Central American trade deal is being delayed by partners
New York Times
Central American Trade Deal Is Being Delayed by Partners
By ELISABETH MALKIN
Published: March 2, 2006
MEXICO CITY, March 1 - Two months after the Central American Free Trade Agreement was supposed to go into effect, only El Salvador is ready to join, frustrating a hard-won victory for Washington in its push toward free trade.
Of the five other countries that signed on to the pact known by its acronym, Cafta, four have yet to change a host of laws to bring them into line with the agreement. The pact requires them to open their economies to American trade and investment, dismantle protections for many local industries and enforce intellectual property rights in return for greater access to the United States market. Costa Rica, the fifth, has delayed ratification.
While the delay is in part a sign of how complex the negotiations have been, it also reflects the extent of the concerns about the agreement in the tiny economies it will affect.
As the legal changes make their way through the various legislatures, they have reignited opposition from an array of groups who fear the trade alliance with the United States will wipe out many local businesses and impoverish farmers.
To complicate matters, some Central American governments now say the United States is asking for more than the countries agreed to.
"In some areas, Cafta is not precise," said Enrique Lacs, the deputy minister of foreign trade in Guatemala. The United States government "wants precision based on its criteria."
Susan C. Schwab, a deputy United States trade representative, said in an interview that the United States was not asking for anything "more than is necessary to comply" with Cafta. "Some of it," she said, "may be misunderstandings of what we’re asking."
The United States trade representative’s office says that the delays will not stop the accord and that countries may join the agreement one by one when they are ready. El Salvador, which has changed its laws, has begun to carry out the accord.
Central American presidents sold the agreement to their countries as a way to broaden access to the American market for the region’s textile and agricultural exports and to attract much-needed foreign investment. But the details are proving a harder sell.
Robert E. Scott, a senior international economist at the Economic Policy Institute in Washington, which opposes the accord, said Central American governments realized they "have to spend more political capital" to bring their laws into compliance with Cafta.
Trade experts say that interest groups in all countries, including the United States, are trying to get the best deal for themselves in the small print. "The political jockeying and pork barreling and lobbying doesn’t stop when the ink is dry," said Russell Roberts, a professor of economics at George Mason University in Fairfax, Va., who supports free trade.
Nicaragua and Honduras may follow El Salvador before midyear, their officials have said. The government of the Dominican Republic, a Caribbean country that is also part of the accord, said it would not be able to join until at least July.
The deal has proved the most divisive in Costa Rica, where it has been stalled by protests from powerful unions of state-run companies and by concerns that it would weaken the country’s social safety net. Although the pro-Cafta candidate, Óscar Arias, a Nobel Peace Prize laureate, appears to have won the Feb. 5 election after a manual recount, his 18,000-vote margin and the lack of an outright legislative majority suggest that he will have a hard time getting the accord through his nation’s Congress.
Resistance has also arisen in Guatemala, where the government pushed forward on the accord despite opposition protests last year that left two people dead.
Many public health experts warn that Cafta’s complex intellectual property rules, which are more stringent than those in the World Trade Organization, will make it harder for Guatemala to import or produce generic versions of new generations of anti-AIDS drugs.
The American negotiators "are responding to the demands of the American pharmaceutical industry to protect their products," said Mr. Lacs, Guatemala’s foreign trade official.
Even in El Salvador, opposition continues. On Tuesday, unions, students, street vendors and other groups opposing Cafta marched in the streets of San Salvador, and five people were injured when the protests grew violent.
Despite this political resistance, few believe that the delays will derail Cafta. Peter Hakim, president of the Inter-American Dialogue, a Washington research organization on Latin America, said: "It’s hard to imagine that someone runs 25 miles to complete a marathon and you tell him there’s one more mile to go and he then says, ’Forget it.’ "
