Bridges Weekly Trade News Digest • Volume 7 • Number 43 • 17th December 2003
CAFTA Negotiations Encounter Last-Ditch Hurdles
During the past week, negotiators from Costa Rica, El Salvador, Honduras, Nicaragua and Guatemala have been meeting with US trade negotiators in Washington, DC, to hash out the final sections of the Central American Free Trade Agreement (CAFTA). Although they may be in their final round of talks — which were scheduled to finish by the end of the year — many obstacles to reaching an agreement have surfaced due to disagreements over agriculture, textiles and services (see BRIDGES Weekly, 5 November 2003).
On Tuesday, 16 December, Costa Rica — the second largest economy in the region — walked out of talks with the US, saying they needed more timeto complete the deal. The US had been pushing for Costa Rica’s liberalisation of insurance and telecommunications sectors, making new requests at a late stage in the talks. Albert Treios, Costa Rica’s trade minister, noted that Costa Rica wanted to resume negotiations next month and that their actions were not "dramatic". The US continued negotiating, hoping to reach an agreement with the other four countries. Nicaraguan President Enrique Bolanos stressed the need to wrap up talks, telling reporters that "Central America cannot wait for more time. Central America needs to advance rapidly". Carlos Sequeira, the chief trade negotiator for Nicaragua, said, "an agreement is near closing, but it is not closed yet," referring to the differences that must be resolved in textiles and agriculture.
The US administration hopes to expand export opportunities in Central America and to have as many free trade pacts as possible with willing countries, in order to put pressure on countries such as Brazil to speed up progress on the 34-nation Free Trade Area of the Americas (FTAA) negotiations, set to conclude by January 2005.
Current talks have encountered mixed reviews. US labour unions, textile makers and the sugar industry oppose the CAFTA. US Republican Senators Larry Craig and Mike Crapo of Idaho and Conrad Burns of Montana wrote to President Bush in early December affirming that it would be difficult to convince the Senate to accept the agreement "if harmful concessions on sugar are included in the final CAFTA treaty". The administration is trying to the counter possible opposition in preparation for elections next year, to garner votes in congressional districts with large Dominican Republic immigrant populations, by considering this country’s inclusion in the CAFTA early next year.
The US currently has free trade agreements with Chile, Singapore, Mexico, Canada, Israel and Jordan. Free trade deals with Australia and Morocco, scheduled for completion by the end of 2003, were recently postponed (see BRIDGES Weekly, 11 December 2003). The US hopes to start free trade talks next year with Bahrain, Colombia, Panama, Thailand and possibly Ecuador and Bolivia.
"5 Nations Work on Free Trade Pact," AP, 16 December 2003; "Costa Rica Balks at US Trade Demands," AP, 16 December 2003; "Costa Rica walks out of US talks on trade deal," FINANCIAL TIMES, 16 December 2003; "Minn-Dak fears free trade pact," AGRINEWS, 16 December 2003; "Trade talks get allies," THE LAFAYETTE DAILY ADVERTISER, 17 December 2003; "Bush Admin. Works to Wrap Up Trade Deal," AP, 17 December 2003; "Sugar Remains Sticking Point in CAFTA," HIGH PLAINS JOURNAL, 12 December 2003.