COURT RULING NOT EXPECTED TO AFFECT SIGNING OF CENTRAL AMERICA ACCORD

COURT RULING NOT EXPECTED TO AFFECT SIGNING OF CENTRAL AMERICA ACCORD

Five Central American presidents are expected to sign a landmark trade pact in Guatemala City today, despite last-minute confusion sparked by a regional court ruling.

The deal will permit a free flow of goods and labor and harmonize customs services in the region, which has a total population of 30 million people.Trade last year in the region was about $900 million, and officials hope this amount will double in a few years under the new pact.

Signing countries are Costa Rica, Nicaragua, Honduras, El Salvador and Guatemala. Panama, which wants to integrate its economy at a slower pace, was to sign as an observer.

A ruling from the Central American Court of Justice threatened to scuttle the deal Wednesday, as the presidents began a three-day summit. The ruling said the pact must only deal with economic issues and not delve into political or social matters.

The ruling sparked intense negotiations Wednesday and Thursday, but "the presidents will have the final word," said Roberto Rojas, Costa Rican economic minister.

Economic alliance should make the Central America region more attractive to foreign investors, observers say.

"The whole world is going this way - the EC (European Community), the North American free-trade agreement. We feel we need to form our own strong block, too," said Doris Osterlof, executive director of Cadexco, an exporters' association in Costa Rica.

The trade pact remains short on details, however. It doesn't include a time frame for eliminating remaining tariffs and other trade restrictions, so each country is allowed to integrate with its neighbors at its own pace.

Many goods already are traded duty free in the region.

The countries also have the right to opt out of the deal and are free to reach bilateral trade deals with outside countries.

The latter two provisions were key concessions to Costa Rica, the region's richest country.

Until this week, Costa Rica had balked at signing the accord, fearing a wave of migrant workers from poverty-stricken Nicaragua.

The trade accord updates antiquated trade regulations under the Central American Economic Integration Treaty signed 32 years ago. That treaty has been plagued by numerous civil wars, bouts of protectionism and trade exemptions.