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08 December 2003

U.S. Official Outlines Importance of U.S.-Central American Trade Agreement

Assistant USTR identifies challenges as CAFTA talks enter final round

Washington -- The U.S.-Central American Free Trade Agreement (CAFTA) will yield broad benefits, and U.S. trade negotiators and their Central American counterparts must work together to forge an agreement that advances everyone's interests, says Assistant U.S. Trade Representative (USTR) for the Americas Regina Vargo.

The CAFTA negotiations were formally launched in January 2003, and trade officials from the United States and Central America convened in Washington on December 8 for the ninth and final round of the talks, which are scheduled to conclude on December 16.

In December 8 remarks to the U.S. Chamber of Commerce in Washington, Vargo said that CAFTA -- the proposed accord between the United States and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua -- is an important part of the Bush administration's efforts to foster a prosperous, secure and democratic hemisphere. She outlined the importance of the CAFTA, progress made in the trade negotiations to date, and the challenges that remain as the talks near completion.

The USTR official noted that U.S. trade with Central America is significant, potentially reaching $25 billion this year. She said that the nations of Central America have been "excellent" trading partners with the United States and identified the goal of the CAFTA negotiations as bolstering this important commercial relationship by crafting an agreement that "lowers tariffs, opens markets and establishes state-of-the-art rules" governing commercial transactions.

Vargo said that the expanded two-way trade CAFTA fosters will support jobs in both the United States and Central America, but said the benefits of the accord will be broader than commercial and economic gains.

"These negotiations are about more than trade," she said. "Free trade has an important role to play in strengthening the rule of law and democracy in the region with its focus on openness and transparency."

Vargo said that CAFTA negotiators have been working "around the clock" since the October 2003 conclusion of the most recent round of talks in Houston.

These intensive efforts, she said, have yielded important advances such as agreement on less-sensitive agricultural issues. However, she cautioned that challenges remain in addressing more sensitive agricultural issues, as well as issues in the areas of services, labor and the environment.

Vargo said that CAFTA negotiators have agreed that no product will be left out of agricultural discussions, but pointed out that 15-year phase-out periods will be included in the agreement in an attempt to ensure appropriate treatment of more sensitive products.

The assistant USTR said the U.S. will work toward a similarly comprehensive approach to services. In this area, she called on Costa Rica in particular to consider a greater opening of its telecommunications sector.

Vargo said that Costa Rica needs a more efficient telecommunications sector, and she indicated that "we are going to have to work on the issue to have some openness."

On the subject of addressing labor and the environment within CAFTA, Vargo said the United States would follow guidelines established by Congress in the Trade Act of 2002.

Vargo said that labor concerns would not be transformed into non-tariff barriers under CAFTA. Rather, the important question before negotiators, she said, is how best to enforce existing labor law in Central America in an effective manner. She said that enhancing the enforcement of labor laws will be a "continuing effort on all sides that can yield higher standards across the region."

As U.S. and Central American negotiators meet this week to address remaining issues and conclude the CAFTA, Vargo emphasized the need for a cooperative approach. "The key is we need to work together," she said. The United States, she added, "seeks an agreement that advances everyone's interest."

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(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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