The process is structured around eight negotiating groups:

1. Chairs of Negotiating Groups
2. Market Access
3. Services and Investment
4. Dispute Resolution and Institutional Matters
5. Intellectual Property and Government Procurement
6. Labour and the Environment
7. Cooperation
8. Sanitary and Phytosanitary Measures related to Agriculture.

The structure is similar to that of the Free Trade Area of the Americas (FTAA) in that it includes services, investment, intellectual property and government procurement within the ambit of a free trade arrangement.

But there are some significant differences between CAFTA and the FTAA; notably in CAFTA's inclusion of labour and the environment; and its exclusion of competition policy and of subsidies, anti-dumping and countervailing duties, as separate subjects of negotiation. This reflects the relatively stronger bargaining position of the United States in CAFTA as compared with the FTAA.

The April meeting in El Salvador made significant progress in identifying points of convergence and of divergence in key areas. The issues have a wider significance, as agreements reached in CAFTA will become precedents and reference points in the FTAA and World Trade Organisation negotiations.

In market access, the points of convergence now include (i) national treatment, (ii) treatment of free zone goods, (iii) elimination of non-tariff measures and of taxes on imports, (iv) rules of origin (except for textiles), (v) customs procedures and trade facilitation, (vi) technical obstacles to trade and (vii) sanitary and phytosanitary measures.

The treatment of textiles and garments remains contentious. The US has proposed a separate set of rules of origin for these products that will limit access to items manufactured from thread, yarn and fabrics originating with the FTA itself. Market access could also be denied in cases of suspected "triangulation" - where third country imports are fraudulently re-exported as domestic products. The measure is similar to that under the existing Caribbean Basin Initiative (CBI) and enhanced CBI legislation, aimed at securing the interests of US domestic textile producers.

In El Salvador last month, the US modified its position by offering to include clothing manufactured from third country imports, but this would probably be by means of special quotas.

The treatment of agricultural products that benefit from heavy subsidies in the US is another point of divergence in CAFTA negotiations. Central America's domestic producers - among which are many poor peasant producers - could be severely affected by an inflow of subsidised US food products.

The US had wanted to keep the issue out of CAFTA altogether, arguing that the WTO is the appropriate arena. Central America's position is that the phasing out of import duties on sensitive products should be linked to the dismantling of domestic price supports in the US. Milk and poultry are two prime examples of such sensitive products.

A third point of divergence is the time-frame for the elimination of tariffs. The US has proposed a maximum period of 10 years for complete duty-free trade to come into effect. Central America prefers the FTAA model, in which duty-free access is negotiated in four categories of products: (i) immediate, (ii) over five years, (iii) over ten years and (iv) products negotiated on a case-by-case basis.