U.S.-Latin America Trade and Investment
link to page 1 
March 15, 2024
U.S.-Latin America Trade and Investment
The 118th Congress is engaged in a range of legislative and
exports. Most of this trade is with Mexico, which accounted
oversight activities related to trade policy toward the Latin
for 77% of U.S. imports from the region and 62% of U.S.
America and Caribbean (LAC) region, which is among the
exports to the region in 2023 (see Figure 1). In 2023, the
United States’ most important regional trading partners.
value of total U.S. trade with the region declined slightly
Historically, some Members of Congress have approached
(1%), with U.S. merchandise exports declining from $542.8
initiatives to strengthen economic relations with LAC
billion in 2022 to $517.6 billion in 2023 and U.S.
partners as complementary to broader U.S. policy goals in
merchandise imports increasing from $603.7 billion to
the region, such as addressing political and economic
$620.7 billion. Major U.S. imports from the region include
instability, insecurity, and migration. For example, see CRS
motor vehicles and parts, mostly from Mexico. Major U.S.
In Focus IF12538, U.S. Efforts to Manage Western
imports from, and exports to, the region are in the electrical
Hemisphere Migration Flows, by Clare Ribando Seelke,
machinery and parts categories, which include electrical
Peter J. Meyer, and Shelby B. Senger.
goods and components.
Free Trade Agreements
Figure 1. U.S. Trade with LAC Countries
Since 1994, the United States has strengthened economic
ties with LAC countries through the negotiation and
implementation of comprehensive free trade agreements
(FTAs). Starting with the North American Free Trade
Agreement (NAFTA) in 1994, which was replaced by the
United States-Mexico-Canada Agreement (USMCA) in
2020, the United States currently has six FTAs with 11
LAC countries: Mexico, Chile, Colombia, Costa Rica, the
Dominican Republic, El Salvador, Guatemala, Honduras,
Nicaragua, Panama, and Peru. NAFTA established new
rules and disciplines that influenced subsequent trade
agreements on issues such as intellectual-property-rights
protection, services trade, agriculture, dispute settlement,
Source: U.S. Census Bureau, as reported by Trade Data Monitor.
investment, labor standards, and the environment.
U.S.-LAC Investment
Trade Preference Programs
Since NAFTA entered into force in 1994, U.S. foreign
The United States has extended unilateral trade preferences
direct investment (FDI) in LAC and LAC FDI in the United
to some LAC countries through several programs. The
States have both increased almost ninefold (not adjusting
Caribbean-focused programs are known collectively as the
for inflation). The region, which includes some of the
Caribbean Basin Initiative, launched by President Reagan in
world’s leading tax havens, currently accounts for 16% of
the early 1980s in an effort to foster economic and political
total U.S. FDI abroad. According to the U.S. Bureau of
stability in the region. The 1983 Caribbean Basin Economic
Economic Analysis, U.S. FDI stock in LAC stood at $1.04
Recovery Act (CBERA, P.L. 98-67, subsequently amended,
trillion in 2022 (on a historical-cost basis), concentrated
with no expiration) provides limited duty-free entry of
primarily in the British Overseas Territories (BOTs) of the
selected Caribbean products. The Caribbean Basin Trade
Caribbean, including Bermuda (61%), Mexico (13%), and
Partnership Act (CBTPA, P.L. 106-200, Title II), amended
Brazil (8%). By sector, U.S. FDI in LAC was mainly in
CBERA by expanding preferences; it was most recently
holding companies (46%), finance (26%), and
extended through September 2030 (P.L. 116-164). Haiti
manufacturing (10%), particularly transportation
receives additional preferences through several programs
equipment. Employment by U.S. multinational enterprises’
that are set to expire in 2025 and provide generous and
(MNEs’) majority-owned foreign affiliates in LAC totaled
flexible unilateral preferences to the country’s apparel
2.8 million workers in 2021, more than half of which were
sector. The Generalized System of Preferences (GSP)
employed in Mexico.
program, which was first authorized in the 1970s and
expired on December 31, 2020, provided duty-free tariff
As a source of foreign investment, LAC FDI represented
treatment to certain products imported from 120 designated
4% ($212 billion) of total FDI in the United States in 2022.
developing countries, including several LAC countries.
It was held mainly in the manufacturing (18%), real estate
(16%), and finance (10%) sectors, and top sources included
US-LAC Trade
the BOTs of the Caribbean (63%), Mexico (16%), and
The United States accounts for roughly 31% of the LAC
Barbados (5%). Majority-owned U.S. affiliates of LAC
region’s merchandise imports and 45% of its merchandise
MNEs employed 430,100 workers in the United States in
https://crsreports.congress.gov
U.S.-Latin America Trade and Investment
2021; affiliates with ultimate owners in Brazil and Mexico
opening measures could lessen its impact. Critics also note
were among the largest employers from the region.
that APEP, to date, does not include major economies like
Brazil and Argentina.
U.S. investment policy toward LAC has generally focused
on fostering U.S. and international investment in the region,
Issues Before Congress
including by facilitating U.S. firms’ access to economic
Congress may consider whether or not to respond, with
opportunities and supporting increased intra-LAC
oversight activities or legislative options, to the Biden
investment. Although some governments have introduced
Administration’s initiatives regarding economic relations
economic reforms over the past two decades, and the
with the LAC region. Congress also may consider assessing
overall investment climate has improved, U.S. investors
the effectiveness of existing FTAs or other types of trade
continue to face significant obstacles in LAC, including
arrangements in the region, seeking broader market-
poor transportation and logistics infrastructure, rigid labor
opening measures such as the proposed FTAA of the mid-
markets, corruption, complex and nontransparent legal and
1990s, or examining proposals for a more defined strategic
regulatory frameworks, and insufficient protection of
plan for the Hemisphere. For example, the proposed
property rights. Through U.S.-led initiatives—such as the
Americas Act calls on the United States to develop a
proposed Free Trade Area of the Americas (FTAA) and the
coherent Latin America policy. One of its key proposals is a
Biden Administration’s ongoing Americas Partnership for
“pathway to membership” in the USMCA Agreement.
Economic Prosperity (APEP)—the U.S. government has
Other Members of Congress have opposed efforts that
sought to address these obstacles, deepen economic
would further open the U.S. market through FTAs.
integration, and bolster regional competitiveness. U.S.
policy also seeks to facilitate U.S.-LAC investment,
Some Members of Congress have expressed increasing
establish rules and disciplines, and enhance cooperation
concerns about marked increases in LAC economic ties
through other framework agreements, such as bilateral
with China, whose interests in the region may at times
investment treaties (BITs), investment chapters of FTAs,
conflict with those of the United States. At issue have been
trade and investment framework agreements (TIFAs), and
questions over lost U.S. export opportunities, as well as the
bilateral tax treaties.
potential implications of the region’s growing economic
interdependence with China, including as a result of
America’s Partnership for Economic Prosperity
China’s financing and construction of strategic
In June 2022, the Biden Administration officially launched
infrastructure projects through its One Belt, One Road
APEP, an initiative that aims to bolster regional
(OBOR) initiative. Although China has become one of
competitiveness and mobilize investment in the Western
LAC’s largest trading partners and a growing source of
Hemisphere. In November 2023, attendees at the inaugural
investment and development finance, FDI stock from China
APEP Leaders’ Summit announced a plan to use APEP as a
in the region is about half of that from the United States.
forum-based initiative to drive inclusive growth in the
Congress could assess whether or not to modify or enact
region and strengthen critical supply chains, especially in
additional trade or investment policies in response to the
the areas of clean energy, semiconductors, and medical
LAC region’s evolving commercial relationships.
supplies. A January 2023 White House fact sheet states that
U.S. Secretary of State Antony Blinken and U.S. Trade
Congress also may examine the pros and cons of partial
Representative (USTR) Katherine Tai are moving the
trade agreements, such as those reached with Brazil and
initiative forward with the initial signatories to the Joint
Ecuador in 2020 on trade facilitation, anti-corruption, and
Declaration on APEP: Barbados, Canada, Chile, Colombia,
good regulatory practices. Some Members of Congress
Costa Rica, the Dominican Republic, Ecuador, Mexico,
favor these “mini” agreements as mechanisms to eventually
Panama, Peru, and Uruguay. These countries and the
develop and enter into comprehensive FTAs. Other
United States represent 90% of the Western Hemisphere’s
lawmakers have argued that such agreements provide less
GDP and nearly two-thirds of the region’s population. With
leverage for reducing tariff and nontariff trade barriers, or
the exception of Uruguay, all the signatories already have
for addressing concerns about the environment and
FTAs with the United States.
workers’ rights in these countries.
The Biden Administration stated that the partnership “will
Policymakers also may consider how to use trade policy to
foster regional competitiveness, resilience, shared
boost regional economies, especially in Central America, to
prosperity, and inclusive and sustainable investment, while
help address some of the economic causes of migration. For
tackling the climate crisis, by seeking high standard
example, some Members have expressed an interest in the
agreements” under four policy pillars: regional
possibility of modifying CAFTA-DR’s rules of origin in the
competitiveness, resilience, shared prosperity, and
textiles and apparel industries, with the aim of promoting
sustainable investment. Some observers contend that the
investment, creating manufacturing jobs, and enhancing
initiative comes at a critical time for U.S.-LAC economic
supply chains and economic opportunities in the region.
relations, given the context of increasing Chinese influence
Other Members have called for updating CAFTA-DR by
in the region. During the past decade, China surpassed the
incorporating similar provisions as those in USMCA,
United States as South America’s largest trading partner.
particularly on labor.
Critics contend that the proposed APEP lacks definition and
may not meet its stated objectives, arguing that the Biden
M. Angeles Villarreal, Coordinator, Specialist in
Administration has not developed a clear strategic plan for
International Trade and Finance
the Americas. They argue that the failure to address market-
https://crsreports.congress.gov
U.S.-Latin America Trade and Investment
IF12614
Andres B. Schwarzenberg, Specialist in International
Trade and Finance
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12614 · VERSION 1 · NEW
March 15, 2024
U.S.-Latin America Trade and Investment
The 118th Congress is engaged in a range of legislative and
exports. Most of this trade is with Mexico, which accounted
oversight activities related to trade policy toward the Latin
for 77% of U.S. imports from the region and 62% of U.S.
America and Caribbean (LAC) region, which is among the
exports to the region in 2023 (see Figure 1). In 2023, the
United States’ most important regional trading partners.
value of total U.S. trade with the region declined slightly
Historically, some Members of Congress have approached
(1%), with U.S. merchandise exports declining from $542.8
initiatives to strengthen economic relations with LAC
billion in 2022 to $517.6 billion in 2023 and U.S.
partners as complementary to broader U.S. policy goals in
merchandise imports increasing from $603.7 billion to
the region, such as addressing political and economic
$620.7 billion. Major U.S. imports from the region include
instability, insecurity, and migration. For example, see CRS
motor vehicles and parts, mostly from Mexico. Major U.S.
In Focus IF12538, U.S. Efforts to Manage Western
imports from, and exports to, the region are in the electrical
Hemisphere Migration Flows, by Clare Ribando Seelke,
machinery and parts categories, which include electrical
Peter J. Meyer, and Shelby B. Senger.
goods and components.
Free Trade Agreements
Figure 1. U.S. Trade with LAC Countries
Since 1994, the United States has strengthened economic
ties with LAC countries through the negotiation and
implementation of comprehensive free trade agreements
(FTAs). Starting with the North American Free Trade
Agreement (NAFTA) in 1994, which was replaced by the
United States-Mexico-Canada Agreement (USMCA) in
2020, the United States currently has six FTAs with 11
LAC countries: Mexico, Chile, Colombia, Costa Rica, the
Dominican Republic, El Salvador, Guatemala, Honduras,
Nicaragua, Panama, and Peru. NAFTA established new
rules and disciplines that influenced subsequent trade
agreements on issues such as intellectual-property-rights
protection, services trade, agriculture, dispute settlement,
Source: U.S. Census Bureau, as reported by Trade Data Monitor.
investment, labor standards, and the environment.
U.S.-LAC Investment
Trade Preference Programs
Since NAFTA entered into force in 1994, U.S. foreign
The United States has extended unilateral trade preferences
direct investment (FDI) in LAC and LAC FDI in the United
to some LAC countries through several programs. The
States have both increased almost ninefold (not adjusting
Caribbean-focused programs are known collectively as the
for inflation). The region, which includes some of the
Caribbean Basin Initiative, launched by President Reagan in
world’s leading tax havens, currently accounts for 16% of
the early 1980s in an effort to foster economic and political
total U.S. FDI abroad. According to the U.S. Bureau of
stability in the region. The 1983 Caribbean Basin Economic
Economic Analysis, U.S. FDI stock in LAC stood at $1.04
Recovery Act (CBERA, P.L. 98-67, subsequently amended,
trillion in 2022 (on a historical-cost basis), concentrated
with no expiration) provides limited duty-free entry of
primarily in the British Overseas Territories (BOTs) of the
selected Caribbean products. The Caribbean Basin Trade
Caribbean, including Bermuda (61%), Mexico (13%), and
Partnership Act (CBTPA, P.L. 106-200, Title II), amended
Brazil (8%). By sector, U.S. FDI in LAC was mainly in
CBERA by expanding preferences; it was most recently
holding companies (46%), finance (26%), and
extended through September 2030 (P.L. 116-164). Haiti
manufacturing (10%), particularly transportation
receives additional preferences through several programs
equipment. Employment by U.S. multinational enterprises’
that are set to expire in 2025 and provide generous and
(MNEs’) majority-owned foreign affiliates in LAC totaled
flexible unilateral preferences to the country’s apparel
2.8 million workers in 2021, more than half of which were
sector. The Generalized System of Preferences (GSP)
employed in Mexico.
program, which was first authorized in the 1970s and
expired on December 31, 2020, provided duty-free tariff
As a source of foreign investment, LAC FDI represented
treatment to certain products imported from 120 designated
4% ($212 billion) of total FDI in the United States in 2022.
developing countries, including several LAC countries.
It was held mainly in the manufacturing (18%), real estate
(16%), and finance (10%) sectors, and top sources included
US-LAC Trade
the BOTs of the Caribbean (63%), Mexico (16%), and
The United States accounts for roughly 31% of the LAC
Barbados (5%). Majority-owned U.S. affiliates of LAC
region’s merchandise imports and 45% of its merchandise
MNEs employed 430,100 workers in the United States in
https://crsreports.congress.gov
U.S.-Latin America Trade and Investment
2021; affiliates with ultimate owners in Brazil and Mexico
opening measures could lessen its impact. Critics also note
were among the largest employers from the region.
that APEP, to date, does not include major economies like
Brazil and Argentina.
U.S. investment policy toward LAC has generally focused
on fostering U.S. and international investment in the region,
Issues Before Congress
including by facilitating U.S. firms’ access to economic
Congress may consider whether or not to respond, with
opportunities and supporting increased intra-LAC
oversight activities or legislative options, to the Biden
investment. Although some governments have introduced
Administration’s initiatives regarding economic relations
economic reforms over the past two decades, and the
with the LAC region. Congress also may consider assessing
overall investment climate has improved, U.S. investors
the effectiveness of existing FTAs or other types of trade
continue to face significant obstacles in LAC, including
arrangements in the region, seeking broader market-
poor transportation and logistics infrastructure, rigid labor
opening measures such as the proposed FTAA of the mid-
markets, corruption, complex and nontransparent legal and
1990s, or examining proposals for a more defined strategic
regulatory frameworks, and insufficient protection of
plan for the Hemisphere. For example, the proposed
property rights. Through U.S.-led initiatives—such as the
Americas Act calls on the United States to develop a
proposed Free Trade Area of the Americas (FTAA) and the
coherent Latin America policy. One of its key proposals is a
Biden Administration’s ongoing Americas Partnership for
“pathway to membership” in the USMCA Agreement.
Economic Prosperity (APEP)—the U.S. government has
Other Members of Congress have opposed efforts that
sought to address these obstacles, deepen economic
would further open the U.S. market through FTAs.
integration, and bolster regional competitiveness. U.S.
policy also seeks to facilitate U.S.-LAC investment,
Some Members of Congress have expressed increasing
establish rules and disciplines, and enhance cooperation
concerns about marked increases in LAC economic ties
through other framework agreements, such as bilateral
with China, whose interests in the region may at times
investment treaties (BITs), investment chapters of FTAs,
conflict with those of the United States. At issue have been
trade and investment framework agreements (TIFAs), and
questions over lost U.S. export opportunities, as well as the
bilateral tax treaties.
potential implications of the region’s growing economic
interdependence with China, including as a result of
America’s Partnership for Economic Prosperity
China’s financing and construction of strategic
In June 2022, the Biden Administration officially launched
infrastructure projects through its One Belt, One Road
APEP, an initiative that aims to bolster regional
(OBOR) initiative. Although China has become one of
competitiveness and mobilize investment in the Western
LAC’s largest trading partners and a growing source of
Hemisphere. In November 2023, attendees at the inaugural
investment and development finance, FDI stock from China
APEP Leaders’ Summit announced a plan to use APEP as a
in the region is about half of that from the United States.
forum-based initiative to drive inclusive growth in the
Congress could assess whether or not to modify or enact
region and strengthen critical supply chains, especially in
additional trade or investment policies in response to the
the areas of clean energy, semiconductors, and medical
LAC region’s evolving commercial relationships.
supplies. A January 2023 White House fact sheet states that
U.S. Secretary of State Antony Blinken and U.S. Trade
Congress also may examine the pros and cons of partial
Representative (USTR) Katherine Tai are moving the
trade agreements, such as those reached with Brazil and
initiative forward with the initial signatories to the Joint
Ecuador in 2020 on trade facilitation, anti-corruption, and
Declaration on APEP: Barbados, Canada, Chile, Colombia,
good regulatory practices. Some Members of Congress
Costa Rica, the Dominican Republic, Ecuador, Mexico,
favor these “mini” agreements as mechanisms to eventually
Panama, Peru, and Uruguay. These countries and the
develop and enter into comprehensive FTAs. Other
United States represent 90% of the Western Hemisphere’s
lawmakers have argued that such agreements provide less
GDP and nearly two-thirds of the region’s population. With
leverage for reducing tariff and nontariff trade barriers, or
the exception of Uruguay, all the signatories already have
for addressing concerns about the environment and
FTAs with the United States.
workers’ rights in these countries.
The Biden Administration stated that the partnership “will
Policymakers also may consider how to use trade policy to
foster regional competitiveness, resilience, shared
boost regional economies, especially in Central America, to
prosperity, and inclusive and sustainable investment, while
help address some of the economic causes of migration. For
tackling the climate crisis, by seeking high standard
example, some Members have expressed an interest in the
agreements” under four policy pillars: regional
possibility of modifying CAFTA-DR’s rules of origin in the
competitiveness, resilience, shared prosperity, and
textiles and apparel industries, with the aim of promoting
sustainable investment. Some observers contend that the
investment, creating manufacturing jobs, and enhancing
initiative comes at a critical time for U.S.-LAC economic
supply chains and economic opportunities in the region.
relations, given the context of increasing Chinese influence
Other Members have called for updating CAFTA-DR by
in the region. During the past decade, China surpassed the
incorporating similar provisions as those in USMCA,
United States as South America’s largest trading partner.
particularly on labor.
Critics contend that the proposed APEP lacks definition and
may not meet its stated objectives, arguing that the Biden
M. Angeles Villarreal, Coordinator, Specialist in
Administration has not developed a clear strategic plan for
International Trade and Finance
the Americas. They argue that the failure to address market-
https://crsreports.congress.gov
U.S.-Latin America Trade and Investment
IF12614
Andres B. Schwarzenberg, Specialist in International
Trade and Finance
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF12614 · VERSION 1 · NEW