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U.S., D.R. Delegates Hail San Juan Trade Talks

Participants cautiously optimistic as meetings conclude; prospects for free-trade agreement this year seen as mixed


Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.February 19, 2004

A week of intensive negotiations in San Juan on the proposed free-trade agreement (FTA) between the U.S. and the Dominican Republic (D.R.) ended inconclusively.

"While the D.R. hasn’t accepted our offer, we expect the talks to continue in Washington," said Assistant U.S. Trade Representative Regina Vargo. "It isn’t over until it’s over."

Vargo preferred to highlight another set of talks. "A milestone was achieved as negotiations on an FTA between the U.S. and Costa Rica were concluded. Costa Rica now joins the other five Central American countries in the U.S.- Central American Free Trade Agreement [Cafta]," she said.

Still, Vargo and D.R. Secretary of Trade & Industry Sonia Guzman described the exercise and the interaction among the delegates to San Juan as invaluable. "They gave us a much keener awareness of the vibrant relationship between Puerto Rico and the D.R. There were a number of sensitive areas discussed, including opening up markets to industrial and agricultural goods," said Vargo. "The U.S. doesn’t want to introduce wrenching changes in the D.R. economy but to enhance the trade relationship that has developed under the Caribbean Basin Initiative."

Guzman called the visit a great success and expressed her appreciation to local officials for their hospitality and many courtesies.

The U.S.-D.R. talks now move to Washington, where the third and final round will be held next month. While Vargo indicated that 90% of the agenda had been discussed, the remaining 10% would be addressed in Washington, including intellectual property, services, agriculture, manufactured goods, and the exclusive distribution laws in both the D.R. and Puerto Rico. "There was a full exchange on all topics, but there are still some sticking points," she said.

Bumps in the road ahead

There are clear indications a U.S.-D.R. FTA could encounter some trouble in this election year and could be bogged down in Congress. A number of Washington observers are convinced the Bush administration will delay seeking Congressional approval of Cafta until 2005 to avoid drawing attention to what is seen as a controversial agreement.

The implications of this possible stalemate for the D.R. are clear as the strategy of the USTR has been to dock, or add, the D.R. to Cafta. While the Bush administration hasn’t admitted it will seek a delay, congressional sources indicate the administration has shown no sign of moving forward with Cafta this year.

There is considerable support for the initiative from members of Congress representing states with large Dominican populations such as New York, New Jersey, Florida, Connecticut, Rhode Island, and Massachusetts. On the other hand, Cafta has aroused considerable opposition from other sectors because it would provide greater market access for sugar and textiles from Central America. In addition, there is concern over the labor and environmental language in Cafta. Although there are significant Central American populations in the U.S., they lack the political clout of Dominicans.

Only last week, Congress approved an FTA between the U.S. and Australia because it excluded sugar and was devoid of labor and environmental provisions to spark opposition.

Observers note a 90-day period must end before trade legislation is introduced and voted on. The Bush administration’s failure to notify Congress of its intention to sign Cafta has caused some apprehension on the part of Senate Finance Committee Vice Chairman Max Baucus (D-Mont.). He said USTR’s Robert Zoellick advised him a letter was to have been sent Feb. 9.

"The administration’s intent to sign the Cafta deal before completing the market-access negotiations to bring the D.R. into Cafta would be unacceptable because Congress would be denied the opportunity to review a significant portion of the anticipated agreement," said Baucus.

Considerable anxiety over fate of the FTA

The majority of the delegates to the San Juan trade talks said they were cautiously optimistic, anxious, and nervous over how the FTA could play out in Washington during this year of presidential and congressional elections. They note growing antagonism toward free-trade legislation as the stagnation of the job market and the flight of manufacturing plants abroad continue. Those from the D.R. point to the presidential elections May 16, which could give the country a new president in August.

This Caribbean Business article appears courtesy of Casiano Communications.
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