A joint resolution Entitled: " Nicaragua Freedom Act of 1988".

Declares it to be the policy of the United States to enhance its security and that of the democratic countries of Central America by assisting in the achievement of: (1) democracy in Nicaragua; (2) an end to Soviet, Cuban, and other Communist bloc military or security assistance to Nicaragua; (3) an end to Nicaraguan aggression and subversion against other countries in Central America; and (4) the reduction of the military and security forces of Nicaragua.

Requires the President to report bimonthly to the Congress concerning: (1) Nicaraguan violations of certain Central American peace agreements; and (2) the receipt by Nicaragua of Soviet, Cuban, Communist bloc, and other foreign military or security assistance.

Authorizes the President to transfer to the Agency for International Development from specified Department of Defense appropriations accounts a specified amount of funds to provide humanitarian assistance, civic action, and nonmilitary training to the Nicaraguan democratic resistance and to strengthen resistance human rights programs. Sets forth specific requirements for the transportation of such assistance, including the indemnification of leased aircraft and the provision of passive air defense equipment for such aircraft.

Authorizes the President to transfer a specified amount of funds from Defense Department appropriations accounts to departments and agencies he may designate to be held in escrow to provide additional assistance (including lethal assistance) for the Nicaraguan democratic resistance. Prohibits making such funds available for such additional assistance unless the President certifies to the Congress that: (1) no definitive ceasefire is in place that was agreed to by the Government of Nicaragua and the Nicaraguan democratic resistance; (2) the failure to achieve such a ceasefire results from the lack of good faith efforts by the Government of Nicaragua to comply with certain Central American peace agreements; and (3) the Nicaraguan democratic resistance has engaged in good faith efforts to achieve such a ceasefire. Suspends any lethal assistance being provided after such a certification is made during any time an agreed ceasefire is in place in Nicaragua.

Provides that the general authorities and limitations of specified Acts shall be deemed to have been met for the transfer and the use of funds as provided in this Act.

Declares that the Congress encourages the President to submit proposals for bilateral and multilateral action to: (1) provide additional economic assistance to the democratic countries of Central America; (2) facilitate the ability of Central American economies to grow through the development of their infrastructure, expansion of exports, and the strengthening of increased investment opportunities; (3) provide a more realistic plan to assist Central American countries in managing their foreign debt; and (4) develop these initiatives in concert with Western Europe, Japan, and other democratic allies.

Provides that if the Government of Nicaragua and the Nicaraguan democratic resistance sign a comprehensive final peace agreement: (1) the President shall terminate the trade embargo imposed against Nicaragua; and (2) a specified amount of funds shall be made available to provide assistance for the relocation and reintegration into Nicaraguan civil society of members of the Nicaraguan democratic resistance.

Authorizes the President to provide additional economic incentives to Nicaragua if, after 180 days after such final agreement is signed, the President certifies to the Congress that the Government of Nicaragua is continuing to comply with that agreement. Specifies such economic incentives as: (1) designating Nicaragua as a beneficiary country for purposes of the Caribbean Economic Recovery Act; (2) designating Nicaragua as a beneficiary developing country for purposes of the generalized system of preferences; and (3) authorizing loan assistance to Nicaragua under the Export-Import Bank Act of 1945.