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US-Central America Trade Talks Open - 2003-01-25

Trade representatives from the United States and five Central American nations meet in San Jose, Costa Rica, Monday, to begin negotiations aimed at producing a free trade agreement. The Central American negotiators hope over the next year to develop a treaty that will give their nations the same advantages Mexico has had under the North American Free Trade Agreement, known as NAFTA.

The five Central American nations taking part in these talks are Costa Rica, El Salvador, Nicaragua, Guatemala and Honduras. They have all been referred to, at one time or another, as "banana republics." For many decades these nations were seen by the United States as simply producers of tropical agricultural commodities.

But they are also moving into light manufacturing, high-scale tourism and financial services. Here in Costa Rica, where the process of negotiating a treaty will start, the government of President Abel Pacheco is in favor of a NAFTA-like treaty, even though some sectors of society are expressing doubts, and even open opposition to such an agreement.

Former Costa Rican President Rodrigo Carazo and leaders of some labor unions, farmers' organizations and environmental groups have demanded that the government take into account their concerns. Several groups plan protests here on Monday.

Costa Rican Commerce Minister Alberto Trejos says the free trade opponents are misguided, since there is no treaty yet, and, therefore, there is nothing to protest. He says the government is conducting the talks in an open manner. He says the government has invited union leaders to participate in a dialogue about the trade talks, and has also sent a detailed letter to the nation's 57 congressional deputies explaining the objectives of the trade negotiations. The Commerce Ministry also maintains an Internet Web site, with updated information about the trade talks.

Costa Rica's chief negotiator at the talks, Anabel Gonzalez, says the first week of talks are designed to set forth the agenda for the multilateral negotiations. She says the first item on the agenda will be an exchange of information. She says the most important part for the Central American nations will be to find out more about the draft trade agreement the United States recently negotiated with Chile, which will serve as a model for the talks here.

One of the U.S. officials involved in preparations for the talks is Todd Chapman of the U.S. Embassy's political and economic section. He says, although this effort was initiated by the Central American nations, it is compatible with overall U.S. efforts to expand trade worldwide. "I think it is fair to say that the Bush administration has truly pursued an expansionist free trade policy, suggesting that truly free trade is perhaps the best vehicle to promote economic development around the world," he says.

Mr. Chapman says a trade agreement with Central America will compliment NAFTA and other U.S. trade treaties. He says Central Americans will benefit by having firm, treaty-based access to the world's largest market, and that consumers in the five nations of the isthmus will benefit by having access to a wider variety of products at lower cost.

Mr. Chapman says it is appropriate that the talks are beginning here in Costa Rica, a nation that has already demonstrated how opening to trade and investment can benefit all economic sectors. "Free trade agreements not only encourage trade, but more importantly, they also encourage investment, and this country has benefited tremendously by an increased flow of foreign direct investment, principally from the United States, and these have offered some of the best-paying and most challenging jobs in the country," he says.

Costa Rica is currently home to large plants owned and operated by such companies as Intel, Abbott Labs and Procter and Gamble. Other Central American nations have also started to attract such companies, but most are still using cheap labor as their main draw. Mr. Chapman says the increase in trade and investment that could result from a regional trade agreement with the United States, could help these nations advance substantially toward a higher level of manufacturing.

The talks starting here Monday will launch a year of follow-up meetings, held in different Central American nations every four to six weeks. The goal is to have a completed agreement by December.