CAFTA (the Central American Free Trade Agreement), a proposed agreement between the United States and five Central American nations including Guatemala, El Salvador, Honduras, Costa Rica and Nicaragua was signed by President Oscar Berge last week among the heaviest demonstrations ever seen in the country that also cost two participants their lives.

CAFTA, if passed by the US Congress early this spring, will serve to push ahead the corporate globalisation model and promote privatization and deregulation of key public services in the South American countries involved. The agreement would reap considerable benefits for the US economy, including in the meat, chemicals and services sectors, as it would lead to the abolishment of long-established tariffs.

US Democrats, their labour allies and Latino activists are closing ranks against CAFTA as harmful to workers in the US and Central America. They claim the agreement will not require Central American governments to protect workers or ban child labour and could devastate the region's farm economies with a flood of US corn and rice.

The Bush Administration insists that all Hispanics should support the trade pact as the best hope to encourage economic and political reform, attract investment and jobs to Central America, while discouraging its apparel industry from fleeing to China.

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