I am seeing the same problem as Andres Ortiz2 in this thread https://e2e.ti.com/support/interface-group/interface/f/interface-forum/930312/tl16c550c-auto-flow-control-doesn-t-work.
Specifically, the AFE bit cannot be set and always reads back as 0. In the thread referenced, it is indicated that this problem could not be replicated, but it was not clear which package of TL16C550C was used: DIP-40 or PLCC. This problem only exists in the DIP-40 package in my testing. I have tried many DIP-40 packages and they all misbehave as described by Andres.
Can you let me know if the testing that was done was on a DIP-40 package?
Thanks,
Wayne