April 1, 2006

Honduras and Nicaragua enter trade pact with US

TEGUCIGALPA, Honduras (Reuters) - A controversial trade
pact between the United States and Central American nations
took effect in Honduras and Nicaragua on Saturday as supporters
said it would help bring prosperity to the poor region.

The U.S.-Central American Free Trade Agreement, known as
CAFTA, will give smaller businesses access to international
markets, Honduran President Manuel Zelaya told a news
conference where he was joined by U.S. Ambassador Charles Ford.

"We will strengthen our urban areas and rural sectors that
are deeply impoverished," he said.

Investors in Brazil, Japan, China, Taiwan and Europe hope
to negotiate deals for biofuels, textiles, health and education
services in the region under the pact, he said.

Three countries including El Salvador, have now entered
into the agreement, despite fierce protests against the pact
across the region. Small farmers, unions and civic groups
feared free trade would drive competition that would erode
incomes and reduce living standards.

CAFTA was approved in the United States last year after one
of the bitterest trade debates in the House of Representatives
in years. The pact covers the United States, El Salvador, Costa
Rica, Guatemala, Honduras, Nicaragua and the Dominican

The United States refused to implement the pact by the
original target date of January 1 because it said none of the
other CAFTA countries had made the necessary changes to bring
rules and legislation in line with the accord.

A key issue was the reluctance of the CAFTA trading
partners to recognize the U.S. meat inspection system as
equivalent to their own, thereby removing a technical barrier
to U.S. meat exports.

El Salvador, Nicaragua and Honduras have made regulatory
changes to make way for the pact, while the other countries
have yet to do so. Costa Rica alone has not ratified the trade
deal, although President-elect Oscar Arias supports it.