Guatemala Slow To Implement CAFTA

by Mike Godfrey, for LawAndTax-News.com, New York

05 May 2006

Guatemala's textile sector says it is losing investment because of delays in implementing CAFTA (the Central America Free Trade Agreement), which should have come into force on 1st May.

The country's Congress is unable to agree changes to intellectual property and service sector legislation required under CAFTA, which the country ratified earlier this year. Guatemala’s president, Oscar Berger, who is strongly in favour of the agreement, says the delay is a tragedy.

The United States concluded free trade agreement negotiations with El Salvador, Guatemala, Honduras, and Nicaragua in December 2003 and with Costa Rica in January 2004. In August 2004, the six countries signed up to CAFTA. All of the signatory countries except Costa Rica have ratified the agreement.

During the implementation process, the US Trade Representative works with local legislators and with the US Congress to bring laws into conformity with the framework treaty, and this process has proved difficult in Guatemala, where many agricultural and workers' pressure groups are against the treaty. Carla Caballero, general manager for Guatemalan Apparel and Textile Industry Commission (VESTEX), said that the delays have cost his industry US$160m in uncommitted investments.

Outgoing USTR Bob Portman said in April: “I’m hopeful that within the next couple of months, we’ll be done with Guatemala implementation."

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