Posted on 10/23/2003 3:48:42 PM PDT by riri
Trade focus: Central America A deal could open markets, lead to wider agreements, and support democracy.
BLOOMBERG NEWS
Negotiators from the United States and five Central American nations are trying to reach agreement on cutting tariffs on factory goods and creating rules for investment as a step toward reaching a free-trade accord this year.
Procter & Gamble Co., Intel Corp., and other U.S. companies are urging the United States, during talks in Houston this week, to ensure that any agreement will make it easier for them to build factories, invest in government-owned utilities, cut piracy, and tap new markets to sell their goods.
The Bush administration is also trying to regain momentum toward opening commerce that was lost in September when global trade talks collapsed.
"If we can reach an agreement with the small economies of Central America, it will provide a good model for what we can accomplish" across the hemisphere, said Calman Cohen, president of the Emergency Committee for American Trade, which represents U.S. companies, including Caterpillar Inc. "This can become a good model to emulate."
Trade as a tool
Trade has been the centerpiece of the Bush administration's strategy for building democracy and fostering economic growth. The United States has also announced plans to cut trade barriers with southern African nations, the Middle East and Southeast Asia.
U.S. officials say cutting trade barriers in Central America will strengthen democracies in a region wracked by civil war within the last two decades. The five nations - Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua - say the agreement will help them lure more investment and give them a better chance to export sugar, bananas, and other farm goods to the States.
Central America also wants to get trade preferences to allow it to sew U.S.-made textiles into apparel, so the region can stave off competition from China, Norman Garcia, commerce minister for Honduras, said at a conference last week.
Agriculture remains
A successful conclusion of negotiations this week will leave only one main issue, agriculture, to settle, with negotiators scheduled to have their last meeting in December.
U.S. sugar farmers, apparel-makers, union representatives, and Democratic lawmakers have all said they are worried that a deal could send U.S. jobs to a region where per-capita income ranges from $370 a year in Nicaragua to $4,060 a year in Costa Rica.
In Central America, farmers have already launched street protests because they fear that inexpensive U.S. corn will put them out of business.
"We have some sensitive issues we'll have to deal with, and so do they," Allen Johnson, the chief U.S. agriculture negotiator, said last week.
Trade between the United States and the five Central American nations totaled $22 billion last year, less than trade between the United States and China in just the first two months of this year.
The deal that may arise is scheduled to be one of the next trade agreements to go before Congress, and so will test lawmakers' desire to further cut trade barriers when the economy has lost 2.5 million manufacturing jobs in less than three years and some companies blame cheap imports for driving them out of business.
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