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5 Central American Nations Discuss Trade - 2003-10-21

Delegates from five Central American nations are in Houston, Texas, for what could be the next-to-last round of talks aimed at forging a free trade agreement with the United States. However there are still many points of contention, which could sidetrack a deal before a self-imposed January deadline.

Meeting behind closed doors at a Houston hotel, the Central American delegates and their U.S. counterparts began work Monday to create a framework for the Central American Free Trade Agreement, known by its initials in English as CAFTA. It is modeled on the North American Free Trade Agreement, or NAFTA, which links the United States, Canada and Mexico.

Central American leaders want an agreement that would lower U.S. tariffs for around 50 agricultural products, including sugar, which is currently protected by U.S. trade barriers. The Central Americans also want a bigger market for their textile products.

The United States is targeting public sector industries, seeking an opening for U.S. investors in such areas as telecommunications and energy. This has been met by some resistance, especially in nations like Costa Rica, where thousands of people are employed in the publicly owned telecommunications industry.

During the five-day meeting here in Houston, negotiators hope to lay the groundwork for a final agreement that would be approved at a meeting set for December in Washington. The CAFTA talks began in San Jose, Costa Rica, in January of this year. The goal set at that meeting was to conclude the round of talks within a year.

But the past several months have been rough ones in the trade negotiation field, and not just for those involved in the Central American talks. Just last month, the latest ministerial meeting of the World Trade Organization collapsed in Cancun, Mexico, when developing nations, joined together in the group called the G-21, demanded more concessions from rich nations on such issues as agricultural subsidies. The European Union and the United States, in turn, demanded that such issues as investment rules be included in the agenda.

The wreck of the meeting in Cancun has cast a dark shadow on talks scheduled for next month in Miami to create the so-called Free Trade Area of the Americas.

Brazil, a leader of the G-21 in Cancun, has set a course that could lead to a clash with the United States in Miami. Brazilian President Luis Inacio da Silva favors a weak, general agreement on trade for the hemisphere, and would like the United States to deal more directly with the nations of South America when it comes to lowering trade barriers. His vision of a united Latin America confronting the rich neighbor to the north also clashes with the U.S. desire to create an inclusive free trade zone for all of the Americas.

The Central American nations (Honduras, Nicaragua Costa Rica, El Salvador and Guatemala), however, have taken a much less strident approach in their discussions with the United States. U.S. officials expressed some displeasure when Costa Rica, El Salvador and Guatemala joined with the G-21 in Cancun, but all three nations have now pulled out of that group, and express a desire to set aside differences in favor of reaching a CAFTA accord.

As is always the case when officials meet to discuss a free trade arrangement, groups opposed to free trade are also on hand here in Houston to stage rallies and protests. Several organizations have been coordinating plans for demonstrations and marches near the meeting site.

Protests at some free-trade-meeting venues in recent years have turned violent, but police say all has been peaceful so far here in Houston. Leaders of the protest groups say they oppose the CAFTA talks, because lowering trade barriers in the poor nations of Central America could result in farmers and laborers losing their livelihoods. They also argue that such agreements favor large corporations and big investors more than they do the common people.

Supporters of tree trade, however, say CAFTA would reduce prices on many imported goods for Central American consumers, and result in an increase in trade to the United States that would create more jobs in the region.