Central America, US FTA Concluded
Pact culminates two years of negotiations
WASHINGTON, DC - 12/18/03 - The US and four Central American nations - El Salvador, Guatemala, Honduras, and Nicaragua - have concluded an historic and comprehensive Free Trade Agreement (CAFTA) that will strip away barriers to trade, eliminate tariffs, open markets, and promote investment, economic growth and opportunity for all five countries.
The culmination of a year of intense negotiations, the CAFTA "fulfills a key US objective of opening markets with free trade partners, while continuing to push trade liberalization hemispherically through the Free Trade Area of the Americas (FTAA) and globally in the Doha talks in the World Trade Organization (WTO)," said US Trade Representative (USTR) Robert Zoellick, who announced the agreement at a press conference in Washington.
Zoellick noted that the US "strives for the highest standards in its comprehensive FTAs.? A fifth Central American participant, Costa Rica, said it needs to undertake further consultations at home before being able to move forward to finalize its participation in CAFTA."
Combined total goods trade between the US and the four CAFTA countries currently amounts to about $15.4 billion annually.
The CAFTA countries and many other developing countries already enjoy duty free access to the US market for the majority of their exports through trade preference programs provided by Congress to promote economic development.?
Yet these countries often have high tariff and non-tariff barriers for US exports and impose restrictions on US businesses.?
More than 80% of US exports of consumer and industrial goods will become duty-free in Central America immediately, with remaining tariffs phased out over 10 years. Key US export sectors will benefit, such as information technology products, agricultural and construction equipment, paper products, chemicals, and medical and scientific equipment.
Protections and non-discriminatory treatment are provided for digital products such as U.S. software, music, text, and videos, as are protections for US patents, trademarks and trade secrets are strengthened.
The CAFTA's worker protection provisions "go beyond the recently-enacted Chile and Singapore FTAs to create a three-part strategy on worker rights that will ensure effective enforcement of domestic labor laws, establish a cooperative program to improve labor laws and enforcement, and build the capacity of Central American nations to monitor and enforce labor rights," said Zoellick.?
The agreement "also establishes a secure, predictable legal framework for US investors in Central America and provides ground-breaking anti-corruption measures in government contracting. US firms are guaranteed a fair and transparent process to sell goods and services to a wide range of Central American government entities," he said.
"State-of-the-art free trade agreements like the CAFTA not only reduce barriers to U.S. trade, but also require important reforms of the domestic legal and business environment that are key to encouraging business development and investment.? Such reforms include providing greater transparency for government actions and rule making; strengthening the rule of law; and improving the protection and enforcement of intellectual property rights," the USTR said.
President Bush announced his intention to negotiate an FTA with the CAFTA countries on January 16, 2002, at a speech before the Organization of American States.?
The Administration worked with Congress throughout 2002 to secure Trade Promotion Authority (TPA).? Congress enacted the Trade Act of 2002 in August, 2002, and on October 1, 2002, the Administration notified Congress that it would begin the CAFTA negotiations.
CAFTA negotiations began in January, 2003, and took place in 9 rounds of negotiations.? These negotiations took place in San Salvador, El Salvador; San Jose, Costa Rica; Guatemala City, Guatemala; Tegucigalpa, Honduras; Managua, Nicaragua; and in the US in Houston, New Orleans, Cincinnati, and, finally, Washington.
The five Central American countries already are joined in a free trade zone, making the negotiation of the FTA a natural endeavor.
The draft text of the new CAFTA agreement will be released in January, and, under the Trade Act of 2002, the Bush Administration must notify Congress at least 90 days before signing the agreement.
The Administration expects to notify Congress early next year of its intent to sign the CAFTA.? It will also continue to consult with Congress on the agreement to prepare the way for eventual consideration.
The US will begin negotiations with the Dominican Republic early next year, and will seek to bring that country into the CAFTA negotiations next year, prior to Congressional action on legislation to approve and implement the agreement.?
Separately, the US has also announced intentions to begin FTA negotiations with Panama, Colombia and Peru, to be followed by Bolivia and Ecuador when they are ready.?
In the Americas, the US' current and in process FTA partners represent 68% of the GDP of the hemisphere, not counting the US, according to Department of Commerce figures released a few months ago.
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