The McClatchy news service reports the following:
Now that the Trump administration has revamped the North American Free Trade Agreement, it is taking a look at kicking key countries out of its sister pact, the Central American Free Trade Agreement.
Trump officials are taking a very close look at the 2005 pact signed with six Latin American nations to see if they can block Nicaragua, the Dominican Republic and El Salvador from keeping preferential access to U.S. markets without disturbing the rest of the agreement.
“We are very concerned with Nicaragua’s move toward authoritarianism, and El Salvador’s and Dominican Republic’s questionable ties with China,” the official said. “As the United States has made clear, we will not allow our trade agreements, including CAFTA-DR, to become back doors to benefit non-market economies and repressive actors in the region.”
I haven't seen this confirmed by other sources yet, but it does seem to fit with the worldview of some people in the Trump administration.
So how would this work? Is there a mechanism for one country to stop applying a trade agreement with respect to some countries but not others? It makes me think of the "non-application" provisions of the GATT/WTO (see, e.g., Article XIII of the WTO Agreement), but applied retroactively. CAFTA does not have any such provision as far as I know.
CAFTA's withdrawal provision says:
Article 22.7: Withdrawal
1. Any Party may withdraw from this Agreement by providing written notice of withdrawal to the Depositary. The Depositary shall promptly inform the Parties of such notification.
2. A withdrawal shall take effect six months after a Party provides written notice under paragraph 1, unless the Parties agree on a different period. If a Party withdraws, the Agreement shall remain in force for the remaining Parties.
On its face, this provision does not offer a way to engage in a country-specific withdrawal, but I suppose the Trump administration could send a notice of withdrawal from the Agreement with regard to just certain countries (a partial withdrawal).
The article suggests that "national security," which has taken on an important role under the Trump administration, could be invoked here:
Miller sees no easy mechanism to kick out the three countries out, but said it can be done. One way, he said would be for officials to suspend them based on national security concerns.
CAFTA's security exceptions are similar to those of other trade agreements, and the Trump administration could invoke those provisions to justify not applying CAFTA to these particular countries. That could work (sort of) for the purposes of international law, although I'm not sure how the administration would justify raising tariffs on these countries under domestic law.
Of course, there is also the political reality that these countries would respond by raising tariffs on U.S. exports. I'm not sure how big those markets are and whether U.S. industries would be affected enough to put up a fight.