United States Reaches Free Trade Agreement With Four Central American Countries

By Martin Crutsinger
The Associated Press
The Tampa Tribune

Published: Dec 17, 2003

WASHINGTON (AP) - Overcoming a last-minute snag on textiles, the United States reached a free trade agreement on Wednesday with four Central American countries.
Negotiators reached agreement in all areas, including textiles and agriculture, U.S. Trade Representative Robert Zoellick announced at a news conference with the trade ministers of Guatemala, El Salvador, Nicaragua and Honduras.

"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," Zoellick said.

A fifth nation, Costa Rica, abruptly left the talks on Tuesday complaining about excessive demands being made by the United States for the nation to open up its market to foreign competition in telecommunications and insurance.

However, U.S. officials expressed hope that the differences with Costa Rica can be resolved in coming weeks so that it will be included when the administration submits the Central American Free Trade Agreement, or CAFTA, to Congress early next year.

The breakthrough in textiles came after an all-night bargaining session. Some of the Central American trade ministers had expressed pessimism that an agreement could be reached during this negotiating round and predicted that the talks would have to recess and start again in January.

The free trade deal covering Central America has stirred strong opposition among U.S. sugar cane and sugar beet farmers, who fear competition from lower-priced Central American sugar, and from the U.S. textile industry, which is concerned that the deal will open the beleaguered industry to even more foreign competition.

The deal, which will phase out virtually all trade barriers among the participating countries over the next decade, represents the sixth free trade deal the United States has achieved.

The North American Free Trade Agreement covers Canada and Mexico and the United States has individual free trade agreements with Israel, Jordan, Chile and Singapore.

The success in reaching the Central American deal gave the Bush administration a badly needed win after a series of setbacks in trade.

In September, negotiations on a global trade liberalization agreement collapsed in Cancun, Mexico, 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 sharp differences with Brazil to keep the 34-nation effort to create a hemisphere-wide free trade zone from collapsing in Miami. And earlier this month, the administration had to reverse positions and withdraw protective tariffs it had imposed on steel in the face of a threat of trade retaliation from Europe and Asia.

Through the Central American trade deal and a series of other free trade agreements it is working on, the administration hopes to put pressure on Brazil and other holdouts to be more forthcoming in the broader free trade talks. Those are slated to be wrapped up in January 2005.

To gather support in Congress for the Central American pact, the administration already has announced plans 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.

However, the textile and sugar industries and labor unions in large part are vowing to oppose the deal.

American growers of sugar cane and sugar beets fear competition would increase if sugar from Central America was allowed into the United States without the steep tariffs imposed on sugar imports from other countries.


Associated Press Writer Nestor Ikeda contributed to this report.


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