Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
CENTRAL AMERICAN REGIONAL PROGRAMS
FY 1998 Development Assistance . . . . . . . . . . . . . . . . . $14,025,000 Introduction
Opening markets, expanding hemispheric economic integration, promoting sustainable development, have been enunciated as key areas promoting peace and democracy of U.S. national interest in Central America. In 1995, Central American imports from the U.S. grew by 12% reaching $7.4 billion, and are estimated to have increased another 5-6% in 1996. With continued growth and political stability, this region presents considerable untapped opportunities for U.S. business. At the December 1994 Summit of the Americas, the Presidents of the Central American countries and the United States signed an agreement (CONCAUSA) commiting to joint efforts to increase trade and to make the Central American region a model of sustainable development. The USAID regional program provides the operational support for these Presidential commitments.The Development Challenge
The Central American region encompasses seven countries: Belize, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. With over 30 million inhabitants in 1993, the population of Central America is increasing at an annual rate of 2.43% and will reach 38 million by the year 2000. However, approximately half of all Central Americans live in rural areas and some 42% live below the poverty line. Socio-economic conditions for the majority are worse now than they were 10 years ago, as reflected in the 1994 United Nations human development index which ranks Belize, Nicaragua, Guatemala, El Salvador and Honduras in the lowest third of all countries worldwide. Additionally, the countries of Central America are not prepared to face the cross-border spread of HIV/AIDS.To effectively combat poverty and promote sustainable development in Central America, higher economic growth rates are required on a sustained basis. This growth must be achieved in a manner which is not at the cost of depletion or irreversible degradation of the natural resource base and which entails adequate investment in the human resources of the region. Central American commitment to action embodied in the CONCAUSA Agreement is particularly focused on areas of environmental protection and natural resources management as vehicles to achieve sustainable development. However, the region's ability to move toward the objectives of more open markets, better protection of worker rights, and improved regional environmental management, are limited by intra-regional trade barriers, limited technical capacity, weak and inconsistent legal frameworks, and rapid depletion of key natural resources in cross-border areas. Additionally, there is growing evidence that businesses from Central America are moving to Mexico because of the lack of parity with the preferences accorded Mexico under the North America Free Trade Agreement.
Other Donors
Data on official assistance flows to the region taken as a whole are not readily available. Other major donors providing support on a regional basis to Central America are the United Nations agencies, the Pan-American Health Organization, Canada, the European Economic Union, and the Inter-American Development Bank. USAID assistance implemented under the Central American Programs portfolio totaled $8.9 million in FY 1995 and $11.5 million in FY 1996.FY 1998 Program
Having recognized the critical development challenges facing the region, the Central Americans themselves established in 1994 a regional "Alliance for Sustainable Development", to which the United States became a partner through the signing of the CONCAUSA Agreement at the 1994 Summit of the Americas. USAID's regional program focuses on implementation of the Summit and CONCAUSAcommitments in the areas of hemispheric free trade and environmentally sound natural resource management necessary for sustainable economic growth. In addition, the regional program includes a special strategic objective aimed at enhancing Central American capacity to respond to the threat of HIV/AIDS. Support to promote peace and democracy in Central America is provided through bilateral programs.Regional development activities supported by USAID respond directly to U.S. and Central American priorities in pursuing greater prosperity through open markets, accelerated hemispheric integration, and sustainable development with a focus on sustainable use of the natural resource base. USAID's program will help increase Central America's readiness to enter into free trade agreements through work in four major areas: strengthened intellectual property rights (IPR) policies and enforcement; further trade liberalization by reducing non-tariff barriers; enhanced foreign investment regimes; and better protection of internationally recognized workers rights. USAID's efforts to achieve environmentally sound natural resource management and an improved regional policy framework contributes to Central America's preparedness for hemispheric free trade agreements, as well as establishes the basis for sustainable resource use required for long-term economic growth. In the environmental area, USAID's role in the region will continue to be catalytic in nature, supporting those activities having economies of scale and cross-border impacts.
USAID's special strategic objective in the regional program aims to strengthen the capabilities of local Central American organizations to deliver services and information about the prevention of HIV/AIDS to those groups and individuals who are most at risk of HIV. Because the spread of HIV/AIDS is not contained by borders, a regional strategy is appropriate to address the threat of HIV/AIDS in Central America.
Agency Goal: Encouraging Broad-based Economic Growth
Central America continues accelerating its integration into hemispheric markets. The Central American countries also remain strong supporters and active participants of the Summit of the Americas process initiated December 1994 in Miami when the heads of the Hemisphere's 34 democracies signed a commitment to complete negotiations of the Free Trade Area of the Americas (FTAA) by 2005. It is notable that three of the eleven FTAA hemispheric working groups are chaired by Central American countries [Costa Rica - investment, El Salvador - market access, and Honduras - Intellectual Property Rights (IPR)]. Also, the Central American countries have made noted progress in recent years in accelerating the region's own economic integration which is consistent with World Trade Organization (WTO) standards. All Central American governments have acceded to the WTO, with the exception of Panama, which is currently negotiating accession requirements. Most countries in the region are continuing their negotiations with the U.S. Government on bilateral investment treaties (BITs) and bilateral intellectual property rights agreements (BIPRAs). Further reductions in external tariff rates are being implemented by most countries, although the pace should be accelerated. Central America has also advanced on its own process of subregional economic integration, abandoning its old model based on import substitution and high rates of external protection to pursue a more outward orientation consistent with WTO commitments.USAID has supported the revitalization, depoliticization and profesionalization of the Permanent Secretariat for Central American Economic Integration (SIECA) enabling it to advance the regional trade agenda. With USAID/G-CAP support, SIECA has drafted model regional agreements on rules of origin, unfair trading practices and dispute settlement procedures, and is now facilitating efforts of the Central American governments to finalize these agreements, build regional support for them and get them ratified. Once in effect, these measures will contribute to greater economic integration and efficiency within the region and enhance Central America's preparedness to enter into hemispheric free trade agreements.
USAID financed a comprehensive study on the status of IPR legislation and enforcement in Central America conducted jointly by regional public and private sector entities. The results were disseminated and contributed to building support for improved IPR policies in the region. Building on the results of the IPR study, SIECA, is implementing a medium term program to strengthen IPR protection in the region. SIECA is collaborating closely with U.S. Patent and Trademark Office (USPTO). This program will greatly enhance Central America's ability to honor commitments made under BIPRAs.
Regarding labor relations and workers rights, USAID has completed a study on how national labor laws across the region conform to international standards and on national enforcement capabilities. The results form the basis for a USAID-sponsored program to improve labor relations and strengthen the protection of worker rights, conducted with the Central American Labor Ministers.
Strategic Objective 1: Increased Central American Participation in the Hemispheric Economy Agency Goal: Protecting the Environment
USAID's regional environmental program for Central America promotes effective regional stewardship of the key natural resources through the establishment of "biological corridors" throughout the isthmus. Recent achievements in this area include the establishment and progress towards effective management of major national protected areas in the region, the development of protected areas legislation, the adoption of appropriate natural resources management practices by target populations, and improved financial sustainability of environmental institutions. A new initiative designed to support the CONCAUSA Agreement commenced in FY 1996 to develop and consolidate a Central American system of cross-border parks and protected areas, and to promote a strengthened regulatory and enforcement framework for environmental protection. The political momentum generated by CONCAUSA and the influence of NAFTA in the area of harmonization of environmental legislation are among the positive factors influencing performance.
Strategic Objective 2: Effective Regional Stewardship of Key Natural Resources Agency Goal: Stabilizing Population Growth and Protecting Human Health
The future political, economic and social development of Central America is threatened by the HIV/AIDS epidemic. The areas most likely to be affected by HIV/AIDS include work productivity, medical care costs and the size of the labor force. In order to maintain economic, political and social stability in Central America, HIV/AIDS prevention activities are being implemented through a strategy that considers the specific sub-regional commonalities and cross-border transmission.The purpose of this seven year program is to strengthen the capabilities of local Central American organizations to deliver services and information about the prevention of HIV/AIDS to target groups. USAID supports activities on three different levels. On the broadest level, the activities are designed to improve the policy environment for the promotion of HIV/AIDS programs. On an intermediate level, USAID supports improved institutional capacity of NGOs and local universities to deliver HIV prevention programs and/or conduct research. Finally, the activities will promote individual behavioral changes which are required to prevent the spread of HIV/AIDS.
Special Objective: Enhanced Central American Capacity to Respond to the HIV Crisis
CENTRAL AMERICAN REGIONAL PROGRAMS
FY 1998 PROGRAM SUMMARY
(000's)
USAID Mission Director: William Stacy Rhodes
USAID Strategic Objectives:
Encouraging Economic Growth Stabilizing Population Growth and Protecting Human Health Protecting the Environment Building Democracy Total 1. Increased Central American Participation in the Hemispheric Economy Dev. Assistance
2,750
500
3,250
2. Effective Regional Stewardship of Key Natural Resources Dev. Assistance
6,375
6,375
Special Objective 1. Enhanced Central American Capacity to Respond to the HIV Crisis
Dev. Assistance
4,400
4,400
Total Dev. Assistance
2,750
4,400
6,875
14,025
ACTIVITY DATA SHEET
PROGRAM: Central America Regional
STRATEGIC OBJECTIVE: Increased Central American Participation in the Hemispheric Economy, 596-S001
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $3,250,000 DA
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2000
Purpose: To increase Central America's preparedness to enter into free trade agreements and thereby accelerate the region's integration into hemispheric markets.
Background: In order to effectively combat poverty and promote sustainable development in Central America, substantially higher economic growth rates are required on a sustained basis. Real growth of 5-6% per year is needed to provide increased demand for the productive use of labor and thereby increase incomes for working families.
At the Summit of the Americas in December 1994, the heads of state of the hemisphere's 34 democracies united in pursuing greater hemispheric prosperity through open markets, hemispheric integration and sustainable development. They signed the Summit of the Americas Declaration of Principles and Action Plan including a pledge to establish the Free Trade Area of the Americas (FTAA) by 2005. While fully supportive of Summit objectives, Central America's ability to participate in FTAA is severely limited by its lack of depth in technical expertise in areas related to implementing existing trade agreements and commitments, dismantling trade barriers and enhancing the region's competitiveness. Reflecting this, the Summit of the Americas Action plan pledged that "technical assistance will be provided to facilitate the integration of the smaller economies and increase their level of development." USAID's program continues to support this commitment primarily through the Project in Support of Central American Participation in Free Trade Agreements (PROALCA).
USAID Role and Achievements to Date: USAID has provided technical assistance, training and research in support of Central America's efforts to reform its regional trade regime. This assistance has contributed importantly to the adoption by Central America of a more outward-oriented regional integration model characterized by lower external tariffs, accelerated implementation of World Trade Organization (WTO) commitments, and reductions in both intra- and extra-regional nontariff trade barriers. Central American countries have increased their participation in the FTAA process and now chair three of the 11 hemispheric working groups laying the basis for FTAA negotiations (Costa Rica -investment, El Salvador - market access, and Honduras - intellectual property rights). Central America's trade performance continues to improve; in 1995, Central America's imports from the United States increased 12% to $7.6 billion, which supports 150,000 U.S. jobs. Further gains are expected in 1996. USAID promoted private sector participation in the electricity and telecommunications sectors. Recent success in these areas include passage in Guatemala in 1996 of laws regulating electricity and telecommunications. These two laws, considered among the most adanced and liberal in the world, have already resulted in strong expressions of interest by U.S. investors.
Description: USAID is directly supporting Central American readiness for participation in hemispheric free trade agreements in five major areas:
(1) Intellectual Property Rights (IPR). USAID supports Central American efforts to strengthen IPR policies and enhance enforcement capabilities through: (a) development of model Central American conventions on trademark, patent and copyright conventions, (b) increasing the public's awareness on the importance of adequate IPR protection to investment, technology transfer and sustainable development, (c) support for Central American efforts to build regional and national consensus on required IPR policy changes, and (d) technical training to patent, trademark and copyright registry officials. Through USAID support and encouragement, SIECA (the Central American regional economic integration secretariat) negotiated a Memorandum of Understanding with the U.S. Patent and Trademark Office support strengthened IPR protection in the region. The first of its kind, and representing a more mature relationship between the U.S. and the region, a USAID grant to SIECA will fund needed training and technical assistance. These activities will support Central American implementation of commitments made in bilateral IPR agreements with the U.S.
(2) Further trade liberalization. USAID is supporting Central American measures to further liberalize both intra- and extra-regional trade. Activities focus on critical non-tariff barriers and emphasize making regional legislation consistent with standards. Technical experts also assist and enhance Central American participation in the Summit of the Americas FTAA working groups.
(3) Enhanced protection of regional and foreign investment. USAID support assists the region to improve dispute resolution procedures, eliminate policy constraints to increased regional and foreign investment, afford national or most-favored-nation treatment to all investors, and establish international standards for expropriation which provide for prompt, adequate and effective compensation. USAID's support will facilitate implementation of commitments made by Central American countries in bilateral investment treaties with the U.S.
(4) Better protection of worker rights and improved labor relations. USAID contributes to strengthening the protection of internationally-recognized workers rights through improving and simplifying labor legislation and upgrading the region's enforcement capabilities. Regional workshops and national seminars emphasize: (a) the relation between increased trade and better wages, and the higher levels of competitiveness and productivity required to succeed in hemispheric markets; (b) workersrights and their relationship to trade preferences; and (c) models of labor-management cooperation that contribute to both increased productivity and higher wages.
(5) Energy and telecommunications regulatory frameworks. USAID is aiding Central American governments in the design and development of more open and competitive telecommunication and energy regimes which encourage private sector participation.
Host Country and Other Donors: USAID is coordinating closely with the IDB which is planning activities to strengthen Central American regional trade institutions and support improved trade policies. As a result of this coordination, USAID is concentrating on areas such as IPR and investment protection, which the IDB does not plan to support in a major way. USAID is coordinating closely with the IDB on its program to strengthen the protection of workers rights and improve labor-management relations.
Beneficiaries: Greater Central American integration to hemispheric markets will generate higher levels of production and increased employment in the region. Beneficiaries will include those enjoying increased employment opportunities and higher incomes throughout the regional economy.
Principal Contractors, Grantees, or Agencies: USAID is working closely with the U.S. Trade Representative (USTR), the U.S. Patent and Trademark Office of the Department of Commerce, the U.S. Department of Labor, the U.S. Customs Service, and the Economic/Commercial Sections of U.S. Embassies in the region. The Permanent Secretariat for Central American Economic Integration (SIECA) is a grantee, and several contracts and grants with U.S. and local firms/NGOs are planned.
Major Results Indicators: Baseline TargetACTIVITY DATA SHEETCentral American trade openness (total merchandise trade as a percent of GDP) 45.2% (1994) 50% (2000)
Central American readiness to enter into hemispheric free trade agreements (composite index with maximum of 5) 2.7 (1992) 3.5 (2000)
PROGRAM: Central America Regional
TITLE AND NUMBER: Effective Regional Stewardship of Key Natural Resources, 596-S002
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $6,375,000
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2000
Purpose: To develop and consolidate a Central American system of protected areas, by providing appropriate management models for terrestrial and coastal protected areas, and promote a strengthened regional regulatory and enforcement framework for environmental management.
Background: Central America's forests, farm lands and water provide most of the employment and income that is generated in the isthmus, as well as feed its rapidly expanding population. The region's terrestrial and marine ecosystems have long played a critical role in the flow of genetic material between the Northern and Southern Hemispheres. In recent decades, this flow has become threatened by extensive deforestation, urbanization, and environmental contamination. These destructive environmental trends, partially a result of lack of community empowerment to manage their own resources, in turn bring increased risks to the social and economic development and well-being of the regions inhabitants.
USAID Role and Achievements to Date: USAID has signed four agreements that are advancing the fulfillment of key CONCAUSA commitments related to the environment and natural resources (E/NR). USAID assistance is a critical factor enabling the Central American Commission for the Environment and Development (CCAD) to spearhead biodiversity conservation and environmental legislation initiatives in the region. CCAD's programs in these areas have established and solidified regional relationships among a multitude of E/NR institutions. A regional comparative environmental risk assessment has just been completed for Central America. This was done through a highly participatory process, which identified and achieved consensus on priority environmental problems the comparative risk assessment the foundation for a regional risk management action plan. Of special note is the regional network of national environmental legal authorities, including public attorneys, legal advisors, prosecutors and judges, from all seven Central American countries, that is increasing levels of enforcement of compliance with environmental laws at the national and local levels. Joint USAID/CCAD efforts are also resulting in highly proactive relationships at municipal and community levels, including programs with NGOs comprised of indigenous peoples. Facilitation of information exchange, formal and informal agreements, including those between Central American Ministers of natural resources has reframed the opportunity for successful multi-national stewardship of the tri-national Gulf of Honduras, tri-national Gulf of Fonseca, and the bi-national Talamanca/Bocas del Toro areas. In two of these three areas policy dialogue for resolution of cross-border conflicts has already been established.
Description: USAID's strategy is focused on increased environmental awareness among Central American Stakeholders topromote improved and sustainable management of key marine and terrestrial areas. Environmental management capacity will also be strengthened through encouraging resource users to engage in compatible uses such as ecoturism, shaded coffee, organic agriculture and management of solid waste. Adoption of these practices by community stakeholders and their significant involvement in addressing local environmental issues will be key to achieving sucess. USAID's environmental strategy is being implemented on the ground in four cross-border, geographic focus areas, as well as "thematically" at regional, national and local levels. The geographic focus areas (Gulf of Honduras, Gulf of Fonseca, Honduran-Nicaraguan Mosquitia, and Talamanca-Bocas del Toro) were selected in collaboration with regional counterparts and bilateral missions. Selection criteria included relative biological importance and potential strategic contribution to the regional system of protected areas. Region-wide thematic work stems from three key environmental initiatives: watershed and coastal zone management; support for creation of the CA "ecological corridor;" and environmental legislation and pollution prevention. Activities include supporting regional networking of environmental experts and workshops for legal professionals on environmental issues. Highly specialized technical assistance supports Central American efforts to achieve regional consensus and coordinated actions to reduce levels of contamination by key pollutants. Targeted results include upward harmonization of environmental laws and regulations, principally through increased region-wide access to information on the laws and regulations of individual countries. The expectation is that with full information, the establishment of common or uniform standards will follow to ensure adequate environmental protection and to deter private investment from shifting to countries with more lax standards.
Host Country and Other Donors: USAID has been working with other international donors, including the Nordics, the Interamerican Development Bank/Global Environmental Fund, UNDP, European Economic Community, and German Technical Cooperation Agency, to leverage funding and to develop an integrated Central American environmental strategy.
Beneficiaries: Poor rural families living in protected areas and surrounding agricultural areas in selected sites throughout Central America, and/or poor urban and semi-urban families benefiting from expanded urban services and urban pollution abatement.
Principal Grantees, Contractors or Agencies: USAID will implement the program through four U.S. NGOs, aU.S. Contractor, U.S. Environmental Protection Agency, and the Central America Commission for Environment and Development.
Major Results Indicators: Baseline Target Increased % of clients indicating positive behavior change TBD TBD Reduced Degradation/Contamination of Key Natural Resources TBD TBD
ACTIVITY DATA SHEET
PROGRAM: Central American Regional
TITLE: Enhanced Central American Capacity to Respond to the HIV Crisis, 596-SP01
STATUS: Ongoing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY1998: $4,400,000 DA
INITIAL OBLIGATION: FY1995 ESTIMATED COMPLETION DATE: FY2003
Purpose: To strengthen the capabilities of local Central American organizations to deliver HIV/AIDS prevention services.
Background: The future political, economic and social development of Central America is threatened by the HIV/AIDS epidemic. The areas most likely to be affected by HIV/AIDS include work productivity, medical care costs, and the size of the labor force. To maintain economic, political and social stability in Central America, HIV/AIDS prevention activities consider the specific sub-regional commonalities and cross-border transmission.
USAID Role and Achievements to Date: The efforts of this program will complement the reproductive health activities (particularly in services and information) that USAID has been supporting in the seven Central American countries.
Description: USAID will support activities on three different levels. On the broadest level, the activities are designed to improve the policy environment for the promotion of HIV programs. On an intermediate level, USAID supports an improved institutional capacity of NGOs and local universities to deliver HIV prevention programs and to conduct research. Lastly, the activities will promote individual behavioral changes that are required to prevent the spread of HIV/AIDS.
The Central American HIV/AIDS program has three components. The Policy and Public Awareness Component is the vehicle through which USAID will provide assistance in support of interventions that enhance the perceived urgency for, and the effectiveness of HIV prevention programs at the local, national, and regional levels. The three major activities which will be carried out under this component are regional policy research, leadership and policy development, and public awareness. Through the NGO Strengthening Component, USAID will provide assistance to local NGOs to improve their capacity to deliver HIV prevention programs. The major activities to be carried out under this component are technical assistance and training, networking and information exchanges and a small grants. The contraceptive Component will establish a sustainable marketing program to provide affordable condoms to the population at risk of contracting a sexually transmitted infection.
Host Countries and Other Donors: Most national governments are budgeting almost no resources to slow the epidemic, and the donor response has been mixed. The Pan-American Health Organization (PAHO) assisted and provided essential budget support for the establishment of a National AIDS Control Program (NACP) in each country. The NACPs have little or no high level support and/or insufficient financial and human resources to be effective. Other donors in the region include the Commission of European Communities, Japan, the Dutch, GTZ, the IDB and the Nordic countries. The World Health Organization/Global Program on AIDS, through which PAHO received the bulk of its resources which it channeled to the countries, terminated in 1995 and was superseded by the multiagency UN Joint Program on AIDS (UNAIDS) However, this program is still in its infant stages and has almost no programmatic support funds available, and it is still unclear what the role of the various member agencies will be. The World Bank begun a regional project (SIDALAC); however, they are contributing only $1 million for all of the Americas.
Beneficiaries: The Central American HIV/AIDS program will strengthen the capacity of Central American organizations and leaders to deal with the HIV/AIDS crisis in Central America. The ultimate beneficiaries of the program are those groups and individuals who are at risk of contracting HIV/AIDS.
Principal Contractors, Grantees or Agencies: USAID is implementing the activities for the Policy/Public Awareness Component and the NGO Strengthening Component through a consortium of U.S. firms (Academy for Educational Development, International Planned Parenthood Federation/Western Hemisphere Region and The Futures Group). USAID is implementing the activities of the component through a consortium of a U.S. firm and a Regional Organization (Population Services International and PROFAMILIA from Costa Rica).
Major Result Indicators: Baseline Target1. Amount and type by sector of regional resources allocated for HIV/AIDS/STD prevention TBD TBD
2. Number of HIV/AIDS/STD prevention interventions TBD TBD implemented per target population that meet best standard practices.
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