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U.S., Four Central American Countries Reach Free Trade Deal

BY Admin  December 17, 2003 at 2:29 PM EDT

U.S. Trade Representative Robert Zoellick announced at a news conference with trade ministers from the four other countries, ”Negotiations began last January, and today we have fulfilled that vision with a cutting-edge, modern free-trade agreement to tear down the tariff walls that block trade between the United States and Central America, between friends and neighbors.”

The negotiators’ consensus on the Central American Free Trade Agreement, or CAFTA, sets the stage for a fight in Congress over its approval.

Wednesday’s deal would phase out almost all trade barriers among the participating countries over the next decade.

Negotiators reached agreement in all areas — including textiles and agriculture — after a fifth nation, Costa Rica, abruptly left the talks on Tuesday complaining about excessive U.S. demands for the nation to open up its market to foreign competition in telecommunications and insurance.

U.S. exports to Costa Rica and the four Central American countries in Wednesday’s pact were projected to reach $11.5 billion in 2003 — about the same value as exports to Russia, India and Indonesia combined.

U.S. officials said they hope the differences with Costa Rica can be resolved in the coming weeks so that it will be included when CAFTA reaches Congress.

Nicaraguan Minister of Industry and Trade Mario Arana told Reuters the Bush administration indicated it would push for congressional approval of CAFTA in the first half of 2004. That would get the approval vote out of the way before the November U.S. elections.

U.S. labor unions have said they will work hard to defeat the Central American agreement because it will lead to more U.S. jobs moving abroad.

The trade agreement “would extend to Central America the disastrous job loss and environmental damage caused by 10 years of the North American Free Trade Agreement,” the AFL-CIO said in a statement posted on its Web site.

The sugar industry is also opposed to the trade agreement because it fears prices would drop if sugar from Central America were allowed into the United States without the tariffs now imposed on sugar imports from other countries.

Commenting on CAFTA and other free trade agreements, Carolyn Cheney, chairwoman of the American Sugar Alliance, said, “American sugarcane and sugarbeet farmers, in 16 states, are among the most efficient in the world, but none could survive at the low prices these trade agreements would bring.”

To gather support in Congress for the Central American pact, the Bush administration has announced it will try to add the Dominican Republic to the CAFTA agreement early next year in hopes of picking up the votes of New York Democrats whose districts include large Dominican immigrant populations.

The negotiators’ success in reaching the deal comes after setbacks for other trade agreements.

In September, World Trade Organization talks in Cancun, Mexico, collapsed over differences between developing countries and rich nations, including the United States, over such issues as agriculture.

Last month, the United States had to paper over differences with Brazil to keep the 34-nation effort to create a hemisphere-wide free trade zone from collapsing in Miami.