By: Staff Writer
March 29, 2024
Increased US investment into the Central American region is key for development as Vice President Kamala Harris gave an update to the Root Causes Strategy, published in 2021.
Vice President Harris continues to lead the implementation of the Root Causes Strategy, which tackles the drivers of irregular migration by improving conditions in El Salvador, Guatemala, and Honduras so people do not feel compelled to leave their homes. This includes addressing economic, governance, and security challenges through five pillars: 1) Addressing economic insecurity and inequality; 2) Combating corruption and strengthening democratic governance; 3) Promoting human rights and labor rights; 4) Countering and preventing violence; and 5) Combating sexual and gender-based violence. These efforts provide hope and opportunity to the people of Central America, affirming that a secure and prosperous future lies in their home communities.
The Administration is on track to meet its commitment in the 2021 Root Causes Strategy to provide $4bn to the region over four years. Through new and ongoing programming, the Strategy is having far-reaching impacts throughout the region.
Small changes to U.S. trade policy could significantly reduce the number of migrants arriving at the southern border, according to our peer-reviewed study, which was recently published in The World Economy.
Our research delved into the effectiveness of existing trade agreements in creating jobs in migrant-sending countries, with a focus on Central America. We analyzed the impact that the Dominican Republic-Central America Free Trade Agreement, or CAFTA-DR, has had on apparel exports and jobs since being ratified by the U.S. and six countries – Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic – from 2005 to 2009.
CAFTA-DR was aimed at encouraging trade and investment ties. But restrictive provisions, particularly its rules of origin, have hindered the region’s ability to benefit fully from the agreement. Under a “triple transformation” clause, only garments assembled in one of the countries from fabrics and constituent fibers originating from the region qualify for free-trade benefits.
This significantly limits the scope for trade expansion because of the limited range of fabrics produced in the region compared with the global market. For example, it means that many modern fabrics, like the kinds used in some stretchy jeans, do not qualify.
Loosening the rules to allow for new fabrics would not only attract investment and create more jobs for Central Americans, it could also reduce immigration from the region by as much as 67%, according to estimates.
At present, about 500,000 people work in the apparel industry in Central America. It is labor-intensive, and expanding exports would increase employment. Our research shows that loosening the rules of origin to include new fabrics from outside the region would create about 120,000 direct jobs.
If a stronger relationship between exports and employment is assumed, this figure could even rise to about 257,500 jobs, our figures show.
Highlights of Biden-Harris Administration initiatives include:
Creating Opportunities: U.S. government support for as many as 23,000 private sector firms in northern Central America has helped create and sustain up to an estimated 250,000 jobs.
Supporting Education: The U.S. government has reached as many as 3 million youth through support for primary and secondary education in areas of high out-migration in El Salvador, Guatemala, and Honduras.
Investing in Entrepreneurs to Create Jobs: Since July 2021, the U.S. International Development Finance Corporation (DFC) has invested over $325 million in 19 projects in Guatemala, El Salvador, and Honduras across sectors, including financial inclusion, healthcare, climate finance, and affordable housing. This includes a $45 million loan to a financial institution to increase lending to small and medium-sized enterprises (SMEs) with a focus on women and rural borrowers; an $80 million loan to financial institutions to expand financing for SMEs, particularly for women entrepreneurs in Honduras; a $60 million loan to a financial institution in El Salvador to increase lending to small businesses and expand its climate finance portfolio; and a $7.5 million equity investment in a fund that will provide growth capital to sustainable agribusiness, digital connectivity, and health businesses, with an emphasis on women-owned and managed businesses in Guatemala, El Salvador, and Honduras.
Enhancing Food Security, Agricultural Productivity, and Finance: Through USAID’s Feed the Future programs, an estimated 63,000 farmers in Guatemala and Honduras utilized innovative technologies intended to increase production and income on more than 75,000 acres of farmland. The U.S. government helped unlock more than $57 million in private sector agricultural finance. This helps create greater income security and resilience to environmental and economic shocks.
Ensuring Labor Rights: Since 2021, 11 Department of Labor projects totaling $76 million supported labor capacity-building and training programs across El Salvador, Guatemala, and Honduras. These projects increased the capacity of approximately 2,800 labor rights actors, including government officials, employers, workers, and civil society, and provided training on the topics of child labor, forced labor, collective bargaining, safety and health, and other labor rights.
Combating Migrant Smuggling and Human Trafficking: Since Vice President Harris announced Joint Task Force Alpha, led by the Department of Justice, in June 2021, interagency efforts have led to over 220 U.S. convictions of members of human trafficking organizations; more than 275 arrests, including against leaders, organizers, and significant facilitators; more than 150 U.S. defendants sentenced, including significant jail sentences imposed; substantial seizures and forfeiture of assets and contraband including hundreds of thousands of dollars in cash, real property, vehicles, firearms and ammunition, and drugs; multiple indictments and successful extradition requests against foreign leadership targets; as well as myriad indictments, arrests, and convictions in El Salvador, Guatemala, and Honduras.