anti-Terrorism Assistance (ATA) training and
equipment to Latin American countries to help improve their capabilities in such
areas as airport security management, hostage negotiations, bomb detection and
deactivation, and countering terrorism financing. In recent years, ATA for Western
Hemisphere countries amounted to $8.9 million in FY2006, $7.3 million in FY2007,
and an estimated $8 million in FY2008. For FY2009, the Administration requested
$9.3 million in ATA for Latin America, with $2.8 million for Colombia and $3
million for Mexico, and the balance for other countries. The United States also
began providing Terrorist Interdiction Program assistance for several Latin American
countries in FY2008. An estimated $1.3 million is being provided to Panama, Brazil,
and Nicaragua in FY2008, while the Administration requested $1.2 million for Latin
America for FY2009.

In the first session of the 110th Congress, the House approved H.Con.Res. 188,
which condemned the 1994 bombing of the Argentine-Israeli Mutual Association in
Buenos Aires, and H.Res. 435, which expressed concern over the emerging national
security implications of Iran’s efforts to expand its influence in Latin America, and
emphasized the importance of eliminating Hezbollah’s financial network in the tri-
border area of Argentina, Brazil, and Paraguay. The Senate approved S.Con.Res. 53
in December 2007, which condemned the hostage-taking of three U.S. citizens –
Marc Gonsalves, Thomas Howes, and Keith Stansell – since February 2003 by the
FARC while a similar resolution, H.Con.Res. 260, was introduced in the House.
Notably, all three U.S. hostages, in addition to Colombian presidential candidate

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Ingrid Betancourt and 11 other hostages, were rescued from captivity on July 2, 2008
in a bold operation by the Colombian military.
In the second session, two resolutions related to terrorism in Latin America have
been introduced: H.Res. 1049, calls for Venezuela to be designated a state sponsor
of terrorism because of its alleged support for the FARC, while H.Res. 965, among
other provisions, calls for Venezuela to implement measures to deny the use of
Venezuelan territory and weapons from being used by terrorist organizations.
CRS 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 $33.8 million in FY2003. Because of the inclusion of Guyana and
Haiti as focus countries in the President’s Emergency Plan for AIDS Relief
(PEPFAR), U.S. assistance to the region for HIV/AIDS increased from $47 million
in FY2004 to an estimated $139 million in FY2008. For FY2009, the Administration
requested almost $139 million in HIV assistance for the Caribbean and Central
America, with $92 million for Haiti and $20 million for Guyana.
In the first session of the110th Congress, H.R. 848 (Fortuño), introduced
February 6, 2007, would add 14 Caribbean countries to the list of focus countries
under PEPAR. The additional countries are Antigua & Barbuda, Barbados, the
Bahamas, Belize, Dominica, Grenada, Jamaica, Montserrat, St. Kitts & Nevis, St.
Vincent and the Grenadines, St. Lucia, Suriname, Trinidad & Tobago, and the

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Dominican Republic. In the second session, the language of H.R. 848 was included
in PEPFAR reauthorization legislation, H.R. 5501 (Berman), approved by the House
on April 2, 2008. The Senate version of the PEPFAR reauthorization, S. 2731
(Biden), which was reported by the Senate Committee on Foreign Relations on April
15, 2008, does not have a similar provision expanding the list of Caribbean countries
that are focus countries.
CRS Products
CRS Report RL32001, HIV/AIDS in the Caribbean and Central America, by Mark P.
Sullivan.
CRS Report RL33485, U.S. International HIV/AIDS, Tuberculosis, and Malaria
Spending: FY2004-FY2008, by Tiaji Salaam-Blyther.
Gangs in Central America
The 110th Congress maintains a keen interest in the effects of crime and gang
violence in Central America, and its spillover effects on the United States. Since
February 2005, more than 1,758 alleged members of the violent Mara Salvatrucha
(MS-13) gang have been arrested in cities across the United States. These arrests are
raising concerns about the transnational activities of Central American gangs.
Governments throughout the region are struggling to find the right combination of
suppressive and preventive policies to deal with the gangs. Some analysts assert that
increasing U.S. deportations of individuals with criminal records to Central American
countries may be contributing to the gang problem.

Most experts argue that the repressive anti-gangs laws adopted by El Salvador
and Honduras have failed to reduce violence and homicides in those countries, and
that law enforcement solutions alone will not solve the gang problem. Analysts also
predict that illicit gang activities may accelerate illegal immigration and trafficking
in drugs, persons, and weapons to the United States, although a May 2007 United
Nations report challenges those assertions. Others maintain that contact between gang
members across the regions is increasing, and that this tendency may cause increased
gang-related violent crime in the United States.
Several U.S. agencies have been actively engaged on both the law enforcement
and preventive side of dealing with Central American gangs. The National Security
Council created an inter-agency task force to develop a comprehensive strategy to
deal with international gang activity. The strategy, which is now being implemented,
states that the U.S. government will pursue coordinated anti-gang activities through
five broad areas: diplomacy, repatriation, law enforcement, capacity enhancement,
and prevention.
During its second session, the 110th Congress has discussed how to address the
gang problem in Central America during its consideration of authorization and
appropriations legislation related to the Mérida Initiative, a $1.4 billion multi-year

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aid package for Mexico and Central America proposed by the Bush Administration
in October 2007. On June 11, 2008, the House approved H.R. 6028 (Berman), the
Merida Initiative to Combat Illicit Narcotics and Reduce Organized Crime
Authorization Act of 2008, which would authorize $405 million for the Central
American countries over the next three fiscal years. In late June 2008, Congress
appropriated $465 million in FY2008 and FY2009 supplemental assistance for
Mexico and Central America in H.R. 2642 (P.L. 110-252), the FY2008 Supplemental
Appropriations Act. The measure provides increased funds for the Central America
portion of the Mérida Initiative above the Administration’s request, including support
for anti-gang programs. Congress will continue its consideration of the Initiative and
its gang-related components during the FY2009 appropriations process.
During the first session of the 110th Congress, immigration legislation was
introduced – H.R. 1645 (Gutierrez), S. 330 (Isakson), and S. 1348 (Reid) – that
included provisions to increase regional cooperation in the tracking of gang activity
and in the handling of deported gang members. The joint explanatory statement to
the Consolidation Appropriations Act, FY2008 (H.R. 2764/P.L. 110-161)
recommended providing $8 million to the State Department to combat criminal youth
gangs, $3 million more than the Administration’s request. On October 2, 2007, the
House passed H.Res. 564 (Engel) supporting expanded cooperation between the
United States and Central America to combat crime and violence.
CRS Products
CRS Report RS22141, Gangs in Central America, by Clare Ribando Seelke.
Afro-Latinos
During its second session, the 110th Congress is maintaining an interest in the
situation of Afro-Latinos in Latin America, particularly the plight of Afro-
Colombians affected by the armed conflict in Colombia. In recent years, people of
African descent in the Spanish- and Portuguese-speaking nations of Latin America
— also known as “Afro-Latinos” — have been pushing for increased rights and
representation. Afro-Latinos comprise some 150 million of the region’s 540 million
total population, and, along with women and indigenous populations, are among the
poorest, most marginalized groups in the region. Afro-Latinos have formed groups
that, with the help of international organizations, are seeking political representation,
human rights protection, land rights, and greater social and economic rights and
benefits. Improvement in the status of Afro-Latinos could be difficult and
contentious, however, depending on the circumstances of the Afro-descendant
populations in each country.
Assisting Afro-Latinos has never been a primary U.S. foreign policy objective,
although a number of foreign aid programs benefit Afro-Latino populations. While
some foreign aid is specifically targeted towards Afro-Latinos, most is distributed
broadly through programs aimed at helping all marginalized populations. Some

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CRS-25
Members may support increasing U.S. assistance to Afro-Latinos, while others may
resist, particularly given the limited amount of development assistance available for
Latin America.
In the 110th Congress, there are several bills with provisions related to Afro-
Latinos. The Consolidated Appropriations Act, FY2008 (H.R. 2764/P.L. 110-161)
required the State Department to certify that the Colombian military is not violating
the land and property rights of Afro-Colombians or the indigenous. It also prohibited
the use of Andean Counterdrug funds for investment in oil palm development if it
causes displacement or environmental damage (as it has in many Afro-Colombian
communities). In the explanatory statement to the Consolidated Appropriations Act,
the conferees stipulate that up to $15 million in alternative development assistance
to Colombia may be provided to Afro-Colombian and indigenous communities. On
July 11, 2007, the House passed H.Res. 426 (McGovern), recognizing 2007 as the
year of the rights of internally displaced persons (including Afro-Colombians) in
Colombia and offering U.S. support to programs that seek to assist and protect them.
Another resolution, H.Res. 618 (Payne), recognizing the importance of addressing
the plight of Afro-Colombians, was introduced on August 3, 2007. In addition to
considering legislation with provisions related to Afro-Latinos, the 110th Congress
may discuss the situation of Afro-Colombians during its consideration of the U.S.-
Colombia Trade Promotion Agreement.
CRS Products
CRS Report RL32713, Afro-Latinos in Latin America and Considerations for U.S.
Policy, by Clare Ribando Seelke.
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. While most
trafficking victims still appear to originate from South and Southeast Asia or the
former Soviet Union, human trafficking is a growing problem in Latin America and
the Caribbean. Countries in Latin America serve as source, transit, and destination
countries for trafficking victims. Latin America is also a primary source region for
the up to17,500 people that are trafficked to the United States each year. In FY2007,
victims from Latin America accounted for 41% of trafficking victims in the United
States certified as eligible to receive U.S. assistance.
The State Department issued its eighth congressionally mandated Trafficking
in Persons (TIP) Report on June 4, 2008. Each report categorizes countries into four
tiers according to the government’s efforts to combat trafficking. Those countries
that do not cooperate in the fight against trafficking (Tier 3) have been made subject
to U.S. sanctions since 2003. The group named in 2008 includes a total of 14
countries. While Cuba is the only Latin American country ranked on Tier 3 in this
year’s TIP report, seven other countries in the region (Argentina, Costa Rica,

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Dominican Republic, Guatemala, Guyana, Panama, and Venezuela) are included on
the Tier 2 Watch List and, without significant progress, could receive a Tier 3
ranking in the 2009 report.
Congress has taken a leading role in fighting human trafficking by passing the
Victims of Trafficking and Violence Protection Act of 2000 (P.L. 106-386), the
Trafficking Victims Protection Reauthorization Act of 2003 (P.L. 108-193), and the
Trafficking Victims Protection Reauthorization Act of 2005 (P.L. 109-164).
In the 110th Congress, there are several bills with trafficking-related provisions.
The Implementing the 9/11 Commission Recommendations Act of 2007 (P.L. 110-
53) directs the Secretary of Homeland Security to provide specified funding and
administrative support to strengthen the Human Smuggling and Trafficking Center.
H.R. 3887 (Lantos), approved by the House by a vote of 405-2 on December 4, 2007,
would, among other provisions, reauthorize anti-trafficking programs through
FY2011, and amend the criminal code and immigration law related to trafficking.
A Senate re-authorization bill, S. 3061 (Biden), was introduced on May 22, 2008, and
is under consideration. Another bill, H.R. 2522 (Lewis), would establish a
Commission to evaluate the effectiveness of current U.S. anti-slavery efforts,
including anti-TIP programs, and make recommendations. S. 1703 (Durbin),
approved by the Senate Judiciary Committee on September 20, 2007, would create
additional jurisdiction in U.S. courts for trafficking offenses occurring in other
countries.
CRS Products
CRS Report RL33200, Trafficking in Persons in Latin America and the Caribbean, by
Clare Ribando Seelke.
CRS Report RL34317, Trafficking in Persons: U.S. Policy and Issues for Congress,
by Clare Ribando Seelke and Alison Siskin.
Country Issues
Bolivia
Bolivia has experienced a period of political volatility with the country having
six presidents since 2001. Evo Morales, an indigenous leader and head of Bolivia’s
coca growers’ union, and his party, the leftist Movement Toward Socialism (MAS),
won a convincing victory in the December 18, 2005, presidential election with 54%
of the votes. He was inaugurated to a five-year term on January 22, 2006. Early in
his term, President Morales moved to fulfill his campaign promises to decriminalize
coca cultivation, nationalize the country’s natural gas industry, and enact land reform.
Those policies pleased his supporters, but complicated Bolivia’s relations with
foreign investors and the United States.

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Since President Morales took office, Bolivian has become increasingly divided
over the issues of constitutional reform and regional autonomy. A constitutional
reform process began in mid-2006 and concluded in late 2007 when the Constituent
Assembly (CA) passed a draft constitution without the presence of opposition
delegates. Efforts by the Catholic Church, the Organization of American States
(OAS), and neighboring governments have failed to ease tensions over the reform
process between the MAS government in La Paz and the opposition. Whereas plans
for a national referendum on constitutional reforms have stalled, four departmental
referendums on autonomy have been held, despite the lack of congressional approval
for them to be convened. Tensions could ignite again in the near future as the
prefects (departmental governors) have recently come out against convoking a recall
referendum on August 10, 2008 on whether they and President Morales should
remain in office.
U.S. interest in Bolivia has centered on its role as a major coca-producing
country. U.S.-Bolivian relations have been strained by the Morales government’s
unorthodox drug policy; ties with Venezuela, Cuba, and Iran; and its nationalization
measures. Bolivian officials have worked closely with the United States on drug
interdiction efforts, but U.S. officials have asserted that excess coca cultivation
remains a problem in Bolivia. In 2007, tensions flared when Bolivian authorities
(including President Morales) complained that some U.S. assistance was going to
support opposition groups trying to undermine the MAS government. The U.S.
Ambassador to Bolivia was called back to Washington for consultations on security
issues in mid-June 2008 after protesters surrounded the U.S. Embassy in La Paz
demanding the extradition of former president Gonzalo Sánchez de Lozada and his
ex-defense minister. The two have been charged in Bolivia with responsibility for the
civilian deaths that occurred in Bolivia during protests in September and October
2003.
Bolivia received $122.1 million in U.S. assistance in FY2007, including $66
million in counternarcotics assistance. In FY2008, Bolivia received an estimated
$99.5 million, including roughly $47.1 million in counternarcotics assistance. The
FY2009 request for Bolivia is for $100.4 million. In February 2008, Congress voted
to extend trade preferences for Bolivia, along with Colombia, Ecuador, and Peru,
under the Andean Trade Preferences and Drug Eradication Act (ATPDEA) through
the end of December 2008. Prior to the end of its second session, the 110th Congress
is likely to consider what level of foreign assistance Bolivia should receive in
FY2009, and whether its existing trade preferences should be extended.
CRS Products
CRS Report RL32580, Bolivia: Political and Economic Developments and
Implications for U.S. Policy, by Clare Ribando Seelke.
CRS Report RS22548, ATPA Renewal: Background and Issues, by M. Angeles
Villarreal.

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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. Lula was
re-elected in the second round of voting with fairly broad popular support. His
immediate tasks were to boost Brazil’s lagging economic growth and address the
issues of crime and violence. Despite President Lula’s personal popularity, many
predicted that intra-party rivalries within his fragile governing coalition would make
it hard for him to push his agenda through Brazil’s notoriously fractured legislature.

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

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CRS Products
CRS Report RL33456, Brazil-U.S. Relations, by Clare Ribando Seelke.
CRS Report RL34191, Ethanol and Other Biofuels: Potential for U.S.-Brazil Energy
Cooperation, by Clare Ribando Seelke and Brent D. Yacobucci.
Colombia
In the last decade, Colombia – a key U.S. ally in South America – has made
significant strides in reasserting government control over much of its territory,
combating drug trafficking and terrorist activities by illegally armed groups, and
reducing poverty and inequality. Since the development of Plan Colombia in 1999,
the Colombian government, with significant U.S. support, has stepped up its
counternarcotics and security efforts. Congress has provided more than $6 billion to
support Plan Colombia from FY2000 through FY2008. Since 2002, Congress has
granted the State Department expanded authority to use counternarcotics funds for
a unified campaign to fight both drug trafficking and terrorist organizations in
Colombia. The three main armed groups in Colombia are the Revolutionary Armed
Forces of Colombia (FARC), the National Liberation Army (ELN), and the United
Self-Defense Forces of Colombia (AUC) paramilitaries. All three participate in drug
trafficking and have been designated foreign terrorist organizations by the State
Department.
President Alvaro Uribe, re-elected in May 2006, is making headway in
addressing the 40-year plus conflict with the FARC. Since March 2008, several of
the FARC’s key leaders have either died or been killed. On July 2, 2008, the FARC
was dealt a significant setback when the Colombian military orchestrated an
operation to rescue 15 hostages, including three U.S. citizens – Marc Gonsalves,
Thomas Howes, and Keith Stansell – held since February 2003 and Colombian
presidential candidate Ingrid Betancourt held since February 2002.
President Uribe has also overseen the demobilization and disarmament of more
than 31,000 AUC paramilitaries that had been active since the 1980s, although there
are credible reports that some paramilitary groups have re-organized. As a result of
these accomplishments, Uribe enjoys strong popular support. His popularity has not
been affected by the so-called “para-political” scandal concerning government ties
to the paramilitaries, in fact, some maintain that the ongoing investigations of those
alleged ties show the newfound strength of the Colombian justice system. As of May
2008, five legislators had been convicted and more than 60 others, were either under
investigation or awaiting trials for possible paramilitary ties. It remains to be seen
how Uribe’s recent decision to extradite 15 paramilitary leaders to the United States
to stand trial for drug trafficking charges will affect those ongoing investigations, as
well as efforts to ensure that victims of paramilitary violence receive compensation
for their suffering.

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President Uribe’s popularity soared after Colombia’s March 2008 raid of a
FARC camp in Ecuador resulted in the killing of a top guerrilla commander and the
seizure of his computer files. The unauthorized incursion caused a major diplomatic
crisis between Colombia, Ecuador and Venezuela. Relations remain tense,
particularly since Interpol has verified the authenticity of files on the seized
computers alleging that both the Venezuelan and Ecuadorian governments had ties
to the FARC, charges that both governments have denied. Should Uribe continue to
make inroads against the FARC, his supporters may increase their recent calls to
convoke a referendum to amend the constitution so that he could run for a third
presidential term in May 2010.
U.S. policy in Colombia remains controversial. Proponents of the current policy
point to the significant inroads that have been made in improving security conditions
in Colombia and in weakening the FARC guerrillas. According to U.S. State
Department figures, kidnappings in Colombia have declined by 83%, homicides by
40%, and terrorist attacks by 76% since 2002. Critics argue that, despite these
security improvements, U.S. policy does not rigorously promote human rights,
provide for sustainable economic alternatives for drug crop farmers, and has not
reduced the amount of drugs available in the United States. A June 2008 report by
the U.N. Office on Drugs and Crime found that although yields were down, the coca
acreage planted in Colombia increased by 27% in 2007.
Congress has expressed concern about a number of Colombia-related policy
issues including the aerial eradication of illicit drug crops, interdiction programs,
funding levels for Plan Colombia, U.S. hostages, and human rights. The FY2008
Consolidated Appropriations Act (P.L. 110-161) cut overall assistance to Colombia
by some 8% from the requested level, providing an estimated $541 million in
assistance. The law reduced interdiction, eradication, and military aid by roughly
$104 million to about $305 million and increased funds for alternative development,
human rights, and institution building programs by some $84 million to $236
million. In December 2007, the Senate approved S.Con.Res. 53, condemning the
hostage -taking of three U.S. citizens for over four years by the FARC, while a
similar resolution, H.Con.Res. 260, was introduced in the House. As noted above,
the hostages were rescued by the Colombian military on July 2, 2008.
Congress has also been concerned about labor activist killings, an issue that
came to the fore during consideration of the U.S.-Colombia Free Trade Agreement
(CFTA). Critics of the free trade agreement have been concerned about the status of
labor rights in Colombia, as well as the ongoing para-political scandal. The Bush
Administration believes that Colombia has made significant advances to combat
violence and instability and views the pending trade agreement as a national security
issue in that it would strengthen a key democratic ally in South America. On April
8, 2008, President Bush submitted implementing legislation to Congress for the
CFTA. The 2002 Trade Promotion Authority procedures stipulated that Congress
must vote on that implementing legislation within 90 legislative days of its
introduction. However, on April 10, 2008, the House, citing insufficient
communication between the President and Congress, voted 224-195 in favor of
changing those procedures, effectively putting congressional consideration of the
CFTA on hold indefinitely.

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Also see sections above on “Andean Counterdrug Program” and “U.S.-
Colombia Trade Promotion Agreement.”
CRS Products
CRS Report RL32250, Colombia: Issues for Congress, by Colleen Cook.
CRS Report RS22419, U.S.-Colombia Trade Promotion Agreement, by Angeles
Villarreal.
Cuba
Since the early 1960s, U.S. policy toward Cuba has consisted largely of isolating
the communist nation through economic sanctions, which the Bush Administration
has tightened significantly. A second policy component has consisted of support
measures for the Cuban people, including private humanitarian donations and
U.S.-sponsored radio and television broadcasting to Cuba. As in past years, the main
issue for U.S. policy toward Cuba in the 110th Congress has been how to best support
political and economic change in one of the world’s remaining communist nations.
Unlike past years, however, Congress is examining policy toward Cuba in the context
of Fidel Castro’s departure from heading the government because of poor health.
Raúl Castro, who had served as provision head of government since July 2006,
was selected on February 24, 2008 by Cuba’s legislature to continue in that role
officially. Since Fidel stepped down from power in 2006, Cuba’s political succession
from Fidel to Raúl Castro has been characterized by a remarkable degree of stability.
Since March 2008, the government has implemented a number of economic changes
that from the outside might not seem significant, but are substantial policy changes
for a government that has heretofore followed a centralized communist economic
model. These have included lifting restrictions on the sales of consumer products
such as computers, microwaves, and DVD and video players; lifting restrictions on
the sale and use of cell phones; de-centralizing the agriculture sector in order to boost
productivity; and revamping salary structures in order to award workers who work
hard with more compensation. In addition, in March 2008, the government lifted a
ban on Cubans staying at tourist hotels. Few Cubans will be able to afford the cost
of staying in such hotels, but the move is symbolically significant and ends the
practice of what critics had dubbed “tourism apartheid.” While additional economic
changes under Raúl Castro are likely over the next year, few expect there will be any
change to the government’s tight control over the political system, which is backed
up by a strong security apparatus.
In the first session of the 110th Congress, Congress fully funded the
Administration’s FY2008 request for $45.7 million for Cuba democracy programs
in the Consolidated Appropriations Act for FY2008 (P.L. 110-161). The act did not
include provisions easing restrictions on U.S. agricultural exports to Cuba that had
been included in H.R. 2829, the FY2008 Financial Services and General Government
appropriations bill, or S. 1859, the Senate version of the FY2008 agriculture

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appropriations bill. In other action, on July 27, 2007, the House rejected H.Amdt.
707 to H.R. 2419, the 2007 farm bill, that would have facilitated the export of U.S.
agricultural exports to Cuba in several ways.
In the second session, the Senate approved S.Res. 573 on May 21, 2008, which
recognized Cuba Solidarity Day and the struggle of the Cuban people. On June 25,
2008, the House Appropriations Committee approved the FY2009 Financial Services
and General Government Appropriations bill with provisions easing restrictions on
family travel and U.S. agricultural exports to Cuba.
Several other legislative initiatives introduced in the 110th Congress would ease
sanctions: H.R. 177 (educational travel); H.R. 216 (Cuban baseball players); H.R.
217 and H.R. 624 (overall sanctions); H.R. 654, S. 554, and S. 721 (travel); H.R. 757
(family travel and remittances); H.R. 1026 (sale of U.S. agricultural products); H.R.
2819/S. 1673 (sale of U.S. agricultural and medical products and travel); and S. 1268
and H.R. 3182 (development of Cuba’s offshore oil). S. 554 would terminate U.S.-
government sponsored television broadcasting to Cuba. Several initiatives would
tighten sanctions: H.R. 525 (related to U.S. fugitives in Cuba), and H.R. 1679/S. 876
and S. 2503 (related to Cuba’s offshore oil development). Two initiatives, H.R. 1306
and S. 749, would amend a provision of law restricting the registration or
enforcement of certain Cuban trademarks; five initiatives – H.R. 217, H.R. 624, H.R.
2819, S. 1673, and S. 1806 – would repeal the trademark sanction. H.R. 5627 and
S. 2777 would give the congressional gold medal to Cuban political prisoner Dr.
Oscar Elias Biscet. H.Res. 935 would commemorate the anniversary of the 1996
shootdown of two U.S. civilian planes by Cuba.
CRS Products
CRS Report RL33819, Cuba: Issues for the 110th Congress, by Mark P. Sullivan.
CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances, by Mark P.
Sullivan.
CRS Report RS22742, Cuba’s Political Succession: From Fidel to Raul Castro, by Mark
P. Sullivan.
CRS Report RL33622, Cuba’s Future Political Scenarios and U.S. Policy 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.
Ecuador
Ecuador, a small, oil-producing country in the Andean region of South America,
has experienced a decade of severe political and economic instability. On January

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15, 2007, Rafael Correa, a left-leaning, U.S.-trained economist, was inaugurated to
a four-year term, becoming the country’s eighth President in ten years. Correa
defeated Alvaro Noboa, a wealthy banana magnate, in a run-off election held in late
November 2006, with 57% of the vote as compared to Noboa’s 43%.

President Correa has fulfilled his campaign pledge to call a constituent assembly
to reform the country’s constitution. Convened on November 29, 2007, the assembly
immediately closed the Ecuadorian Congress and has since assumed its legislative
functions. The assembly, which is controlled by representatives from Correa’s party,
has until the end of July 2008 to draft a new constitution. Critics contend that Correa
appears to be using the constituent assembly as a pretense to strengthen his power
base.
Ecuador’s relations with the United States have traditionally been close,
although recent events have strained bilateral relations. Negotiations for a bilateral
free trade agreement were suspended indefinitely in May 2006 following Ecuador’s
decision to expel a U.S. oil company, Occidental, from the country without
compensation for an alleged breach of contract. President Correa opposes
completing negotiations of a free trade agreement with the United States, and is not
willing to restart negotiations as a condition to continue receiving U.S. trade
preferences under the Andean Trade Preferences and Drug Eradication Act
(ATPDEA), which are due to expire on December 31, 2008.
Another major focus of U.S. interest in Ecuador is on counternarcotics
cooperation. President Correa has confirmed that his government will not renew the
lease on the U.S. air base at Manta, which is used for U.S. aerial counter-drug
monitoring operations, when it expires in 2009. He has expressed reservations about
any Ecuadorian involvement in Plan Colombia and publicly opposed the Colombian
army’s incursions into Ecuadorian territory, including Colombia’s unauthorized
March 2008 raid of a Revolutionary Armed Forces of Colombia (FARC) camp in
Ecuador. The United States provided $32.0 million in assistance to Ecuador in
FY2007 and an estimated $25.2 million in assistance in FY2008. The FY2009
request for Ecuador was for $32.5 million.
CRS Products
CRS Report 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.
Guatemala
President Alvaro Colom, of the center-left National Union of Hope (UNE) party,
was sworn in for a four-year term on January 14, 2008. He defeated the right-wing
candidate, Otto Pérez Molina of the Patriot Party (PP), in run-off elections held

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November 4, 2007 after no single candidate secured a majority of votes in the first
round held on September 9. The election was deemed free and fair, with a significant
increase in voting in rural areas, although the election campaigns were the most
violent since 1985. Colom will need to build coalitions to support his agenda since
no party holds a majority in the 158-member National Assembly. Reforms are being
delayed because of corruption investigations on both sides of the aisle. The
legislative leader stepped aside and was suspended from UNE after being implicated
in the transfer of legislature funds to a private firm. The banking regulatory
commission has accused opposition leader Pérez Molina of involvement in siphoning
of state funds. Pérez had already declared his intention to run for President in 2011.
Reporting on his first 100 days in office in late April 2008, Colom cited as
achievements a $79.8 million rural development council for projects in the country’s
poorest 44 municipalities; reduction in the murder rate from 17 to 11 a day; and a
major drug interception and arrest of 36 alleged traffickers. He also implemented a
$200 million investment program supporting producers of basic grains, rural
infrastructure, land reform, and housing projects. In terms of problems, the attorney
general noted an “alarming increase” in kidnappings. Critics voiced concern over the
lack of a comprehensive policy to address gang-related issues and lack of progress
in purging police of corrupt officers.
Addressing concerns that his economic policy was weak, in May 2008, Colom
announced a 10-point program addressing the economic crisis generated by rising
food prices. The program’s goals are to negotiate with the private sector to address
inflation; boost production by providing cooperatives and small producers with
access to credit, and achieve economic stability. Given Guatemala’s widespread
poverty, the food crisis has hit the country particularly hard. According to the UN
World Food Program, poverty increased from 2006 to 2007, a three point rise
resulting in 54% of the population living in poverty, and a five point rise resulting in
20.2% living in extreme poverty. Although spending pressures for social programs
may lead to a 2009 tax reform, some believe that Colom will continue the fiscally
conservative and pro-business stance of his predecessor, Oscar Berger, at least at the
outset. Given the importance of trade relations and the mutual fight against
narcotrafficking - nearly 90% of cocaine heading for the United States passes through
Central America - U.S.-Guatemalan relations will likely remain close.
Under President Oscar Berger’s leadership (2004 - 2008), the Guatemalan
economy experienced the highest growth rates since 1998, up to an estimated 5.6%
in 2007. This growth is attributed to increased remittances, high prices for
Guatemalan exports such as sugar and cardamon, and increased trade and investment
stemming from the U.S.-Dominican Republic- Central America Free Trade
Agreement (CAFTA-DR). The Berger government secured passage of a law against
organized crime and legislative approval for the United Nations International
Commission Against Impunity in Guatemala (CICIG) to be established. It also took
a significant step in the implementation of reforms agreed upon in the 1996 peace
accords by expanding voting to rural areas, thus incorporating millions of indigenous
people into the political decision-making process. Drug trafficking and organized
crime continued to overwhelm the country’s weak institutions, however, and violent
crime rates remained high.

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International adoption from Guatemala has been a source of concern in bilateral
relations. Guatemala implemented a new adoption law to comply with the Hague
Convention on the Protection of Children and Cooperation in Respect of Inter-
country Adoption, intended to prevent human trafficking. Effective January 1, 2008,
the law transfers responsibility for adoptions from private agencies and attorneys to
the usually slow Guatemalan courts and a newly created National Adoptions Council,
bringing U.S. adoptions almost to a standstill. The new law permits the completion
of adoption cases pending as of December 31, 2007; they are being reviewed to
ensure they are legal, a process that may take months. Prior to the new process,
Guatemala was the biggest source for U.S. adoptions after China; as of mid-June
2008 no new adoptions had begun. It is unclear whether the United States will
permit adoptions from Guatemala after U.S. implementation of the Hague
Convention in April 2008, due to concerns that the Guatemalan system will not yet
comply with all of the Convention’s requirements.
Relations between the United States and Guatemala traditionally have been
close, but there has been friction at times over human rights and civil/military issues.
Congressional concerns regarding Guatemala focus on human rights, democracy,
counternarcotics, and U.S. immigration policy. Guatemala received $51.3 million of
U.S. assistance in FY2007, and is receiving an estimated $62.9 million in FY2008.
The Consolidated Appropriations Act for FY2008 (H.R. 2764/P.L. 110-161)
stipulates that funding from the Development Assistance and Global Health and
Child Survival accounts be made available for Guatemala at no less than the amount
allocated in FY2007. Significantly, the act’s joint explanatory statement
recommended providing $500,000 in Foreign Military Financing (FMF) pending
Department of State certification that certain human rights conditions have been met.
This is the first time Guatemala has been eligible to receive FMF funding since 1990.
Requested funding for FY2009 is $62.3 million.
CRS Products
CRS Report RS22727, Guatemala: 2007 Elections and Issues for Congress, by
Miranda Louise Jasper and Colleen W. Cook.
CRS Report RL31870, The Dominican Republic-Central American Free Trade
Agreement (CAFTA-DR), by J. F. Hornbeck.

CRS Report RL34112, Gangs in Central America, by Clare M. Ribando.
Haiti
Haiti’s fragile stability has been shaken yet again by a worsening food crisis,
which led to violent protests and the removal of the Prime Minister in April 2008.
UN officials said political opponents and armed gangs infiltrated the protests and
fired at UN peacekeepers in an effort to weaken the government. Without a Prime
Minister, Haiti cannot sign certain agreements with foreign donors or implement
programs to address the crisis. President René Préval, who began his five-year term
in May 2006, named a new candidate for prime minister on June 23, 2008: Michele

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Pierre-Louis, a highly-regarded educator and economist who has worked on behalf
of the Haitian poor and youths. Parliament, including members of Préval’s own
party, rejected his previous two choices.
In the previous year and a half, Preval had begun to establish some stability. He
outlined the two main missions for his government as being to build institutions and
to establish favorable conditions for private investment in order to create jobs. In
November 2007, his Administration published its Poverty Reduction Strategy, a key
step in meeting IMF requirements for debt relief. International donors pledged more
than $1.5 billion in economic assistance to Haiti. With the support of the United
Nations Stabilization Mission in Haiti (MINUSTAH), security conditions had
improved and reform of the country’s police force had begun. President Bush praised
Préval for his efforts to improve economic conditions and establish the rule of law
in Haiti. Préval pledged to cooperate with U.S. counternarcotics efforts.
The main priorities for U.S. policy regarding Haiti during the 110th Congress
have been how to strengthen fragile democratic processes, continue to improve
security, and promote economic development. Other concerns include the cost and
effectiveness of U.S. aid; protecting human rights; combating narcotics, arms, and
human trafficking; addressing Haitian migration; and alleviating poverty. Since
Haiti’s priorities are many, and deeply intertwined, the Haitian government and the
international donor community are implementing an assistance strategy that attempts
to address these many needs simultaneously. The challenge is to accomplish
short-term projects that will boost public and investor confidence, while also
pursuing long-term development plans to improve living conditions for Haiti’s vast
poor population. The challenge has been made more daunting in the face of rising
food and gasoline prices world-wide. In May 2008, the Bush Administration
announced an additional $25 million in emergency food aid to Haiti, making its total
emergency contribution $45 million.
U.S. assistance for Haiti in FY2007 totaled an estimated $214.5 million, and the
estimated for regular foreign assistance in FY2008, not including the emergency food
aid, is $234.2 million. The Administration’s FY2008 request was for $223 million,
including $83 million to combat HIV/AIDS and $25.5 million for an integrated
conflict mitigation program to target urban crime. Among other provisions affecting
aid to Haiti, the FY2008 Consolidated Appropriations Act (H.R. 2764/P.L. 110-161)
stipulates that not less than $201.5 million in economic and military assistance be
provided. The request for FY2009 is $245.9 million, including $35.5 million in P.L.
480 food aid.
There is bipartisan support in Congress for support to Haiti under the Préval
government. Responding to the food crisis and Préval’s earlier calls for increased
U.S. investment in Haiti, Congress passed the second Haitian Hemispheric
Opportunity through Partnership Encouragement (HOPE) Act as part of the 2008
farm bill in June 2008 (Title XV, P.L. 110-246). The law expands trade preferences
for U.S. imports of Haitian apparel first provided in the 2006 version of the HOPE
Act ( P.L.109-432, Title V). In April 2008, the House unanimously passed an
amendment to the Jubilee Act (H.Amdt. 993 to H.R. 2634) recommending
immediate cancellation of Haiti’s outstanding debts to multilateral institutions, which
constitute much of Haiti’s $1.7 billion foreign debt.

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Congress is also likely to consider what levels of support to provide for security
enhancing measures in Haiti, counternarcotics programs, development assistance, and
police and judicial reform. Another issue of interest to Congress is likely to be
ensuring that free and fair elections are held this spring for the Haitian Senate. Some
Members are likely to remain concerned about the Bush Administration’s October
2006 decision to partially lift the 15-year-old arms embargo against Haiti in order to
allow arms and equipment to be provided to Haitian security units.
CRS Products
CRS Report RL32294, Haiti: Developments and U.S. Policy Since 1991 and Current
Congressional Concerns, by Maureen Taft-Morales and Clare Ribando Seelke.
CRS Report RS22879, Haiti: Legislative Responses to the Food Crisis and Related
Development Challenges, by Clare Ribando Seelke and J. F. Hornbeck.
CRS Report RL34029, Haiti’s Development Needs and a Statistical Overview of
Conditions of Poverty, by Maureen Taft-Morales and Demond Alexander
Drummer.
Mexico
The United States and Mexico have a close and complex bilateral relationship,
with extensive economic linkages as neighbors and partners under the North
American Free Trade Agreement (NAFTA). Bilateral relations are generally
friendly, although the U.S. enactment of border fence legislation in 2006 caused
some tension in the relationship.
Drug trafficking issues are prominent in relations since Mexico is the leading
transit country for cocaine, a leading supplier of methamphetamine and heroin, and
the leading foreign supplier of marijuana to the United States. Shortly after taking
office in December 2006, President Felipe Calderón of the conservative National
Action Party (PAN) launched operations against drug cartels in nine Mexican states.
Since early 2008, he has sent more than 25,000 soldiers and federal police to drug
trafficking “hot-spots.” Calderón has increased extraditions to the United States, and
has demonstrated an unprecedented willingness to reach out for counternarcotics
assistance from the United States while also calling for increased U.S. efforts on
arms trafficking and a reduction in the U.S. demand for illicit drugs. The rivalries
and turf wars among Mexico’s drug cartels fueled an increase in violence within the
country, particularly along the Southwest border region that the United States shares
with Mexico. In an effort to control the most lucrative drug smuggling routes in
Mexico, rival drug cartels are launching attacks on each other, the Mexican military,
and police personnel. This heightened violence is posing a serious challenge to
Mexico’s security forces.
In October 2007, the United States and Mexico announced the Mérida Initiative
to combat drug trafficking, gangs, and organized crime in Mexico and Central
America. The Administration subsequently requested $500 million in FY2008

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supplemental assistance and $450 million in its regular FY2009 budget request for
Mexico as part of a $1.4 billion multi-year aid package for the Initiative.
In late June 2008 legislative action on Mérida Initiative in H.R. 2642 (P.L. 110-
252), Congress provided $400 million supplemental assistance in FY2008 and
FY2009 for Mexico, with not less than $73.5 million for judicial reform, institution-
building, anti-corruption, and rule of law activities. The measure provides $352
million in FY2008 supplemental assistance within the International Narcotics Control
and Law Enforcement (INCLE), Foreign Military Financing (FMF), and Economic
Support Funds (ESF) accounts, and $48 million in FY2009 supplemental assistance
within the INCLE account. The measure has human rights conditions softer than
compared to earlier House and Senate versions, in large part because of Mexico’s
objections that some of the conditions would violate its national sovereignty. In the
final version, human rights conditions require that 15% of INCLE and FMF
assistance be withheld until the Secretary of State reports in writing that Mexico is
taking action in four human rights areas. The Secretary of State, after consultation
with Mexican authorities, is required to submit a report on procedures in place to
implement Section 620J of the Foreign Assistance Act of 1961 with regard to vetting
to ensure that those receiving assistance have not been involved in human rights
violations.
In other action, on June 10, 2008, the House approved authorization legislation
for the Mérida Initiative, H.R. 6028, that would authorize $1.6 billion over three
years, FY2008-FY2010, for both Mexico and Central America, $200 million more
than originally proposed by President Bush. Of that amount, $1.1 billion would be
authorized for Mexico, and $73.5 million for activities of the U.S. Bureau of
Alcohol, Tobacco, Firearms, and Explosives (ATF) to reduce the flow of illegal
weapons from the United States to Mexico. Among the bill’s various conditions on
providing the assistance, the measure requires that vetting procedures are in place to
ensure that members or units of military or law enforcement agencies that may
receive assistance have not been involved in human rights violations.
Migration, border security, and trade issues also have dominated the bilateral
relationship in recent years. Comprehensive immigration reform was debated early
in the 110th Congress, but the issue was put aside following a failed cloture motion
in the Senate on the Comprehensive Immigration Reform Act of 2007 (S. 1348). In
September 2006, Congress approved the Secure Fence Act of 2006 (P.L. 109-367)
to authorize the construction of a border fence and other barriers along 700 miles of
the U.S.-Mexico border. Since 1994, NAFTA institutions have been functioning,
trade between the countries has tripled, and allegations of violations of labor and
environmental laws have been considered by the trilateral institutions. The Bush
Administration argues that NAFTA has had modest positive impacts on all three
member countries, but Mexican farmers have strongly criticized the effects of
NAFTA. Notable bilateral trade disputes relate to trucking, tuna, sweeteners and
anti-dumping measures.

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CRS Products
CRS Report RL32724, Mexico-U.S. Relations: Issues for Congress, by Colleen Cook,
Rebecca G. Rush, and Mark P. Sullivan.
CRS Report RL34215, Mexico’s Drug Cartels, by Colleen W. Cook.
CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and
Implications, by M. Angeles Villarreal.
CRS Report RL34204, Immigration Legislation and Issues in the 110th Congress,
coordinated by Andorra Bruno.
CRS Report RL32044, Immigration: Policy Considerations Related to Guest Worker
Programs, by Andorra Bruno.

CRS Report RL34112, Gangs in Central America, by Clare Ribando Seelke.
Nicaragua
The credibility of President Daniel Ortega, inaugurated in January 2007, is
diminishing both within Nicaragua and abroad, as questions arise about the lack of
transparency in government finances, and actions that critics view as increasingly
authoritarian. The Sandinista leader’s previous presidency (1985-1991) was marked
by a civil conflict with U.S.-backed "contras," authoritarian tendencies, and charges
of corruption. Ortega, who had lost the last three presidential elections, won only
37.9% of the vote in the 2006 elections. But a Nicaraguan law - which Ortega
helped spearhead through the congress - allowed him to avoid a run-off vote because
he was more than 5% ahead of the next closest candidate, Eduardo Montealegre,
then-head of the Nicaraguan Liberal Alliance (ALN). Until now, Ortega has walked
a fine line, balancing strong anti-U.S. rhetoric with cooperation on issues of concern
to the United States, such as the pursuit of free-trade policies (including participation
in CAFTA-DR), counter-narcotics efforts, and resolution of property claims. His
administration signed a poverty reduction strategy with the International Monetary
Fund (IMF), providing for a three-year loan program.
Now, however, the IMF is withholding $39 million from Nicaragua because the
government failed to approve an “anti-fraud” energy law to regulate aid from
Venezuela, including funds generated by the re-sale of Venezuelan oil bought on
preferential terms, which amounts to hundreds of millions of dollars a year. The IMF
said it will not sign a new agreement with Nicaragua until the legislature passes
legislation recognizing the debts owed to Venezuela and regulating the use of the
funds. Otherwise, donors and critics say, the Venezuelan aid is basically a slush fund
outside the national budget which the Sandinistas can use for patronage, and which
could leave future governments with an enormous debt. The IMF also expressed
concern over the government’s making loans to companies using government social
security funds.

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The top U.S. foreign policy priorities in Nicaragua are to strengthen democracy
and governance, promote economic growth, and improve security. In 2005, the Bush
Administration signed a five-year, $175 million agreement with Nicaragua under the
Millennium Challenge Account to promote rural development. Other U.S. aid to
Nicaragua has fluctuated, from $50 million in FY2006, to $36.9 million in FY2007,
an estimated $28.6 million for FY2008, and a requested $38 million for FY2009.
The U.S. ambassador to Nicaragua and the European Union representative have both
said international financial support could be in jeopardy because of the Ortega
government’s “closure of democratic space.” The Sandinista-dominated electoral
council (CSE) revoked the legal status of two major opposition parties, the dissident
Sandinista Reformist Movement (MRS) and the center-right Conservative Party. The
two parties were expected to do well in next November’s municipal elections. The
CSE’s postponement of local elections on the Atlantic Coast led to riots. Ortega also
established Citizens Power Councils, despite the National Assembly having voted
against them. The councils administer government anti-poverty programs, but are
overseen by Ortega’s wife, Rosario Murillo and controlled by the Sandinista party.
Critics say they are another example of lack of transparency and authoritarian
practices.
U.S. officials have also expressed concern over increasing ties between Iran and
Nicaragua. Iran has pledged to invest in Nicaragua’s ports, agricultural sector, and
energy network, as well as constructing houses for low-income Nicaraguans, with
Venezuela co-financing many of these infrastructure projects. Nicaragua has joined
Mexico and other Central American countries in criticizing U.S. inaction on
comprehensive immigration reform. In 2007, the Department of Homeland Security
extended Temporary Protected Status (TPS) to about 4,000 eligible Nicaraguans
living in the United States until January 5, 2009. Other points of tension may occur
if Ortega continues to strengthen relations with Venezuela or follow through with
recent threats to re-nationalize components of the economy.
CRS Products
CRS Report RS22836, Nicaragua: Political Situation and U.S. Relations, by Clare
Ribando Seelke.
CRS Report RL33983, Nicaragua: The Election of Daniel Ortega and Issues in U.S.
Relations, by Maureen Taft-Morales.
Panama
With four successive elected civilian governments, the Central American nation
of Panama has made notable political and economic progress since the 1989 U.S.
military intervention that ousted the regime of General Manuel Noriega from power.
The current President, Martín Torrijos of the Democratic Revolutionary Party (PRD),
was elected in May 2004 and inaugurated to a five-year term in September 2004.
Torrijos, the son of former populist leader General Omar Torrijos, won a decisive

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electoral victory with almost 48% of the vote in a four-man race. Torrijos’ electoral
alliance also won a majority of seats in the unicameral Legislative Assembly.

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

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CRS Products
CRS Report RL30981, Panama: Political and Economic Conditions and U.S.
Relations, by Mark P. Sullivan.
CRS Report RL32540, The Proposed U.S.-Panama Free Trade Agreement, by J. F.
Hornbeck.
Peru
President Alan García was elected to a second, non-consecutive presidential
term in June 2006, defeating populist Ollanta Humala 53% to 47%. Since taking
office for his five-year term, García has embraced a free trade agreement with the
United States, appointed a fiscally conservative finance minister, and assured the
international financial community that he is running the country as a moderate rather
than as the leftist he had been in his early career. García’s earlier presidency
(1985-1990) was marked by hyper-inflation and a violent guerrilla insurgency.
President García has continued the pro-market economic policies of his predecessor,
Alejandro Toledo, who presided over one of the highest economic growth rates in
Latin America throughout his term. Peru’s economy grew about 8% in 2007.
Economic growth is expected to remain strong but be tempered by rising inflation.
García says he seeks to use trade to reduce poverty in Peru, which is
concentrated in rural and jungle areas and among the indigenous population. Local
and international groups have charged that Garcia’s trade agenda threaten the
environment and the livelihoods of indigenous people, especially in the Amazon
region. Popular frustration that economic growth has not resulted in improved living
conditions has led to periodic social unrest. Human rights groups charge that the
government is violating civil liberties by prohibiting legitimate protests. Garcia’s
administration pushed laws through congress that imposed strict regulations on non-
governmental organizations’ work in Peru; criminalized social protests; and
classified strikes as “extortion.”
Peru’s government maintains that it is committed to holding government
officials accountable for past abuses of power. Former President Alberto Fujimori
(1990-2000) was extradited from Chile on charges of corruption and human rights
violations and his trial began in December 2007. If convicted, he faces 30 years in
prison and a fine of $33 million. As the trial continues, García may lose the support
of the Fujimorista bloc in the Peruvian Congress, which he relies on to pass
legislation. Fujimori’s daughter Keiko, who won a Congressional seat in 2006 with
more votes than any other candidate, launched a new party assumed to be a vehicle
for a 2011 presidential bid and the release of her father. Corruption scandals have
involved members of Garcia’s party.
Issues in U.S.-Peruvian relations include democracy, human rights,
environmental protection, and counternarcotics cooperation. Trade is currently at the
forefront of the bilateral agenda. A U.S.-Peru Trade Promotion Agreement (PTPA)
was signed in April 2006, and approved by the Peruvian legislature that June. PTPA
implementing legislation (H.R. 3668) passed the House on November 8, 2007, by a

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vote of 285 to 132; the Senate on December 4, 2007, by a vote of 77 to 18; and was
signed by President Bush on December 14, 2007 (P.L. 110-138). Peru also benefits
from the Andean Trade Promotion and Drug Eradication Act (P.L.109-432).
Congress extended that act on its expiration date, February 29, 2008, until December
31, 2008, by which time it is expected that the superseding PTPA will be
implemented. Garcia created an environment ministry in May 2008 to carry out
environmental impact assessments.

Peru is a major illicit drug-producing and transit country. In April 2007,
President García announced a tough anti-drug policy, reaffirming his government’s
commitment to coca eradication, despite protests by coca growers. The United
States provided $136.2 million in foreign assistance to Peru in FY2007 and an
estimated $90.3 million in FY2008. The FY2008 request for Peru was for $93.2
million, including $66.8 million in counternarcotics and economic support funds,
with the most significant cuts occurring in counternarcotics funds traditionally
provided through the Andean Counterdrug Initiative (ACI). The joint explanatory
statement to the Consolidated Appropriations Act for FY2008 (H.R. 2764/P.L.
110-161) recommended providing counternarcotics funds at the level of the President
’s request. The request for FY2009 (not including Peace Corps funds) is $103
million, including $37 million for the Andean Counterdrug Program, and $53 million
for Development Assistance.
CRS Products
CRS Report RS22715, Peru: Political Situation, Economic Conditions, and U.S.
Relations, by Miranda Louise Jasper and Clare Ribando Seelke.
CRS Report RL34108, U.S.-Peru Economic Relations and the U.S.-Peru Trade
Promotion Agreement, by M. Angeles Villarreal.
CRS Report RS22548, ATPA Renewal: Background and Issues for Congress, by M.
Angeles Villarreal.
Venezuela
Under the populist rule of President Hugo Chávez, first elected in 1998 and
most recently reelected to a six-year term in December 2006, Venezuela has
undergone enormous political changes, with a new constitution and unicameral
legislature, and a new name for the country, the Bolivarian Republic of Venezuela.
U.S. officials and human rights organizations have expressed concerns about the
deterioration of democratic institutions and threats to freedom of expression under
President Chávez, who has survived several attempts to remove him from power.
The government has benefitted from the rise in world oil prices, which has sparked
an economic boom and allowed Chávez to increase expenditures on social programs
associated with his populist agenda. After he was reelected, Chávez announced new
measures to move the country toward socialism. His May 2007 closure of a popular
Venezuelan television station (RCTV) that was critical of the government sparked

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protests. President Chávez was dealt a setback in December 2007 when his proposed
constitutional amendment package, which included the removal of presidential term
limits, was defeated by a close margin in a national referendum.
The United States traditionally has had close relations with Venezuela, the
fourth major supplier of foreign oil to the United States, but there has been friction
with the Chávez government. U.S. officials have expressed concerns about human
rights, Venezuela’s military arms purchases, its relations with Cuba and Iran, and its
efforts to export its brand of populism to other Latin American countries. Declining
cooperation on anti-drug and anti-terrorism efforts has also been a U.S. concern.
Since 2005, President Bush has annually designated Venezuela as a country that has
failed demonstrably to adhere to its obligations under international narcotics
agreements, and since 2006, the Department of State has prohibited the sale of
defense articles and services to Venezuela because of lack of cooperation on anti-
terrorism efforts. In the aftermath of Colombia’s March 1, 2008 bombing of a FARC
camp in Ecuador that killed the terrorist group’s second in command Raúl Reyes,
captured laptops contained files potentially linking the Venezuelan government with
efforts to secure arms and support the FARC. In a turn of events, on June 8, 2008,
President Chávez publicly urged the FARC to end its armed struggle, and release all
hostages.
Concerns regarding Venezuela in the 110th Congress have focused on human
rights, energy, and terrorism issues. On May 24, 2007, the Senate approved S.Res.
211, expressing profound concerns regarding freedom of expression and Venezuela’s
decision not to renew the license of RCTV. The House version of H.R. 2764, the
FY2008 State Department and Foreign Operations appropriations bill approved in
June 2007, would have directed $10 million for targeted international broadcasting
to Venezuela. The final enacted measure (P.L. 110-161, Division J) did not earmark
such funding, but the explanatory statement to the bill expressed support for restoring
shortwave and medium wave transmission to Venezuela. On November 5, 2007, the
House approved H.Res. 435, expressing concern about Iran’s efforts to expand its
influence in Latin America, and noting Venezuela’s increasing cooperation with Iran.
Additional House initiatives that have been introduced include two human rights
resolutions, H.Con.Res. 50 and H.Con.Res. 77; H.Res. 560, expressing concern
about Venezuela’s actions in the oil sector; H.Res. 965, calling upon the Chávez
government to take action to deny Venezuelan territory and weapons from being used
by terrorist organizations; and H.Res. 1049, calling for Venezuela to be designated
a state sponsor of terrorism. Two Senate bills, S. 193 and S. 1007, would increase
hemispheric cooperation on energy issues.
CRS Products
CRS Report RL32488, Venezuela: Political Conditions and U.S. Policy, by Mark P.
Sullivan and Nelson Olhero.

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