[mgj-discuss] AP: Free Trade Talks Hit Impasse on Textiles (!)

[David Levy]

WTO, FTAA, now CAFTA?....

--d.

Posted on Wed, Dec. 17, 2003    
Free Trade Talks Hit Impasse on Textiles 
MARTIN CRUTSINGER 
Associated Press 


WASHINGTON - Negotiations over the creation of a free trade area linking the United States and Central America hit an impasse Wednesday over the politically sensitive issue of textiles. 

Some of the trade negotiators expressed doubt that the differences can be resolved this week and said it was likely that the discussions would continue in January. 

The Bush administration faced heavy pressure from the U.S. textile industry, which fears that a free trade deal with Central America would open the beleaguered U.S. industry to even more foreign competition. 

Negotiators working on the proposed Central American Free Trade Agreement, or CAFTA, met overnight until 6:30 a.m. at a downtown hotel trying to resolve differences. But in the end the Central American countries believed that the market-opening offer the United States was making in textiles would give them fewer benefits than they already enjoy under the Caribbean Basin Initiative, which provides preferential trade treatment in such areas as textiles to countries in the Caribbean. 

The Central American trade ministers were scheduled to meet later in the day with U.S. Trade Representative Robert Zoellick to discuss ways to resolve the impasse over textiles. 

Guido Rodas, chief trade negotiator for Guatemala, said the likely outcome was that the countries would agree to meet again in January. 

The five Central American nations involved in the CAFTA talks are Guatemala, Costa Rica, El Salvador, Nicaragua and Honduras. 

However, the trade minister from Costa Rica abruptly left the talks on Tuesday, saying his country could not reach a deal this week because of demands the United States was making for Costa Rica to open its telecommunications and insurance industries to foreign competition. 

The four other Central American countries had hoped to push ahead to a final agreement with the expectations that Costa Rica would resolve its differences and join the pact in the coming weeks. 

The proposed free trade deal with Central America has spurred stiff opposition in the United States not only in the textile industry but also among sugar beet and sugar cane farmers, who also are concerned about increased competition from Central America. 

The temporary impasse over textiles represented the latest setback for the Bush administration's trade agenda. 

In September, negotiations on a global trade liberalization agreement collapsed in Cancun, Mexico, over differences between rich nations, including the United States and developing countries, over such issues as agriculture. And last month, the United States had to paper over sharp differences with Brazil to keep the 34-nation effort to create a hemisphere-wide free trade zone from collapsing in Miami. 

Through the Central American free trade deal and a series of other free trade agreements it is working on, the administration hopes to put pressure on Brazil and other holdouts to be more forthcoming in the broader free trade agreement talks. Those are slated to be wrapped up in January 2005. 

Currently, the administration has free trade agreements with only six countries - Canada and Mexico, both part of the North American Free Trade Agreement, and individual agreements with Israel, Jordan, Chile and Singapore. 

To gather support in Congress for the Central American pact, the administration already has announced plans to add the Dominican Republic to the CAFTA agreement early next year in hopes of picking up the votes of New York Democrats whose districts include large Dominican immigrant populations. 

However, the textile and sugar industries and labor unions in large part are vowing to oppose the deal. 

American growers of sugar cane and sugar beets fear competition would increase if sugar from Central America was allowed into the United States without the steep tariffs imposed on sugar imports from other countries. 

The U.S. textile industry was pushing for rules to prevent the Central American nations from being used as a gateway for textiles and clothing made elsewhere in the world to be shipped into the United States duty-free. 

--- 

Associated Press Writer Nestor Ikeda contributed to this report. 
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