US Begins Talks for Trade Pact with Central America

U.S. Begins Talks for Trade Pact With Central Americans
By ELIZABETH BECKER

January 9, 2003

WASHINGTON, Jan. 8 - The Bush administration officially opened negotiations
today to create a free trade agreement with five Central American countries
within a year, a big leap in its ambitious plans for a Nafta-like zone
throughout the Western Hemisphere.

The announcement cemented the role of trade as the administration's primary
policy focus with Latin America. It gives the United States trade
representative, Robert B. Zoellick, chief responsibility for promoting
improved American relations in the region at a time much of the administration
is focused on Iraq and terrorism.

Indeed, Richard E. Feinberg, former special assistant for inter-American
affairs to President Bill Clinton and an early advocate of the regional free
trade concept, said, "I believe these free trade agreements will be seen as
the 21st-century version of strategic alliances."

Some critics in Latin America are annoyed at what they say is the
administration's strategy of dealing first with small countries that have
fewer trade disagreements with the United States rather than including bigger
trading rivals like Brazil.

And the initiative intensifies competition between Washington and the European
Union for access to the Latin American market, where Europe is the
second-largest trading partner after the United States. European officials in
Brussels have taken note of Mr. Zoellick's Latin American push since Congress
granted trade promotion authority - once called fast track - to President Bush
in August. And now the Europeans are working to complete negotiations for a
similar free trade agreement with Mercosur, the world's third-largest trade
group, comprising Argentina, Brazil, Paraguay and Uruguay as well as Bolivia
and Chile as associate members.

"It is obvious we are in stiff competition right now," a European
representative in Washington said. "Our agreement with Mexico came after
Nafta, and we don't want to lose out again, especially not with Mercosur.

Flanked by representatives of several countries that just decades ago knew the
United States mostly as a purveyor of weapons in their civil wars, Mr.
Zoellick said American interests in the region were now centered on
liberalized trade, economic development and democracy.

"This is more than a trade negotiation," he said. It is "a plan to strengthen
democracy and promote development in a region that has known too little of
both."

However, these five countries - Costa Rica, El Salvador, Guatemala, Honduras
and Nicaragua - offer relatively few of the problems that will appear in the
hemispherewide talks for a Free Trade Area of the Americas, or F.T.A.A., since
their trade largely meshes with the United States.

Critics, particularly in Brazil, say they fear that this regional agreement is
an attempt by the United States to divide and rule, forcing the bigger Latin
nations to accept Washington's dictates in the wider negotiations.

"I think this is tactical," said Mario Mugnaini, vice president for
international affairs at the Federation of Industries in São Paulo. "If there
are too many bilateral accords made around the region, then Brazil would
ultimately favor closing the F.T.A.A. negotiations, but I don't think that's
what the United States wants."

Still, United States trade with these five Central American countries is
significant. They import a total of $9 billion worth of products from the
United States every year, the rough equivalent of American exports to Russia,
India and Indonesia combined. And the United States imports $11 billion worth
of goods from the five countries, with nearly three-fourths of the products
entering duty free under special-preference programs.

The European Commission's chief trade negotiator, Pascal Lamy, seeking to
regain a European foothold in the region and to capitalize on its Old World
ties to Spain and Portugal, will travel to Brazil in three weeks - seeking to
fortify relations on a continent that in just a few months has moved swiftly
toward a greater opening toward the United States.

The United States and nearly every country in the Western Hemisphere agreed on
a blueprint for a Free Trade Area of the Americas in November with the goal of
essentially expanding the North American Free Trade Agreement all the way to
Argentina by January 2005. Brazil, the largest Latin American economy and the
nation most skeptical of a free trade area, is now co-chairman of those talks
with the United States.

Last month, Washington concluded a free trade pact with Chile - a model, Mr.
Zoellick hopes, for the talks with the Central American nations, particularly
in the areas of protection for laborers and the environment.

Bernard W. Aronson, assistant secretary of state for inter-American affairs
under President Bush's father, who first proposed a hemispherewide free trade
zone, said that while Mr. Zoellick might be making rapid strides now, they
were perhaps 10 years too late.

"I think that the U.S. and Latin America have paid an enormous price for
failing to spread free trade throughout the hemisphere after Nafta," Mr.
Aronson said. "If we had, the hemisphere would look very different, and much
of the economic and political disintegration wouldn't have occurred."

But some of the praise for Mr. Zoellick's efforts today was laced with
criticism of the administration for relying on trade to solve a myriad of
crises in Latin America. "Zoellick is doing a wonderful job, but it's
extremely unfortunate that he is carrying the water for the whole
administration," said Julia Sweig, a senior fellow at the Council on Foreign
Relations. The region, she said, "deserves more senior attention."

At the beginning of the month, Brazilian officials were insulted when Mr.
Zoellick led the American delegation to the inauguration of President Luiz
Inácio Lula da Silva, leader of the leftist Workers Party. Not only was he
considered too junior, but he has been held in some disdain for warning Brazil
that it would be reduced to exporting to Antarctica if it failed to join in
the Americas trade pact.

Brazil, indeed, has lobbied for the hemispherewide negotiations to be
concluded as a single undertaking, meaning all loose ends of an accord must be
tied up before all countries involved can sign.

Now, a senior trade official said, Mr. Zoellick is trying to push Brazil "into
not just joining the pact, but leading the way."

The major sticking points in all the negotiations will be farm products,
especially sugar and citrus fruit.

But the trade and economic ministers of the five Central American countries
said today that they were willing to compromise to win permanent access to the
United States economy and lure greater investment to their region.

"We're also talking about something more fundamental than trade," said Alberto
Trejos, Costa Rica's foreign trade minister. "We'll derive many, many more
permanent benefits and a vision of development that will mean more jobs and
increased prosperity."

While concern over the strike-induced oil crisis in Venezuela and the civil
strife in Colombia may occupy higher-ranking members of the administration,
trade officials say they are well suited to be the most prominent
representatives of President Bush in the region.

"Economics is the most compelling aspect of U.S.-Latin relations," said Peter
Allgeier, a deputy United States trade representative. "Getting access to us
gives the message to investors that their countries are a safe place to put
their money."

--------------

Copyright 2003 The New York Times Company