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Leaders praise CAFTA as US exports climb

Houston Chronicle | Feb. 27, 2007

Leaders praise CAFTA as U.S. exports climb

Salvadoran leader and Bush hail trade growth, though textiles lag

Bloomberg News

U.S. exports to four Central American countries grew more than 18 percent last year after the Bush administration began a free-trade agreement with those nations. Imports were unchanged as textile trade lagged.

President Bush and Salvadoran President Elias Antonio Saca heralded on Tuesday the growth in trade, led by exports of food, petroleum products and machinery, after a White House meeting just two days before the first anniversary of the trade deal.

"A lot of people are benefiting" from the U.S.-Central American Free Trade Agreement, Bush said. El Salvador’s government is a key ally of the U.S. in the region, and the first country to implement CAFTA.

CAFTA removes duties on 80 percent of the $15 billion in annual U.S. exports to the region and makes permanent the duty-free access to the U.S. that most products from Central America already have. All of the nations except Costa Rica have ratified the accord, and the agreement has gone into effect with four of the six nations, Honduras, El Salvador, Nicaragua and Guatemala. The U.S. will carry out the agreement with the Dominican Republic soon, U.S. Trade Representative Susan Schwab said this week.

Saca said Salvadoran exports are up 20 percent in 2006 from the previous year, and "there’s no doubt free trade has allowed this to become true."

U.S. exports to the four nations rose 18 percent to $10.2 billion last year, while imports were unchanged at $10 billion, according to U.S. Census data. Total annual trade with the region is less than that traded with China in just three weeks.

The agreement hasn’t fulfilled the promises of linking American textile makers with apparel sewing operations in the four countries to fend off competition from China, supporters and critics say.

Imports of clothing from the four countries were down more than 7 percent in 2006 compared with a year earlier. Apparel imports from China, meanwhile, surged more than 22 percent.

"Until you address the subsidies in China, CAFTA countries will continue to lose market share," said Lloyd Wood, a spokesman for the American Manufacturing Trade Action Committee.

Even supporters of the trade agreement say the rules necessary for duty-free imports in the pact make it difficult to use and not worth the effort.

"Technical problems with the implementation is a large part of what is dragging them down," said Julia Hughes, vice president of the New York-based United States Association of Importers of Textiles and Apparel. "It’s not simple, and some of the provisions are still not available."

 source: Houston Chronicle