US Proffers Free Trade Area To Central America

by Mike Godfrey, Tax-News.com, New York

18 January 2002

In a speech devoted to trade liberalisation in the Americas, George Bush on Wednesday evening said that his administration would pursue a rade deal that would include Nicaragua, El Salvador, Guatemala, Costa Rica and Honduras. A US trade official said that the plan was part of the larger strategy of "competition in liberalisation" sketched out by Robert Zoellick, the US trade representative.

There is concern among US trade officials that the economic crisis in Argentina could have negative effects on its plan to complete an expansion of NAFTA into a Free Trade Area of the Americas by 2005.

"Success in the global economy comes to countries that maintain fiscal discipline, open their borders to trade, privatise inefficient state enterprises, deregulate their domestic markets and invest in the health and education of their people," Mr Bush said. "And those who promise painless protectionism or security through statism assure a bleak and stagnant future.".

Whatever the administration hopes for, the reality in Washington is however that there is substantial oppposition in the Congress to further trade liberalisation, not helped by a wave of protectionist if not isolationist sentiment following the events of September 11th. The House last month passed by one vote a bill to give the president new trade negotiating authority and its prospects in the Senate are uncertain. Mr Bush on Wednesday night again urged quick passage of the legislation. The most difficult issues to resolve will be related to cheap labour and agriculture, the region’s two biggest competitive advantages, which impinge on powerful US interests.

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