Zoellick Hopes To Wrap Up CAFTA Deal By Year's End

by Mike Godfrey, Tax-News.com, Washington

01 October 2003

Following the failure of the World Trade Organisation talks in Cancun recently, United States trade representative Robert B. Zoellick headed to Central America once again this week in a bid to wrap up a trade pact with the five nations in the CAFTA region.

The main anticipated outcome of the agreement is the lifting of tariffs and trade restrictions between the US and the CAFTA nations (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua). According to recent statistics, the area has a combined economy of $57 billion, and approximately $20 billion worth of trade takes place between the CAFTA nations and the US.

"CAFTA will give Americans better access to affordable goods and promote US exports and jobs, even as it advances Central America's prospects for development," Zoellick observed during the last round of meetings in New Orleans in July.

However, the CAFTA arrangement is not without its critics in the US Congress, and in a recent speech, Senator Max Baucus (D - Mon) said the agreement with the Central American nations will be a "politically difficult" proposition for many US lawmakers to accept, mainly due to labor conditions and environmental concerns.

It has also been reported that there are concerns amongst business groups in the US over local monopolies which exist in Costa Rica's electricity, insurance and telecommunications markets, which may restrict access to US firms.

However, despite these anxieties, Zoellick is pressing to conclude the CAFTA agreement by the end of the year to enable Congress to vote on the issue early in 2004.

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