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US, Costa Rica Reach Free Trade Agreement

Seattle Post Intelligencer article on this subject 25.Jan.2004 15:02


Sunday, January 25, 2004 Last updated 2:34 p.m. PT

U.S., Costa Rica reach free trade deal


U.S Trade Representative Robert B. Zoellick, left, shakes hands with Costa Rica's Minister of Foreign Trade Alberto Trejos, right, during a ceremony at the Office of the U.S. Trade Representative Sunday, Jan. 25, 2004 in Washington. The U.S. and Costa Rica announced Costa Rica's participation in the U.S.-Central American Free Trade Agreement (CAFTA), phasing out tariffs and other trade barriers and promoting regional economic integration and growth.(AP Photo/Pablo Martinez Monsivais)

WASHINGTON -- The Bush administration reached an agreement with Costa Rica on Sunday that will allow that nation to join four of its neighbors in creating a Central American Free Trade Area with the United States, officials of the two countries announced.

The deal must be approved by Congress.

The agreement came after two weeks of intense negotiations aimed at overcoming differences in such areas as telecommunications and insurance that had prompted Costa Rica to back out at the last minute from completing the CAFTA talks last month with the four other nations, Guatemala, El Salvador, Nicaragua and Honduras.

Administration officials said they were pleased with the market-opening language finally reached with Costa Rica, which had sought to protect its monopoly operations in telephones and insurance.

Costa Rica agreed to fully open its insurance market to foreign competition by 2011. It also agreed to open three key sectors of its telephone market to competition - wireless services, private network services and Internet services.

While the country will maintain bans against foreign competition in other areas of telecommunications, U.S. negotiators said they were satisfied that they had torn down barriers in the areas of most interest to U.S. companies.

"Costa Rica needed a little more time to complete its participation in CAFTA, and we're very pleased it has joined its Central American neighbors in this cutting-edge, modern free trade agreement," U.S. Trade Representative Robert Zoellick said in a statement.

The negotiating breakthrough was announced jointly in Washington by Zoellick and Costa Rican Trade Minister Alberto Trejos.

Senior U.S. trade officials, who briefed reporters Sunday on condition of anonymity, said that they hoped to publish the full text of the CAFTA agreement by the end of the week.

They said the next step would be to add a sixth country, the island nation of the Dominican Republic, to the trade deal before submitting it to Congress.

The free trade deal covering Central America has stirred strong opposition among U.S. sugar cane and sugar beet farmers, who fear competition from lower-priced Central American sugar and from the U.S. textile industry, which is concerned that the deal will open their beleaguered industry to even more foreign competition.

U.S. officials on Sunday refused to speculate on when the CAFTA would be presented to Congress for a vote. Supporters hope that the addition of the Dominican Republic will pick up critical House votes among Democrats whose districts include large numbers of Dominican immigrant populations.

However, U.S. labor unions are vowing to strongly oppose the pact, which they believe would continue a trend of exposing U.S. workers to increased competition from low-wage nations with lax labor and environmental laws.

For its part, the administration hopes to use congressional passage of CAFTA as a stepping stone to achieving an even bigger goal, creation of a Free Trade Area of the Americas, covering all 34 democracies in the Western hemisphere.

In 2003, U.S. goods exports to Costa Rica totaled $3.5 billion, up about 13 percent from the previous year, while the United States imported $3.4 billion in goods from Costa Rica, an increase of 9.7 percent from 2002.

Costa Rica accounts for about one-third of U.S. trade with the five CAFTA countries. Adding the Dominican Republic to CAFTA would create the second largest U.S. export market in Latin America behind Mexico.

The United States currently has free trade agreements with Mexico and Canada, its partners in the North American Free Trade Agreement, and individual deals with Israel, Jordan, Chile and Singapore.