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Thursday, May 20, 2010

Political Status of Puerto Rico: Options for Congress

Keith Bea
Specialist in American National Government

R. Sam Garrett
Analyst in American National Government

The United States acquired the islands of Puerto Rico in 1898 after the Spanish-American War. In 1950, Congress enacted legislation (P.L. 81-600) authorizing Puerto Rico to hold a constitutional convention and in 1952, the people of Puerto Rico ratified a constitution establishing a republican form of government for the island. After being approved by Congress and the President in July 1952 and thus given force under federal law (P.L. 82-447), the new constitution went into effect on July 25, 1952. 

Puerto Rico is subject to congressional jurisdiction under the Territorial Clause of the U.S. Constitution. Over the past century, Congress passed legislation governing Puerto Rico's relationship with the United States. For example, residents of Puerto Rico hold U.S. citizenship, serve in the military, are subject to federal laws, and are represented in the House of Representatives by a Resident Commissioner elected to a four-year term. Although residents participate in the presidential nominating process, they do not vote in the general election. Puerto Ricans pay federal tax on income derived from sources in the mainland United States, but they pay no federal tax on income earned in Puerto Rico. In the 111th Congress, the Resident Commissioner may vote in legislative committees and in the Committee of the Whole. 

Elements of the U.S.-Puerto Rico relationship have been and continue to be matters of debate. Some contend that the current political status of Puerto Rico, perhaps with enhancements, remains a viable option. Others argue that commonwealth status is or should be only a temporary fix to be resolved in favor of other solutions considered permanent, non-colonial, and nonterritorial. Some contend that if independence is achieved, the close relationship with the United States could be continued through compact negotiations with the federal government. One element apparently shared by all involved is that the people of Puerto Rico seek to attain full, democratic representation, notably through voting rights on national legislation to which they are subject. 

On April 29, 2010, for the first time since 1998, the House approved (223-169) status-related legislation for Puerto Rico. H.R. 2499 (Pierluisi) would authorize a two-stage plebiscite in Puerto Rico to reconsider the status issue. As passed by the House, the bill provides that if a majority of voters opt for a change in status in the first plebiscite, a slate of four options (independence, sovereignty in association with the United States, statehood, and commonwealth) would be on the ballot for the second plebiscite. Approval of any one of these options by the Puerto Rican voters would arguably set the stage for, but would not mandate, further congressional action.


Date of Report: May 12, 2010
Number of Pages: 58
Order Number: RL32933
Price: $29.95

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Thursday, May 13, 2010

Panama: Political and Economic Conditions and U.S. Relations

Mark P. Sullivan
Specialist in Latin American Affairs


With five successive elected civilian governments, the Central American nation of Panama has made notable political and economic progress since the 1989 U.S. military intervention that ousted the regime of General Manuel Noriega from power. Current President Ricardo Martinelli of the center-right Democratic Change (CD) party was elected in May 2009, defeating the ruling center-left Democratic Revolutionary Party (PRD) in a landslide. Martinelli was inaugurated to a five-year term on July 1, 2009. Martinelli's s Alliance for Change coalition also captured a majority of seats in Panama's National Assembly that will increase the chances that the President will be able to secure enough votes to enact his legislative agenda. 

A significant challenge facing the Martinelli government has been dealing with the economic fallout stemming from the global economic recession, but while the growth of Panama's servicebased economy has slowed, it has avoided the economic contraction experienced by many Latin American economies. The Panama Canal expansion project has played a large role in stimulating economic growth. President Martinelli has called for a number of large public infrastructure projects, including a subway for Panama City, and the government has begun to move ahead on some of these projects. In March 2010, President Martinelli secured legislative approval of a tax reform measure that reduces corporate and individual income taxes while raising sales and other taxes that overall is expected to increase government revenue. 

The United States has close relations with Panama, stemming in large part from the extensive linkages developed when the canal was under U.S. control and Panama hosted major U.S. military installations. The current relationship is characterized by extensive counternarcotics cooperation, assistance to help Panama assure the security of the Canal, and a proposed bilateral free trade agreement (FTA). U.S. bilateral assistance amounted to a $3.7 million in FY2008, $7.6 million in FY2009, and an estimated $8.7 million in FY2010. The FY2011 request is for $10.6 million. This funding does not include an estimated $11 million Panama received in FY2008 and FY2009 under the Mérida Initiative to assist Mexico and Central American countries in their efforts to combat drug trafficking, gangs, and organized crime; beginning in FY2010, Panama will receive assistance under the successor Central America Regional Security Initiative (CARSI) instead of under the Mérida Initiative. 

In June 2007, the United States and Panama signed a proposed bilateral FTA, and Panama's National Assembly overwhelmingly approved the agreement in July 2007. While the 111th Congress could consider implementing legislation for the FTA, a number of observers believe that it is unlikely that it will be considered this year. Final issues being worked out relate to worker rights and to Panama's bank secrecy laws. H.Res. 987 (Frelinghuysen), introduced in December 2009, would express the sense of the House that the FTA with Panama should be implemented immediately, and H.Res. 1124 (Mack), introduced in February 2010, would call on President Obama to submit the Panama FTA to Congress and work to ensure that it is approved. 

For more, see CRS Report RL32540,
The Proposed U.S.-Panama Free Trade Agreement, CRS Report R40622, Agriculture in Pending U.S. Free Trade Agreements with Colombia, Panama, and South Korea, CRS Report R40135, Mérida Initiative for Mexico and Central America: Funding and Policy Issues, and CRS Report RL34112, Gangs in Central America.


Date of Report: May 5, 2010
Number of Pages:28
Order Number:RL30981
Price: $29.95

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Tuesday, May 11, 2010

Argentina’s Defaulted Sovereign Debt: Dealing with the “Holdouts”

J. F. Hornbeck
Specialist in International Trade and Finance


In December 2001, following an extended period of economic and political instability, Argentina suffered a severe financial crisis, leading to the largest default on sovereign debt in history. It was widely recognized that Argentina faced an untenable debt situation that was in need of restructuring. In 2005, after prolonged, contentious, and unsuccessful attempts to find a mutually acceptable solution with its creditors, Argentina abandoned the negotiation process and made a one-time unilateral offer on terms highly unfavorable to the creditors. Although 76% of creditors accepted the offer, a diverse group of "holdouts" opted instead for litigation in hopes of achieving a better settlement in the future. Although Argentina succeeded in reducing much of its sovereign debt, its unorthodox methods left it ostracized from international credit markets for nearly a decade and triggered legislative action and sanctions in the United States. 

Argentina still owes private creditors $20 billion in defaulted debt and $10 billion in past-due interest, as well as $6.2 billion to Paris Club countries. Of the disputed privately held debt, U.S. investors hold approximately $3 billion. The more activist investor groups have lobbied Congress to pressure Argentina to reopen debt negotiations. Some Members of Congress have introduced punitive legislation in both the 110th and 111th Congress, but to date it has not received any legislative action. Nearly five years after the original debt workout, however, a confluence of circumstances has persuaded Argentina to restructure the holdout debt, particularly the need to secure long-term public financing. 

On April 15, 2010, Argentina announced the key features of the proposed bond deal, which will be made in a formal offer on April 30, 2010. Argentina expects to complete the process in June 2010. Two offers are proposed, one for retail (small) investors, the other for institutional (large) investors. Retail investors will receive replacement bonds for the full face value of the defaulted bonds they currently hold. Past due interest will be paid in cash. Institutional investors will receive a discount bond equal to a 66.3% reduction in the face value of the defaulted debt they currently hold (the so-called "haircut"). Past due interest will be covered by a separate seven-year "Global" bond. Interest rates vary depending on the bond. Both groups of investors will receive a GDP-linked security called a warrant that provides for additional payments should the Argentine economy grow at rates higher that anticipated and stipulated in the final prospectus. Analysts value the deal at between 48 and 51 cents on the dollar, compared to 60 cents for the 2005 exchange. 

For Argentina, a successful restructuring requires a sufficiently large participation rate to eliminate most of the existing judgments and attachment orders. Argentina expects, with no guarantee, that such an outcome will lead to renewed access to the international credit markets. Historically, sovereign debt workouts with at least a 90% participation rate have achieved this goal. Since holdouts compose 24% of the original bondholders, a 60% participation rate of this group would allow for the total participation rate to reach the 90% threshold, including the 2005 exchange. If the exchange succeeds, Argentina will have completed a sovereign debt restructuring with the deepest write-off of principal in history. Many original bondholders were severely hurt by this deal, as was Argentina by the crisis. Secondary market participants may see a sizable profit. If there is a legacy to the Argentine case, it may be in the changes to bond contracts that seek to improve outcomes for creditors. One option is the use of collective action clauses (CACs), now standard for sovereign debt, which require all creditors to bargain collectively, with a compulsory majority decision applicable to all bondholders.



Date of Report: April 28, 2010
Number of Pages: 17
Order Number: R41029
Price: $29.95

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Thursday, May 6, 2010

Brazil’s WTO Case Against the U.S. Cotton Program

Randy Schnepf
Specialist in Agricultural Policy

In 2002, Brazil—a major cotton export competitor—expressed its growing concerns about U.S. cotton subsidies by initiating a World Trade Organization (WTO) dispute settlement case (DS267) against specific provisions of the U.S. cotton program. In September 2004, a WTO dispute settlement panel ruled against the United States on several key issues. It found both (1) prohibited U.S. export subsidies (related to Step 2 program payments and export credit guarantees under the GSM-102 program) and (2) actionable U.S. domestic support measures (i.e., marketing loan benefits and counter-cyclical program payments) that resulted in adverse effects against Brazil's commercial interests. In March 2005, a WTO Appellate Body upheld the panel's ruling on appeal, and provided specific deadlines for removal or modification of the offending U.S. subsidies. Shortly after the March 2005 ruling, the United States made several changes to both its cotton and GSM-102 programs in an attempt to bring them into compliance with WTO recommendations. However, Brazil argued that the U.S. response was inadequate, and requested a WTO compliance panel in August 2006 to review U.S. compliance with the previous rulings. This panel ruled against the United States in December 2007, and the ruling was upheld on appeal in June 2008. 

Brazil proposed trade retaliation of nearly $3 billion against U.S. goods and services. The United States disagreed and a subsequent WTO arbitration panel, in August 2009, generally found in favor of Brazil's retaliation requests but at formula-based levels substantially reduced from those requested by Brazil. The panel also ruled that Brazil would be entitled to cross-retaliation if the overall retaliation amount exceeded a formula-based variable annual threshold. Cross-retaliation involves countermeasures in sectors outside of the trade in goods, most notably in the area of U.S. copyrights and patents. In December 2009, Brazil announced that it would impose trade retaliation against up to $829.3 million in U.S. goods in 2010 (based on the WTO formulas using 2008 data). In addition, Brazil announced that the WTO arbitrator's formula yielded a threshold estimate of $561 million, which implied $268.3 million in eligible cross-retaliatory countermeasures. In March 2010, Brazil released a list of 102 goods of U.S. origin valued at $561 million that would be subject to import tariffs of up to 100%, followed by a preliminary list of U.S. patents and intellectual property rights valued at $268 million that it could restrict. Brazil announced an April 6 deadline for imposing the tariffs, barring a joint settlement. 

Brazil and the United States were engaged in intense negotiations to find a mutual agreement to avoid the trade retaliation prior to the April 6 deadline. On April 5, 2010, the United States offered a three-point proposal including establishment of a $147.3 million annual fund to provide technical assistance and capacity-building for Brazil's cotton sector, near-term modifications to the operation of the GSM-102 program, and special recognition for certain Brazilian beef imports into the United States. As a result, Brazil agreed to postpone until April 22 the implementation of WTO-approved countermeasures. 

The U.S. proposal was solidified when, on April 6, USDA cancelled unutilized balances of GSM- 102 funding for FY2010 and, on April 19, USDA announced new fee rates for its GSM-102 program. Then, on April 16, USDA published a proposed rule on Brazilian meat imports, and on April 20 the two parties signed a memorandum of understanding (MOU) that officially detailed the specifics of the $147.3 million fund. As a result, Brazil extended the suspension of trade retaliation an additional 60 days until mid-June. The two sides continue to negotiate on changes to the nature of U.S. domestic cotton programs. However, Brazil retains its full rights of retaliation pending a negotiated settlement.


Date of Report: April 28, 2010
Number of Pages: 42
Order Number: RL32571
Price: $29.95

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Colombia: Issues for Congress

June S. Beittel
Analyst in Latin American Affairs


In the last decade, Colombia—a key U.S. ally in South America—has made significant progress in reestablishing government control over much of its territory, combating drug trafficking and terrorist activities, and reducing poverty. Since the development of Plan Colombia in 1999, the Colombian government has stepped up its counternarcotics and security efforts. The U.S. Congress has provided more than $7 billion to support Colombia from FY2000 through FY2010. In October 2009, Colombia and the United States signed a defense agreement that provides U.S. access to Colombian military bases for counter-terrorism and security-related operations for the next decade. The improving security conditions in the country and the weakening of the Revolutionary Armed Forces of Colombia (FARC) guerrillas are cited as evidence that the strategy is working by supporters. Critics, however, argue that while pursuing these security improvements, U.S. policy has not rigorously promoted human rights, provided for sustainable economic alternatives for drug crop farmers, or reduced the amount of drugs available in the United States. 

First elected in 2002, President Álvaro Uribe initiated an aggressive plan to reduce violence. He has made substantial progress in addressing both Colombia's 46-year conflict with the country's leftist guerrillas and the rightist paramilitary groups that have been active since the 1980s. Uribe, who enjoys wide popular support, was reelected with a strong majority in 2006. He is credited with restoring public security and creating a stable environment for investment. Backers of the president helped to organize a referendum to change the constitution again (after it was changed in 2005 to allow a second term) so the president could run for a third term. The Colombian Constitutional Court, however, ruled on February 26, 2010, that the referendum was unconstitutional citing several irregularities. President Uribe immediately accepted the ruling and removed himself as a candidate for president in the election slated for May 30, 2010. 

Concerns in the 111th Congress regarding Colombia continue those of prior sessions: funding levels, and U.S. policy regarding Plan Colombia, trade, and human rights. In FY2010, Congress reduced overall funding for Plan Colombia by about 3%. Congress continues to seek an almost even balance between social and economic aid (including rule of law programs) and securityrelated assistance (i.e., equipment and training to the Colombian military and police). In the FY2011 request, the Obama Administration asked for 9% less than what was enacted in FY2010 with the balance between "soft-side" traditional development assistance and "hard-side" security and counternarcotics assistance closer to 50/50. 

While acknowledging the progress in security conditions in Colombia, some Members of Congress have expressed concerns about labor activist killings and labor rights in Colombia; extrajudicial killings of Colombian civilians by the Colombian military; the para-political scandal (linking Colombian politicians with paramilitaries); and the domestic security agency (DAS) scandal concerning unauthorized spying on President Uribe's political opponents and human rights activists. These concerns have delayed consideration of the pending U.S.-Colombia Free Trade Agreement (CFTA). President Obama in his State of the Union address in January 2010 supported strengthening trade ties with Colombia, but prospects for the CFTA in the 111th Congress remain uncertain. For more information, see CRS Report RL34470,
The Proposed U.S.- Colombia Free Trade Agreement: Economic and Political Implications
and CRS Report RL34759,
Proposed Colombia Free Trade Agreement: Labor Issues.


Date of Report: April 23, 2010
Number of Pages: 42
Order Number: RL32250
Price: $29.95

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Wednesday, May 5, 2010

The Proposed U.S.-Colombia Free Trade Agreement: Economic and Political Implications

M. Angeles Villarreal
Specialist in International Trade and Finance


Implementing legislation for a U.S.-Colombia Free Trade Agreement (CFTA) (H.R. 5724/S. 2830) was introduced in the 110th Congress on April 8, 2008 under Title XXI (Bipartisan Trade Promotion Authority Act of 2002) of the Trade Act of 2002 (P.L. 107-210). The House leadership took the position that the President had submitted the legislation to implement the agreement without adequately fulfilling the requirements of Trade Promotion Authority. On April 10 the House voted 224-195 to make certain provisions in § 151 of the Trade Act of 1974 (P.L. 93-618), the provisions establishing expedited procedures, inapplicable to the CFTA implementing legislation (H.Res. 1092). It is currently unclear whether or how the 111th Congress will consider implementing legislation for the pending U.S.-Colombia FTA. 

The agreement would immediately eliminate duties on 80% of U.S. exports of consumer and industrial products to Colombia. An additional 7% of U.S. exports would receive duty-free treatment within five years of implementation and most remaining tariffs would be eliminated within ten years of implementation. The agreement also contains provisions for market access to U.S. firms in most services sectors; protection of U.S. foreign direct investment in Colombia; intellectual property rights protections for U.S. companies; and enforceable labor and environmental provisions. 

The United States is Colombia's leading trade partner. Colombia accounts for a very small percentage of U.S. trade (0.8% in 2009), ranking 22nd among U.S. export markets and 27th as a source of U.S. imports. About 90% of U.S. imports from Colombia enter the United States duty free, while U.S. exports to Colombia face duties of up to 20%. Economic studies on the impact of a U.S.-Colombia free trade agreement (FTA) have found that, upon full implementation of an agreement, the impact on the United States would be positive but very small because the size of the Colombian economy is very small when compared to that of the United States (about 1.6%). 

Numerous Members of Congress oppose the CFTA because of concerns about the violence against labor union activists in Colombia. President Bush's Administration believed that Colombia had made significant advances to combat violence and instability and views the pending trade agreement as a national security issue in that it would strengthen a key democratic ally in South America. 

President Barack Obama met with Colombian President Alvaro Uribe at the White House on June 29, 2009. After the meeting, President Obama stated that he had asked the United States Trade Representative (USTR) to work closely with Colombian government representatives to see how the two countries could move forward on the pending agreement. President Obama commended Colombia for its progress in addressing the violence against labor union leaders. In March 2010, USTR Ron Kirk stated that the Obama Administration is working on developing a finite list of proposals to give to Colombia to resolve the issues that blocked congressional approval of a free trade agreement with the United States and that the proposals would likely be related to worker rights protection and the issue of persecution in Colombia. The Obama Administration also stated in March 2010 that the pending FTAs with Colombia, Korea, and Panama are important to U.S. national security, each for different reasons, because national security depends on economic security and U.S. competitiveness. For Colombia, a free trade agreement with the United States is part of its overall economic development strategy.



Date of Report: April 16, 2010
Number of Pages: 31
Order Number: RL34470
Price: $29.95

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Tuesday, May 4, 2010

Cuba: U.S. Restrictions on Travel and Remittances

Mark P. Sullivan
Specialist in Latin American Affairs

Restrictions on travel to Cuba have been a key and often contentious component in U.S. efforts to isolate Cuba's communist government since the early 1960s. Under the Bush Administration, restrictions on travel and on private remittances to Cuba were tightened. In March 2003, the Administration eliminated travel for people-to-people educational exchanges unrelated to academic coursework. In June 2004, the Administration further restricted family and educational travel, eliminated the category of fully-hosted travel, and restricted remittances so that they could only be sent to the remitter's immediate family. Initially there was mixed reaction to the Administration's June 2004 tightening of Cuba travel and remittance restrictions, but opposition to the policy grew, especially within the Cuban American community regarding the restrictions on family travel and remittances. 

Dating back to 2000, there have been numerous legislative efforts to ease restrictions on travel to Cuba in various ways. The Bush Administration regularly threatened to veto legislation if it contained provisions weakening Cuba sanctions. In the 110th Congress, several House and Senate committee versions of appropriations bills had provisions that would have eased restrictions on travel to Cuba, but no final action was taken before the end of the Congress. 

During the 2008 electoral campaign, Barack Obama pledged to lift restrictions on family travel to Cuba as well as restrictions on Cuban Americans sending remittances to Cuba. In the aftermath of that election, the 111th Congress took action to ease some restrictions on travel to Cuba by including two provisions in the FY2009 omnibus appropriations measure (P.L. 111-8), which President Obama signed into law on March 11, 2009. The first provision eased restrictions on family travel, which the Treasury Department implemented by issuing a general license for such travel as it existed prior to the Bush Administration's tightening of family travel restrictions in June 2004. The second provision eased travel restrictions related to the marketing and sale of agricultural and medical goods to Cuba, and required the Treasury Department to issue a general license for such travel. In April 2009, President Barack Obama announced that his Administration would go further and allow unlimited family travel and remittances. Regulations implementing these changes were issued in September 2009. The new regulations also included the authorization of general licenses for travel transactions for telecommunications-related sales and for attendance at professional meetings for commercial telecommunications transactions. 

Several legislative initiatives have been introduced in the 111th Congress that would further ease Cuba travel restrictions: H.R. 874 (Delahunt)/S. 428 (Dorgan) and H.R. 1528 (Rangel) would prohibit restrictions on travel to Cuba; H.R. 188 (Serrano), H.R. 1530 (Rangel), and H.R. 2272 (Rush), which would lift the overall embargo on Cuba, would also lift travel restrictions; H.R. 1531 (Rangel)/S. 1089 (Baucus) and H.R. 4645 (Peterson)/S. 3112 (Klobuchar), which would facilitate the export of U.S. agricultural products to Cuba, would also prohibit Cuba travel restrictions; H.R. 332 (Lee) would ease restrictions on educational travel; S. 774 (Dorgan), H.R. 1918 (Flake), and S. 1517 (Murkowski) would allow for travel related to hydrocarbon exploration and extraction activities. In contrast, H.Con.Res. 132 (Tiahrt) would call for the fulfillment of certain democratic conditions before the United States increases trade and tourism to Cuba. 

For additional information on Cuba, see CRS Report R40193,
Cuba: Issues for the 111th Congress.


Date of Report: April 16, 2010
Number of Pages: 33
Order Number: RL31139
Price: $29.95

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Mérida Initiative for Mexico and Central America: Funding and Policy Issues

Clare Ribando Seelke
Specialist in Latin American Affairs

Increasing violence perpetrated by drug trafficking organizations and other criminal groups is threatening citizen security in Mexico and Central America. Drug trafficking-related violence claimed more than 6,500 lives in Mexico in 2009, and several Central American countries have among the world's highest homicide rates. Mexican drug trafficking organizations (DTOs) dominate the illicit drug market in the United States and are expanding their operations by forming partnerships with U.S. gangs. 

On October 22, 2007, the United States and Mexico announced the Mérida Initiative, a package of U.S. counterdrug and anticrime assistance for Mexico and Central America that would begin in FY2008 and last through FY2010. Congress has appropriated some $1.3 billion for Mérida programs in Mexico, $248 million for Mérida and related programs in Central America, and $42 million for Caribbean countries in P.L. 110-252, P.L. 111-8, P.L. 111-32, and, most recently, in the FY2010 Consolidated Appropriations Act, P.L. 111-117. Each of these acts contains human rights conditions on 15% of certain law enforcement and military assistance provided to Mexico and Central America. P.L. 111-117 places Central America funding into a new Central America Regional Security Initiative (CARSI), which splits Central America from the Mérida Initiative. The act also provides $37 million for a new Caribbean Basin Security Initiative (CBSI). 

Throughout 2009, drug trafficking-related violence in Mexico and the potential threat of spillover along the Southwest border focused congressional concern on the pace of implementation of the Mérida Initiative. On December 3, 2009, the Government Accountability Office (GAO) issued a preliminary report for Congress on the status of funding for the Mérida Initiative. By the end of September 2009, GAO found that $830 million of the $1.3 billion in Mérida funds appropriated for Mexico and Central America as of that time had been obligated by the State Department, but only $26 million of the funds had actually been spent. The pace of implementation has accelerated since that time, with at least $113 million worth of equipment having arrived in Mexico by March 2010, but implementation challenges remain. 

The 111th Congress is maintaining a strong interest in how well U.S. agencies and their foreign counterparts are implementing the Mérida Initiative and the degree to which the nations involved are fulfilling their domestic obligations under Mérida. Congress has also monitored enforcement of Mérida's human rights conditions, particularly with respect to Mexico. Congress is playing a role in the design of post-Mérida security cooperation with Mexico, Central America, and the Caribbean Basin during its consideration of the Obama Administration's FY2011 budget request. For FY2011, the Administration has asked for $310 million in assistance for Mérida programs in Mexico, $100 million for CARSI, and $79 million for CBSI. Detailed strategy documents for CARSI and CBSI are not yet available, but Secretary of State Hillary Clinton announced a new strategy for U.S.-Mexican security cooperation after a high-level meeting in Mexico City on March 23, 2010. The plan focuses on (1) disrupting organized criminal groups; (2) institutionalizing the rule of law; (3) building a 21st-century border; and (4) building strong and resilient communities. 

This report provides an overview of the funding provided for the Mérida Initiative and related assistance programs in Central America and the Caribbean, the status of Mérida implementation, and a discussion of some policy issues that Congress may consider as it oversees the initiative and related programs.


Date of Report: April 19, 2010
Number of Pages: 34
Order Number: R40135
Price: $29.95

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Sunday, May 2, 2010

Political Status of Puerto Rico: Options for Congress

Carl Ek
Specialist in International Relations


Keith Bea
Specialist in American National Government

R. Sam Garrett
Analyst in American National Government

The United States acquired the islands of Puerto Rico in 1898 after the Spanish-American War. In 1950, Congress enacted legislation (P.L. 81-600) authorizing Puerto Rico to hold a constitutional convention and in 1952, the people of Puerto Rico ratified a constitution establishing a republican form of government for the islands. After being approved by Congress and the President in July 1952 and thus given force under federal law (P.L. 82-447), the new constitution went into effect on July 25, 1952. 

Puerto Rico is subject to congressional jurisdiction under the Territorial Clause of the U.S. Constitution. Over the past century, Congress passed legislation governing Puerto Rico's relationship with the United States. For example, residents of Puerto Rico hold U.S. citizenship, serve in the military, are subject to federal laws, and are represented in the House of Representatives by a Resident Commissioner elected to a four-year term. Although residents participate in the presidential nominating process, they do not vote in the general election. Puerto Ricans pay federal tax on income derived from sources in the United States, but they pay no federal tax on income earned in Puerto Rico. In the 111th Congress, the Resident Commissioner may vote in legislative committees and in the Committee of the Whole. 

Elements of the U.S.-Puerto Rico relationship have been and continue to be matters of debate. Some contend that the current political status of Puerto Rico, perhaps with enhancements, remains a viable option. Others argue that commonwealth status is or should be only a temporary fix to be resolved in favor of other solutions considered permanent, non-colonial, and nonterritorial. Some contend that if independence is achieved, the close relationship with the United States could be continued through compact negotiations with the federal government. One element apparently shared by all discussants is that the people of Puerto Rico seek to attain full, democratic representation, notably through voting rights on national legislation to which they are subject. 

Three bills regarding Puerto Rico's political status were introduced during the 110th Congress. H.R. 900 would have authorized a plebiscite in which Puerto Ricans would have voted on continuing the status quo or proceeding toward non-territorial status. H.R. 1230 would have authorized a constitutional convention and referendum in Puerto Rico to consider status options. The House Natural Resources Committee held a hearing on those two bills in October 2007. At that time, the Committee ordered reported favorably an amended version of H.R. 900, which combined elements of the two House bills. (The written report, H.Rept. 110-597, was issued in April 2008.) Finally, on August 2, 2007, Senator Salazar introduced S. 1936 which proposed another approach: a single plebiscite in which voters would choose between the status quo, independence, free association, or statehood. The status issue was not the subject of additional legislative action during the 110th Congress. 

In the 111th Congress, H.R. 2499 (Pierluisi) would authorize a two-stage plebiscite in Puerto Rico to reconsider the status issue. H.R. 2499 is similar to H.R. 900 as introduced in the 110th Congress. The 111th Congress legislation, however, would frame the plebiscite questions somewhat differently than proposed during the 110th Congress. On October 8, 2009, the House Committee on Natural Resources reported out H.R. 2499 and the bill was placed on the Union Calendar.


Date of Report: April 23, 2010
Number of Pages: 54
Order Number: RL32933
Price: $29.95

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