Saturday, October 06, 2007

Costa Rica Weighs Free Trade Agreement

Washington Post - Corrected: Costa Rica Trade Perks Not Conditional: Democrats
La Nacion (San Jose) - Jose Francisco Ulloa: ‘No hay por que temer’
Financial Times - ‘No way’ say the streets of San Jose”

Costa Rica voters will vote in a national referendum on Sunday regarding approval of the Central American Free Trade Agreement (CAFTA). Costa Rica is the only CAFTA country to hold a public referendum on the issue. The Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua are the other signatories.

However, CAFTA has become much more controversial in Costa Rica than the other countries and the impending referendum has broadened into a society-wide argument over the future of Costa Rica. Last week, around 100,000 people marched in San Jose, the capital, protesting CAFTA and urging the voters to reject it. Even the nation’s clergy have become involved. The president of Costa Rica’s Episcopal conference rushed to urge clergy not to become overly politically involved in the referendum after a group of 92 priests joined together to publicly oppose CAFTA’s adoption.

Although Costa Rica currently enjoys many trade benefits with the United States under the Carribean Basin trade initiative, it is unclear what concrete trade effect a rejection of CAFTA might have on the existing policies. Earlier in the week the US trade representative stated that if Costa Rica did not approve CAFTA, existing trade benefits would be at risk. However, democrats in Congress protested and sought to assure Costa Rica that existing trade relations would not be harmed by a rejection of CAFTA. They asserted that US trade preferences remain within the power of the Democratically-controlled Congress.

CAFTA’s approval would mean extending duty-free access for Costa Rica to US markets and also remove existing barriers for US corporations, farmers, and manufacturers to Costa Rica's market. Although many in the Costa Rican government, including President Oscar Arias have been urging a “yes” vote, voters remain evenly divided in the run-up to the referendum.

1. Should the US make continued free Costa Rican access to the US economy conditional on CAFTA's approval?
2. What sectors of society would CAFTA benefit in Costa Rica?

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