CAFTA-DR
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The U.S.–Central America–Dominican Republic free trade agreement and what it means for apparel sourcing.
The Dominican Republic–Central America Free Trade Agreement (CAFTA-DR) is the free trade agreement between the United States and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. For apparel, it is one of the most used preference programs in the Western Hemisphere, supporting nearshore garment production for the U.S. market.
Most apparel trade between the U.S. and the CAFTA-DR countries is duty free when the goods meet the agreement rules of origin — built around a yarn-forward standard with specific flexibilities. This page summarizes the framework and links the official texts and resources.
U.S. - Central American Free Trade Agreement: CAFTA
The CAFTA countries and many other developing countries already enjoy duty free access to the U.S. market for the majority of their exports through trade preference programs provided by Congress to promote economic development. Yet these countries often have high tariff and non-tariff barriers for U.S. exports and impose restrictions on U.S. businesses. State-of-the-art free trade agreements like the CAFTA not only reduce barriers to U.S. trade, but also require important reforms of the domestic legal and business environment that are key to encouraging business development and investment.
The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) entered into force for the United States, El Salvador, Guatemala, Honduras, and Nicaragua in 2006, for the Dominican Republic in 2007, and for Costa Rica in 2009. As a result of the FTA, 100 percent of U.S. consumer and industrial goods exports to the CAFTA-DR countries will no longer be subject to tariffs by 2015. Tariffs on nearly all U.S. agricultural products will be phased out by 2020. To be eligible for tariff-free treatment under the FTA, products must meet the relevant rules of origin.
You may also want to learn aboutNAFTAand theTransatlantic Trade and Investment Partnershipin our international trade section.
Part of the Apparel Search Customs & Import Guide — classification, brokers, drawback, rulings and trade programs for apparel importers.
Open the Customs & Import GuideThe United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. The agreement entered into force country by country between 2006 and 2009.
In general, a garment qualifies when the yarn and fabric are formed in one or more parties to the agreement and the garment is cut and sewn there, subject to flexibilities such as cumulation with Mexico and specific short-supply lists.
Qualifying apparel enters duty free. Goods that do not meet the rules of origin pay normal MFN rates, so classification and origin documentation matter on every shipment.
Related Apparel Search guides and directories for moving apparel freight.