EL SALVADOR

Congress approves FTA

Inforpress Centroamericana. Jan 13, 2005

The Legislative Assembly on Dec. 18 ratified the Central America Free Trade Agreement (CAFTA), signed in May by Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua with the United States. El Salvador was the first country to ratify the accord.

The agreement was approved by 49 votes in favor and 39 against even though the full Congress never debated even a single line of the 2,500-page text. Economy Minister Yolanda Mayorga de Gavidia had presented the text two weeks earlier.

The government considers that when the accord takes effect the Salvadoran economy will improve. Nevertheless, a study of the Chamber of Commerce and Industry of El Salvador shows that 47 percent of the businesses are not ready to compete with foreign companies.

"Small businesses are not ready for the CAFTA," said the president of the Association of Small and Mid/sized Businessmen, José Mariano Pinto.

Obsolete technology, lack of credits, high electricity rates and problems of labor security are difficulties to which small and mid-sized companies are exposed in the context of the CAFTA.