WASHINGTON, Dec 17 (Reuters) - The Bush administration wrapped up a free trade agreement with four Central American countries on Wednesday, setting the stage for a bruising battle in Congress ahead of the 2004 presidential election.

U.S. Trade Representative Robert Zoellick told reporters the U.S.-Central American Free Trade Agreement, or CAFTA, would expand trade while strengthening democracy and economic development in a region that was the scene of bloody guerrilla wars two decades ago.Trade officials from El Salvador, Guatemala, Honduras and Nicaragua echoed those sentiments."This will mean a new future for our region," El Salvador Economy Minister Miguel Lacayo said. "We are firm believers that there is a strong link between trade, development and democracy."

The United States wanted to wrap up an agreement this week with five Central American countries but Costa Rica said on Tuesday it needed more time to consider U.S. demands to open key services market, such as telecommunications and insurance. "We hope and believe Costa Rica will join us soon, but we also won't wait," said Zoellick.

At the same time, American sugar farmers and a leading U.S. textile group immediately announced they would oppose the pact.And Rep. Dick Gephardt, a Missouri Democrat who is running for his party's presidential nomination, blasted the Bush administration for "selling out American workers.""As a result of CAFTA, thousands of textile and apparel jobs will be lost in South Carolina and across the country. Thousands more jobs will be lost in the agricultural industry," Gephardt said.

U.S. labor unions have promised an all-out campaign to defeat the agreement, which could come before Congress in mid-2004. But a broad coalition of U.S. business and farm groups who expect to benefit from CAFTA said they were ready for the fight.Trade between the United States and the four CAFTA countries runs about $15.4 billion annually.

The agreement builds on that by phasing out almost all tariffs, many immediately after the pact takes effect.In the case of sugar, a politically sensitive item for the United States, the agreement provides the countries with a combined quota to ship 85,000 to 90,000 additional metric tons of sugar to the United States.That would grow by 2 percent annually, but high tariffs to keep out additional shipments would remain in place. The four countries now ship about 110,000 metric tons of sugar to the United States under a quota covering all countries.

Jack Roney, an economist with the American Sugar Alliance, said CAFTA sets a dangerous precedent for other proposed free trade agreements with a long list of sugar producers ranging from the Dominican Republic to Australia."The volume increases we are looking at are really more than our market can endure," he said. "If we apply the same principle to all the other countries lined up for FTAs, we're looking at increasing our quota by 1 million tons."

loyd Wood, a spokesman for the American Manufacturers Trade Action Coalition, said the textile industry group would oppose the pact because it allows the Central American countries to export clothing to the United States made from yarn and fabric produced "anywhere in the world."

U.S. trade officials hope CAFTA will pave the way for the proposed Free Trade Area of the Americas, which would include every country in the Western Hemisphere except Cuba.