Introduction

The prehistory of the Central American–Dominican Republic–United States Free Trade Agreement (CAFTA–DR–US) can be traced back to the failed efforts of twice Secretary of State, James G. Blaine ‘The Plumed Knight from Maine’. At the close of the nineteenth century, Blaine actively sought to elbow out European influence in Central America by the promotion of the then innovative devices of tariff reciprocity and arbitration treaties. Blaine also pushed hard for a meeting of Latin American leaders held in 1890 during his second tenure as Secretary of State, under President Harrison. The agenda of the meeting was dominated by trade issues. Nothing much came of the meeting, and his tariff reduction project came to naught as a result of the McKinley Tariff Act. Nevertheless, the effort still stands out in the middle of this hundred-year period of United States–Central American history marked by direct military intervention and other forms of gunboat diplomacy.

After the 1898 Spanish–American war, the influence of the United States (US) in the region quickly began to overtake that of the United Kingdom (UK) and Germany, not only in geopolitical terms, but also in terms of trade and investment. The UK's investment peaked in 1913, and by 1929 the US was the leading export market for most countries in the region.

American investment not only grew in terms of quantity during the early twentieth century. It also had very different characteristics from European investment.