WASHINGTON - The Office of the United States Trade Representative today transmitted to the
President and the Congress reports from 32 trade advisory committees, comprising more than
750 practitioners representing diverse interests and views, regarding the recently completed U.S.-
Central America Free Trade Agreement (CAFTA), covering Costa Rica, El Salvador,
Guatemala, Honduras, and Nicaragua. The Trade Act of 2002 requires these committees to
prepare reports on proposed trade agreements for the Administration and Congress. Support for
the agreement was widespread among nearly all the committees, with several senior-level
committees noting that the agreement goes beyond the Chile and Singapore FTAs in important
respects."
The trade advisory committee reports show that CAFTA is a cutting edge, modern free trade
agreement that will expand economic freedom and support democracy. Most U.S. imports from
Central America are already duty-free. As our advisory committees have confirmed, this
agreement will level the playing field and open new opportunities for American manufactured
goods, farm products, and services," said U.S. Trade Representative Robert B. Zoellick. "The
reports show that small countries can be big export markets for the United States. CAFTA will
expand opportunities for U.S. exports in everything from construction equipment to high-tech
software, from fruits and vegetables to financial services."
Support for the agreement was widespread. The Advisory Committee for Trade Policy and
Negotiations (ACTPN), which is appointed by the President and is the most senior committee,
called CAFTA "an exceptional agreement with a large trading partner." ACTPN said, "the
agreement meets or exceeds the negotiating achievements of the recently implemented Chile and
Singapore agreements, and in many ways has set the highest standard yet achieved in free trade
agreements. [CAFTA] will level the playing field for America's farmers and ranchers, factories,
and service establishments...and does so in a manner not disrupting the U.S. economy." ACTPN
took special note of the CAFTA's anti-corruption provisions, calling them "the strongest to date
in any free trade agreement."
A majority of the Trade and Environment Policy Advisory Committee (TEPAC) commented
"with satisfaction that environmental issues in this agreement appear to have obtained a higher
profile than in last years' agreements with Chile and Singapore." The TEPAC report highlighted
the CAFTA's new public participation provisions and the State Department's side agreement on
environmental cooperation (ECA). TEPAC said, "these new provisions, which were not present
in the Chile or Singapore Agreements, will enhance the ability of citizens with reasonable
environmental concerns to have those concerns heard." TEPAC urged that the Secretariat for the
environmental provisions of the Agreement be given sufficient staff and financial resources to
accomplish the objectives outlined in the ECA, and said this be done expeditiously to understand
fully the environmental implications of the CAFTA. TEPAC also commented that the investor state
provisions "are analogous to those in the Chile and Singapore Agreements and are an
improvement over those in the North American Free Trade Agreement (NAFTA)." A number of
detailed separate and additional views from TEPAC members addressed such issues as
investment, market access for sugar, intellectual property protection for pharmaceuticals, and
environmental procedures.
Broad support was also expressed for CAFTA by advisory committees on services,
manufactured goods, and intellectual property. These committees highlighted the comprehensive
nature of the agreement, its rapid elimination of tariffs on U.S. exports, the provisions
eliminating restrictive dealer laws, and the positive effect of improving the investment climate
through anti-corruption and transparency provisions. The reports noted that protections for
intellectual property and digital products go beyond the recent U.S.-Chile FTA. The report of
the services committee pointed out that the CAFTA liberalization commitments in services are
"very substantial," particularly in areas such as cross border services trade, telecommunications
services, and financial services. Some committees noted that Central American tariffs on a few
industrial products will not phase out immediately, but acknowledged that smaller developing
economies may need additional time to adjust to competition. Many textile industry and all
apparel industry committee members agreed that a free trade agreement with the Central
American countries could play a vital role in developing a strong and successful supply chain
between the U.S. and Central America.
Agricultural advisory committees, with one exception, voiced broad support for the agreement.
The senior-level Agricultural Policy Advisory Committee (APAC) said, "the comprehensive
agreement calls for eventual duty-free, quota-free access on essentially all [farm] products and
addresses other trade measures among the parties." The agreement won support from most
agricultural technical advisory committees, who stressed the increased market access CAFTA
will provide for U.S. farm goods such as poultry, pork, high-quality beef, dairy, fruits and
vegetables, grains, feeds, oilseeds, and processed foods. The producer interests represented on
the sweetener committee expressed opposition to CAFTA because it includes provisions on
sugar, while sweetener users expressed disappointment that greater liberalization had not
occurred.
The committee of state and local government representatives (IGPAC) expressed support for the
CAFTA, finding that "the agreement advances trade development in a manner generally
beneficial to our national, regional and local economies." The committee stressed the
importance of ensuring that trade agreements continue to respect the authority of state and local
governments to regulate in areas under their jurisdiction. Some committee members suggested
clarifications on provisions affecting state and local governments, such as investment and
investor-state dispute settlement, procurement, and the terms and conditions for adding the
Dominican Republic to the CAFTA. One IGPAC member expressed a concern about textiles
imports. IGPAC also offered a number of suggestions to build on recent improvements made by
USTR in federal-state consultation on trade agreements.
As it did with regard to the Australia FTA, the Labor Advisory Committee (LAC) urged
Congress to reject the agreement, alleging deficiencies in local labor laws. Other criticisms in
the LAC report are similar to the committee's criticisms of all U.S. free trade agreements
negotiated under Trade Promotion Authority, such as alleged non-equivalence of dispute
settlement procedures and opposition to provisions on investment, intellectual property, and
government procurement. Similar views were expressed in a dissenting opinion from the
ACTPN report, received from a labor union representative on that committee.
Background
The trade advisory committee system was established in the Trade Act of 1974. The purpose of
the system is to ensure that the Administration receives advice and assistance from a broad range
of stakeholders in setting U.S. trade policy and developing balanced U.S. positions in trade
negotiations. The advisory program is run jointly by five federal agencies: USTR, the
Department of Commerce, the Department of Agriculture, the Department of Labor, and the
Environmental Protection Agency. USTR is the lead agency.
The advisory groups are made up of more than 750 cleared advisors from business, agriculture,
labor, environmental groups, consumer groups, state and local governments, as well as academic
experts and retired U.S. government officials.
There are 32 advisory committees which meet with U.S. trade officials to provide advice on
proposed and on-going trade initiatives. In FY03, more than 150 advisory committee meetings
were held. In addition, USTR and other agencies keep advisors informed by e-mail and the
Internet of important developments in trade negotiations. More than 125 such communications
were sent to advisors in FY03.
During the course of negotiations, advisors review confidential texts and are asked to provide
advice and input. The text of the CAFTA was made available to the general public on January
28, 2004, only three days after conclusion of negotiations and three weeks before the President
notified Congress of his intent to enter into the agreement. This follows last year's suggestion
from advisors that texts be made publicly available as soon as possible upon conclusion of
negotiations.
Other recent improvements in the advisory system include daily webcast briefings at trade
ministerial meetings, more frequent briefings during the concluding phases of trade negotiations,
a secure website for review of documents, and a complete re-structuring of the industry sectoral
and functional advisory committees to reflect the changing makeup of the U.S. economy.
