[Ip-health] FT: Cafta deal may hang on single vote in Congress

[Rene Shen]

 From the Financial Times

Cafta deal may hang on single vote in Congress
By Edward Alden in Washington
Published: December 19 2003 4:00 | Last Updated: December 19 2003 4:00

Regina Vargo, the lead US negotiator for the Central American free trade
agreement, was unusually blunt last week.


Talking about the deal's prospects before Congress, she said: "The common
wisdom is that Cafta will be determined by one vote, and in this case the
common wisdom is probably right."

But the deal concluded on Wednesday with four small Central American
countries has been crafted by the US in an effort to ensure the vote next
year is a Yes.

The congressional decision will be a critical one. While Congress last year
approved deals with Singapore and Chile, the Cafta is the first agreement
conceived and negotiated by the current Republican administration. It will
face strong opposition from Democrats who say the US should not be entering
trade deals with low-wage countries that have few protections for workers.

But analysts say the smaller bilateral agreements now favoured by Robert
Zoellick, US trade representative, can be tailor-made to address US
political sensitivities.

"The asymmetry in the power relationship is so profound that these
countries basically have to take whatever the US offers," says Jon
Huenemann, a former assistant US trade representative.

While the deal would open Central American markets to the US financial
services, telecommunications and information technology industries, it
maintains US import restrictions where they are needed to avoid alienating
US lawmakers from states with import-sensitive industries.

Costa Rica, the largest Central American economy, balked at that
compromise, saying it could not meet US demands on telecommunications and
insurance. The US chose to proceed with El Salvador, Guatemala, Honduras
and Nicaragua.

Democrats and their labour allies are concurring with John Sweeney,
president of the AFL-CIO union federation, who said opponents should do
"everything in our power to defeat this deeply flawed agreement".

Gaining the crucial one-vote margin will require the support of southern
Republicans with close ties to the sugar and textile industries - which are
two of Central America's most important exports but are among the most
import-sensitive US products.