The Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR) connects the United States with six dynamic partners: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. Implemented between 2006 and 2009, CAFTA-DR remains one of the most comprehensive regional trade frameworks in the Western Hemisphere.

For U.S. exporters, it delivers duty-free access for nearly all industrial and consumer goods, streamlined customs procedures, and growing opportunities in agriculture, technology, and digital services across a rapidly modernizing region.

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Overview of U.S.–CAFTA-DR Trade

• Participating Economies: United States, Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
• U.S. Exports to CAFTA-DR Region (2023): $45.7 billion, led by petroleum products, machinery, vehicles, plastics, and medical instruments.
• U.S. Imports from CAFTA-DR Region (2023): $34.6 billion, primarily apparel, agricultural goods, medical devices, and electronics.
• Tariff Treatment: Nearly 100 percent of U.S. consumer and industrial goods enter these markets duty-free.
• Trade Role: The region functions as both a production base for U.S. supply chains and a fast-growing consumer market.

(Source: Office of the U.S. Trade Representative, 2024)

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Key CAFTA-DR Advantages for U.S. Exporters

1. Comprehensive Tariff Elimination: Duty-free access for almost all goods, with phased reductions on sensitive agricultural items.
2. Streamlined Customs Procedures: The agreement harmonizes documentation and clearance standards across members, improving predictability—though each country retains its own customs administration.
3. Strong IP Protections: Region-wide rules for patents, trademarks, and digital content safeguard innovation.
4. Market Access for Services: U.S. firms can provide professional, financial, and telecommunications services under transparent regulations.
5. Digital Trade Enablement: Early adoption of e-commerce rules supporting cross-border data flow and digital products.

These provisions have fueled regional growth, helping U.S. exporters integrate production and logistics across nearby economies.

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Strategic Export Opportunities

Sector	Opportunity	Compliance Note
Textiles & Apparel	Duty-free exports of U.S. yarns and fabrics under the “yarn-forward” rule	Ensure documentation of origin for textile inputs
Medical Devices & Pharmaceuticals	Growing healthcare manufacturing clusters in Costa Rica and the Dominican Republic	Review labeling and certification under CAFTA-DR Annex 3.3
Renewable Energy & Equipment	Solar, hydropower, and grid upgrades across Central America	Confirm conformity standards and environmental certifications
ICT, Software & Cloud Services	Expanding digital economies in El Salvador and Costa Rica	Align data protection policies with CAFTA-DR e-commerce provisions
Agricultural Technology & Equipment	Demand for U.S. irrigation systems, tractors, and smart ag solutions	Verify tariff classification and sanitary measures for agricultural exports

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Rules of Origin and Documentation

Products must meet CAFTA-DR rules of origin to qualify for duty-free treatment. These rules are designed to promote regional value creation and are similar to NAFTA/USMCA frameworks.

Exporters should:

• Complete a CAFTA-DR Certificate of Origin for each shipment claiming preferential treatment.
• Maintain supporting records for at least five years in case of verification.
• Confirm regional value content (RVC) and tariff shift requirements for complex goods.
• Consult CBP or local customs agencies for official binding rulings when necessary.
• Use digital trade tools to streamline FTA recordkeeping and compliance workflows.

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Emerging Trends and Market Insights

• Nearshoring Acceleration: Companies relocating supply chains from Asia to Central America benefit from proximity, low tariffs, and regulatory alignment with U.S. standards.
• Textile and Apparel Integration: Duty-free inputs from U.S. suppliers sustain competitive apparel exports back to the United States.
• Digital Economy Growth: Costa Rica and the Dominican Republic are leading regional digital adoption, attracting cloud and fintech investment.
• Renewable Infrastructure: Energy diversification and climate initiatives are fueling imports of U.S. clean-tech and power management systems.
• Agricultural Collaboration: U.S. agricultural exporters supply machinery, fertilizers, and smart-farming tools that enhance food security in the region.

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Why It Matters for Exporters

CAFTA-DR provides U.S. businesses with a secure and profitable bridge to six neighboring economies, blending low logistics costs with strong regulatory cooperation. Its advantages include:

• Near-total tariff elimination for industrial and consumer goods
• Harmonized customs and documentation standards across partner markets
• Robust IP and digital trade protections for technology exporters
• Opportunities in nearshore production and supply chain integration

By leveraging CAFTA-DR’s framework, U.S. exporters can strengthen competitiveness in the Americas while expanding partnerships across manufacturing, technology, and sustainable trade.

To simplify compliance and identify regional duty-savings opportunities, explore Trade Insight AI for automated HTS verification, rules-of-origin validation, and FTA documentation management.

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Series Note:
This article is part of the Export Snapshot series, offering in-depth overviews of U.S. Free Trade Agreements and how exporters can use data-driven compliance tools to grow globally.