The Central American Free Trade Agreement is in a holding pattern as the seven signatory nations try to resolve outstanding issues.
Negotiators from the U.S. and CAFTA nations had been targeting Jan. 1 for implementation of the accord that reduces or eliminates tariffs on goods flowing between the U.S. and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. The six CAFTA nations exported $9.37 billion worth of apparel and textiles to the U.S. in 2004, while the U.S. exported more than $4 billion in textiles to the region in 2004.
However, it is unclear whether several issues will be resolved by Jan. 1 and the U.S. appears to have backed off that date.
"We're continuing to work with all of the countries on implementing the agreement as soon as possible," said a spokeswoman for the U.S. Trade Representative's office, who would not say whether Jan. 1 was still the target date.
Congress approved CAFTA at the end of July after a tough battle in the House, where it had a two-vote margin. Opposition ran deep and the GOP leadership leaned heavily on Republican loyalists — many from textile manufacturing states — to push the pact through the House.
Industry representatives from the U.S. and Central America are monitoring discussions to resolve CAFTA apparel and textile amendments that were crafted outside of the original agreement and will require legislative action. The Bush administration made commitments to House members who represent textile-producing regions in order to secure enough votes for passage, including one that seeks to preserve pocketing and lining business in the U.S., and another intended to protect U.S. cotton and man-made trouser fabric business in Nicaragua.
The U.S. is holding talks with the six CAFTA countries individually, but it is unclear what concessions might have to be made to secure the commitments to help preserve existing U.S. export business in the region.
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