Why Costa Rica Might Not Need CAFTA After All

Analysis prepared by COHA Research Associate Cassidy Rush

Despite What President Arias Might Want You to Believe: Why Costa Rica Might Not Need CAFTA After All, and Why It May Be a Bad Deal for the Average Costa Rican

"Collective suicide." It was what Costa Rica President Óscar Arias has publicly predicted for his country if its good citizens don't ratify the Central American Free Trade Agreement (CAFTA), which will be put to referendum this Sunday.

"Let's not close the door. Let's not cut our wings. Let's not deny our young people this challenge," was the impassioned, almost moralistic appeal that Costa Rican economist Álvaro Cedeño made in the country's national newspaper, La Nación. This hortatory, if not establishmentarian advice on the part of Arias and the Costa Rican academic, is reminiscent of President Clinton's appeal to Democratic legislators in 1994 when he urged them to vote for NAFTA.

Just as the pro-free trade bloc bought NAFTA by throwing millions of dollars to promote the enactment of it, a comparable fortune has been spent in Costa Rica to guarantee that no October surprises take place on Sunday.

Few thought CAFTA would be decided through referendum. According to an op-ed signed by former Costa Rican presidents Luis Alberto Monge and Rodrigo Carazo Odio, "Arias and his consultants … resorted to free-speech violations, like closing TV shows [and] banning documentaries.…

" These scare tactics "prompted resilient opposition from very diverse groups (including businessmen, farmers, ecological groups and intellectuals)," which brought CAFTA out of the Congress and out to the people, "something Arias had tried to shun from the beginning."

Now it looks like he will pay for his political clumsiness: the most recent Unimer opinion poll indicates 55% of voters will reject the treaty.

CAFTA supporters (the issue is class-based: the rich favor it, while the poor invariably oppose it) foresee a number of grave consequences befalling Costa Rica if the "No" camp triumphs: massive job hemorrhaging, a catastrophic decline in foreign investment and an exodus of well-educated Costa Ricans who will no longer find economic opportunity in their country.

CAFTA supporters have always claimed to be on the side of reason and clear thinking, but adding such hysterical doomsday prophecies to their rhetorical repertoire shows the movement is feeling vulnerable, despite its torrent of paid-for publicity calling for "Sí" votes, including a battalion of foreign consultants brought into Costa Rica to see to it that the pro-free trade momentum was not being slowed down.

Costa Ricans are coming to realize that sticking with the status quo might not be such a bad thing. In terms of trade, most Costa Rican produce will continue to enjoy duty-free access to the US market due to the Caribbean Basin Initiative (CBI). A Democratic Congress will likely renew the CBI before it expires at the end of next September.

Would Congress allow Costa Rica to remain a part of the CBI even if the country were to turn down CAFTA? It's impossible to know for certain right now, but given the Democrats' lack of congeniality toward bilateral FTAs, they would almost certainly give serious consideration to forgiving Costa Ricans—even lauding them—for not signing an agreement many legislators, publicly and well as privately, see as flawed.

One of the most bedeviling of these flaws relates to CAFTA's treatment of intellectual-property rights, which would at the very least wreak havoc on Costa Rica's outstanding healthcare system.

CAFTA would prevent Costa Rican authorities from "approving the sale of generic drugs for at least five years after a new [pharmaceutical] is introduced … even if the drug's patent has already expired," according to the Dear Colleague letter written by Rep. Henry Waxman. This stipulation would leave Costa Ricans deprived of the inexpensive generic medicine they need access to in order to remain the healthiest country in Central America.

Losing quality healthcare would mean a double blow for Costa Rican farmers, who would also have to face a flood of subsidized agricultural goods. Most agricultural tariffs would be phased out in the next 15 years, and the average tico farmer would have to compete against Cargill and Archer Daniels Midland and other US multinationals, which would undercut domestically produced foodstuffs in the Costa Rican market.

In the end, the average Costa Rican has very little to gain and much to lose from saying "Sí" to CAFTA. Certain Costa Rican elites, however, do have much to gain, which explains the slick, high-profile ad campaign they've waged in favor of the agreement, concealing from the public that it is unquestionably a bad deal for the average tico.

Hopefully the population can look beyond the narrow self-interests of the country's elite and their US counterparts, taking into account only those of their own homeland, and send the Bush White House's and President Arias' smoothly orchestrated pro-CAFTA campaign packing.

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being “one of the nation’s most respected bodies of scholars and policy makers.” For more information, please see our web page at www.coha.org; or contact our Washington offices by phone (202) 223-4975, fax (202) 223-4979

ENDS

More: Latest World News | Top World News | World Digest | Archives