WASHINGTON -- The Bush administration reached an agreement with Costa Rica yesterday that will allow that nation to join four of its neighbors in creating a Central American Free Trade Area with the United States, officials of the two countries said.
The deal must be approved by Congress.
The agreement came after two weeks of intense negotiations aimed at overcoming differences in such areas as telecommunications and insurance that had prompted Costa Rica to back out at the last minute from completing the CAFTA talks last month with the four other nations, Guatemala, El Salvador, Nicaragua, and Honduras.
Administration officials said they were pleased with the market-opening language finally reached with Costa Rica, which had sought to protect its monopoly operations in telephones and insurance.
Costa Rica agreed to fully open its insurance market to foreign competition by 2011. It also agreed to open three key sectors of its telephone market to competition -- wireless services, private network services, and Internet services.
While the country will maintain bans against foreign competition in other areas of telecommunications, US negotiators said they were satisfied that they had torn down barriers in the areas of most interest to US companies.
"Costa Rica needed a little more time to complete its participation in CAFTA, and we're very pleased it has joined its Central American neighbors in this cutting-edge, modern free trade agreement," US Trade Representative Robert Zoellick said in a statement.
The negotiating breakthrough was announced jointly in Washington by Zoellick and Costa Rican Trade Minister Alberto Trejos.
Senior US trade officials, who briefed reporters yesterday on condition of anonymity, said that they hoped to publish the full text of the CAFTA agreement by the end of the week.
They said the next step would be to add a sixth country, the island nation of the Dominican Republic, to the trade deal before submitting it to Congress.
The free trade deal covering Central America has stirred strong opposition among US sugar cane and sugar beet farmers, who fear competition from lower-priced Central American sugar and from the US textile industry, which is concerned that the deal will open their beleaguered industry to even more foreign competition.
US officials yesterday refused to speculate on when the CAFTA would be presented to Congress for a vote. Supporters hope that the addition of the Dominican Republic will pick up House votes among Democrats whose districts include large numbers of Dominican immigrant populations.
However, US labor unions are vowing to strongly oppose the pact, which they believe would continue a trend of exposing US workers to increased competition from low-wage nations with lax labor and environmental laws.
The administration hopes to use congressional passage of CAFTA as a stepping stone to achieving an even bigger goal, creation of a Free Trade Area of the Americas, covering all 34 democracies in the Western Hemisphere.
In 2003, US goods exports to Costa Rica totaled $3.5 billion, up about 13 percent from the previous year, while the United States imported $3.4 billion in goods from Costa Rica, an increase of 9.7 percent from 2002.