Delays hit the inauguration of CAFTA

A villager collects radishes from a field in Santiago Sacatepequez, 45km west of Guatemala City, on Saturday. The Central American Free Trade Agreement was intended to take effect yesterday, but failed to do so. PHOTO: AFP

Central American and US officials had hoped the Central American Free Trade Agreement (CAFTA) would take effect yesterday.

But none of the region's countries has passed the necessary legal and regulatory reforms, delaying the start date for the historic union that will tear down trade barriers between the US, Central America and the Dominican Republic.

CAFTA fear the delay will cause costly business and trade losses in a region that could use an economic boost, for example in its growing textile and assembly-for-export industries.

Some have made extra investments in their products to prepare for the changes and say the holdup delays the long-anticipated payoffs of access to US markets.

"In Guatemala, we were planning on economic growth of 4.4 percent -- the most robust of the region -- thanks to CAFTA," said Juan Carlos Paiz, president of the Guatemalan Union of Nontraditional Products.

But the delay is being hailed as good news by farm groups and others who have fought the agreement, arguing it will be a death-knell for small producers and other local businesses.

"It's a victory, [although] a temporary one," said Jose Pinzon, secretary general of the Guatemalan General Workers Federation.

Stephen Norton, spokesman for the US Trade Representative's office, said the Central American nations and the Dominican Republic must make "technical changes" in customs procedures, and regulations regarding intellectual property rights, telecommunications and procurement.

Honduras, El Salvador and Guatemala are aiming to meet the entry requirements by Feb. 1. Nicaragua says it probably won't join until March, while the Dominican Republic says it won't be ready until July 1.

Costa Rica still hasn't approved the pact, and may not even join at all. Lawmakers there aren't scheduled to debate the topic until February at the earliest.

"None of the Central American nations can begin because they haven't -- we haven't -- finished clarifying topics" with the US government, said Guatemalan Economy Minister Marcio Cuevas.

Norton US officials were working with CAFTA nations to help them prepare for the trade union's implementation and predicted they would be added on "a rolling basis."

"The implementation process should not be rushed," Norton said. "Otherwise the benefits of CAFTA to farmers, workers, businesses and consumers of the US and of its partners could be jeopardized."

At issue are laws that strengthen intellectual property rights, an attempt to crack down on counterfeit and pirated goods, which flourish in Central America. Some countries must also formally eliminate tariffs and obstacles to investment.

Honduras tackled most of the legal reforms, but President Ricardo Maduro must still approve a series of regulations needed to export farming products to the US.

In El Salvador, Congress has approved a package of reforms, and President Tony Saca is expected to sign them in early January.

Legislators' vacations kept Guatemala from approving its own reforms, while in Nicaragua, lawmakers are still hashing out intellectual property and copyright laws.

Paiz, of the Guatemalan Union of Nontraditional Products, blamed the US for the delay, saying the powerful nation was requiring too much of its poorer partners.

"The US isn't holding fair negotiations now," Paiz said. "What we signed was sufficient, and they shouldn't have to ask for more."