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Central American Nations, US Sign Free Trade Agreement - 2004-05-28

The United States has signed a free trade agreement with five Central American nations. It will eliminate almost all tariffs on U-S exports to the region over the next decade. Opponents of the accord fear it could lead to jobs moving abroad.

The Central American Free Trade Agreement is modeled after a similar, 10-year-old U.S. trade deal with Mexico.

Besides the United States, the signatories are El Salvador, Guatemala, Honduras, Nicaragua, and Central America's healthiest economy, Costa Rica. The Dominican Republic, in the Caribbean, intends to join the agreement, which, over a 10-year period, will eliminate almost all tariffs on U.S. exports to the region. Three quarters of Central American exports already enter the U.S. market duty free.

While the agreement, known as CAFTA is strongly supported by U.S. business, it is bitterly opposed by trade unions, who fear it will lead to a migration of American jobs to lower-cost Central America.

A small number of protesters expressed their opposition outside the Washington headquarters of the Organization of American States, where the signing ceremony was held.

U.S. Trade Representative Robert Zoellick says the Bush administration has work to do to win Congressional support for the accord. "So, I have a message to members of Congress, both strong liberals and arch conservatives. We were willing to fight fierce political battles in the 1980s, when Central America was in a downward spiral. Won't you seize this opportunity to help Central America sustain an upward spiral?," he said.

John Kerry, the presumptive Democratic Party opponent to President Bush in November's presidential election, says he will renegotiate the deal, if he is elected. Mr. Kerry says the accord needs a stronger commitment to labor rights and environmental protection.

President Bush sees CAFTA as an essential building block of a broader hemispheric free trade agreement, he hopes to conclude within the next year. Mr. Zoellick says CAFTA will not be presented to Congress, until after the November election.