- The Washington Times - Wednesday, January 8, 2003

The United States officially opens free-trade talks today with five Central American countries, kicking off a year with an ambitious agenda for regional and worldwide negotiations to lower trade barriers and protect investor rights.
With Central America, the Bush administration is hoping to open markets and lock in government reforms in the relatively poor countries Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua while adding momentum to hemispherewide trade negotiations.
The Central American countries, four of which were at least peripherally involved in destructive civil wars during the 1980s or 1990s, see the talks as an opportunity to gain permanent access to the world's biggest market, to come into their own as a destination for foreign investment and to codify economic reforms in a treaty.
"This becomes an instrument of economic policy that will mean increased employment and increased opportunity in the region, which in turn will translate into democratic stability," said Miguel Lacayo, El Salvador's economy minister, in Washington for the start of talks.
Other governments are also eager to sign deals with the United States. Morocco, five southern African countries and Australia expect to start trade talks this year.
At a broader level, the United States is trying to make progress on a Free Trade Area of the Americas with 34 countries in the Western Hemisphere. And the most expansive talks are at the World Trade Organization, where 144 countries are trying to lower trade barriers.
Last year the Bush administration wrapped up a deal with Chile and announced the framework for a pact with Singapore, though that treaty is hung up on one matter: Singapore wants to be able to limit capital flows in an economic crisis.
Government leaders from the developing countries see the talks as crucial to not being left behind as others lock in access to the U.S. market and as an important way to compete against bigger global players, especially China.
El Salvador, physically a little smaller than Massachusetts and with around 6.4 million people, has the second-highest per capita income of the five Central American countries starting negotiations today, according to World Bank figures. But since emerging from a 12-year civil war in 1992, it has suffered from grinding poverty in some areas; more than half the population lived on less than $2 a day through the 1990s.
The country's government sees the free-trade agreement as an important political pact, not just an economic deal.
"Generally democracy has come to countries after development. In our case democracy came before development," Mr. Lacayo said. "We have to work very hard to make that democracy sustainable. We think this free-trade agreement will consolidate the model of liberty, will consolidate the democratic model."
Some groups in the United States are concerned with a lack of labor rights, potential environmental abuses and economic dislocation in the region, problems that could be exacerbated with a rush to entice investment.
Others are worried about economic impact. Among U.S. businesses, the textile industry will closely watch the negotiations. Textiles and especially apparel are among the biggest exports for both sides.
The deal could be beneficial to the United States but requires strong protections against shipments from third countries making their way into the production stream, then being shipped to the United States with lower duties, said Charles Bremer, vice president for international trade at the American Textile Manufacturers Institute.
As a bloc, the five countries are the United States' 19th-largest trade partner. Through October, the United States ran a $1.8 billion trade deficit with them, exporting nearly $8.1 billion in goods and importing almost $9.9 billion.
The countries are part of the Caribbean Basin Initiative, which gives unilateral trade preferences to countries in Central America and the Caribbean but expires in 2008.

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