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CENTRAL AMERICA FREE TRADE AGREEMENT INCREASINGLY DIVISIVE AS U.S. BECOMES FOURTH TO RATIFY.

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The US House of Representatives passed the Central America Free Trade Agreement (CAFTA) into law on July 28, by the narrowest of margins, 217-215. The agreement squeaked by only after the time allotted for the vote was extended to allow for last minute arm-twisting. The agreement will go into effect in January 2006, but as yet only three other countries, El Salvador (see NotiCen, 2005-01-06), Honduras, and Guatemala, have ratified it. Unless they follow suit, Nicaragua, the Dominican Republic, and Costa Rica will not be part of the pact. They have two years to decide. The US congressional action appears to have done nothing to resolve the sharp divisions regarding CAFTA in any of the countries or palliate the anxieties over who will benefit and who will suffer.

The agreement is still mired in contradictions. Claims have been made on both sides that are either patently untrue or still unproven. US Trade Representative (USTR) Rob Portman issued a statement on Aug. 2, saying, "America's support for CAFTA-DR sends a strong signal to the world that the United States is committed to market liberalization."

But the facts as widely reported are that the machinations involved in the last-minute wheeling and dealing sent a strong signal in the opposite direction. To get holdouts on board, Portman promised to limit free trade between the US and China, to delay tariff-free imports of Mexican textiles into Central America, and to limit the import of Chinese textiles to Nicaragua.

US President George W. Bush said in remarks...

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