On August 23, Central American foreign ministers were meeting in San Jose, Costa Rica, to review progress in Central American integration. Cultural integration will be included: a Central American television channel is under consideration.

Costa Rica, the current Chair of the Central American Integration System (SICA), plays a strategic role. It has recently negotiated a draft free trade agreement with Trinidad and Tobago, which is to become the basis for a Costa Rica-CARICOM Free Trade Agreement (FTA). It also has a large community on its Caribbean coast with historic ties to the islands.

The San Jose meeting was also due to consider a Plan of Action for cooperation with CARICOM, arising out of the first ever Central American-CARICOM summit held in February in Belize. Trade, the environment, health and education are the chief areas of cooperation that have been identified.

Earlier in the week, Central American Vice Ministers of Trade and the Economy had met to agree on the agenda for negotiations with the United States for the proposed Central America-United States (CA-US) FTA.

Approval of Trade Promotion Authority for the US Administration last month has placed these negotiations on the front-burner. Even as the US continues to give high priority to the Free Trade Area of the Americas (FTAA) process, negotiations with Central America and Chile will be pursued.

The Central American meeting achieved substantial agreement on the negotiating agenda and leaders are expressing optimism that the CA-US FTA could be concluded within one year.

One contentious issue is that of US agricultural subsidies that may impact market access for Central America's agricultural exports. But this may be deferred to the World Trade Organisation, rather than included in the CA-US negotiations.

However much technical work needs to be done to prepare for the negotiations, for example in the area of services. Several countries are expressing the need for financial and technical assistance for this purpose.

Central America also agrees that it will need to complete its customs union and unification of customs administrations as a precondition for the operation of an FTA with the US. Regional integration and trade liberalisation will go hand in hand.

Meanwhile, the Dominican Republic is preparing to host a crucial meeting of the FTAA Trade Negotiating Committee on August 8-30, this year. Vice Ministers from most Greater Caribbean countries are expected to attend.

The meeting will agree on the package of proposals to be submitted to the FTAA Ministerial meeting due for Ecuador in October, this year. The issues include market access, government procurement, the treatment of small economies, special and differential treatment and base tariff rates for the FTAA--all of vital importance to the region.

Representatives of civil society continue to point to argue the need for a stronger social dimension to the FTAA. Recently the President of the Latin American Parliament (PARLACEN) called for a programme of social investment to accompany the FTAA. This is similar to the proposal for a Regional Development Fund endorsed at the 3rd Association of Caribbean States Summit.

The special CARICOM Summit on the Economy in St Lucia in mid-August and the technical meeting in Barbados the following week were other signs of the imperative of regionalism in the face of economic challenges.

While politics is national, economics and economic relations are becoming regional, hemispheric and global.

Professor Norman Girvan is Secretary General of the Association of Caribbean States. The views expressed are not necessarily the official views of the ACS. Feedback can be sent to mail@acs-aec.org.

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August 23, 2002