CAFTA: Point of Disagreement in Costa Rica

Editor's Note: Juliana Rincón Parra has already shown us the extensive opposition to Costa Rica's ratification of the Central American Free Trade Agreement. However, San Jose-based Roy Rojas was adamant that we also show the support for CAFTA in Costa Rica and its blogosphere. The following post has been translated from its original Spanish.

caftaIn the last two years, in Central America and the Dominican Republic, a lot of political discussion has centered around the good and the bad that would come from the proposed free trade agreement with the United States. Out of all the countries involved, Costa Rica is the only one that has not ratified the Central American Free Trade Agreement. This is because an opposition of minority parties has tried to kidnap the Legislative Assembly and to obstruct all parliamentary progress.

What has in fact happened in the countries that have ratified – Nicaragua and El Salvador for example – is that exports to the US have increased significantly and unemployment has not gone up as opponents had warned. What is the fear keeping labor unions from supporting a deal with a country as consumerist as the United States, where, at the moment, Costa Rica already exports millions of dollars every year?

How is it that so many economists and experts on the subject, like those of the Inter-American Development Bank (I.A.D.B.) and Central American Bank of Economic Integration (BCIE), among others, could be mistaken and allegedly want to drag us into a catastrophe like the unions insist. This is simply inconceivable. We cannot close our doors to a great market like the United States, which, although we are currently insulated from by the “Initiative of the Caribbean Account”, this program could be eliminated at any time. And we would be left unable to export our agricultural products, technologies, and textiles to a market that feeds thousands of Costa Ricans.

According to data provided by the Ministry of Economy, 13,000 people could be unemployed with the exit of textile manufacturers from the country as it would be impossible to compete with other manufacturing countries that are able to export their products, without tariffs, to the United States. These companies leaving Costa Rica would then install in some other country of the region that has ratified the treaty. At the moment, in some zones of Costa Rica, the textile sector provides almost 78% of employment. In 2007, textile exports from Costa Rica diminished 11% compared to the previous year. Meanwhile, in countries of the region that are part of CAFTA, textile exports have increased 17%, which makes us wonder if the treaty really wouldn't benefit us.

Now, one of the subjects that has been most controversial is the opening of the telecommunications industry to more competition (which does not equate to privatization). Many points of view exist about the topic, such as in Fusil de Chispas [ES], which frequently makes references to data from other countries where there are multiple suppliers of telecom services, such as this post pointing readers [ES] to an article from the online magazine Confidential, which points out the low tariffs that we have in Costa Rica [ES], even though we are third in cell phone use per capita worldwide.

En el año 2000, la tarifa por el servicio celular en Costa Rica era la más baja de Centroamérica, y estaba más de 50% por debajo de la segunda más barata, la salvadoreña. Así consta en un completo informe publicado entonces por la revista online Confidencial, sobre la calidad del servicio ofrecido por BellSouth en Nicaragua.

In 2000, the tariff by the cellular service in Costa Rich she was lowest of Central America, and was more than 50% lower than second place El Salvador. That is according to a complete report [ES] published by the online magazine, Confidential [ES], on the quality of the service offered by BellSouth in Nicaragua.

And so, if we are clear that we will not have privatization, and what we will have is just more competition, then why is there fear of letting other companies offer cellular and internet service? If the current provider, ICE, is the cheapest of the region and practically the world, than what does it matter if others come also? Competition benefits all of the users. ICE would likely improve their service and foreign service providers would have to compete with their low prices. The Association of Young people for the Development [ES], an organization of Costa Rican youths, has a weblog that deals mostly with the free trade agreement (State Universities and CAFTA [ES], State-investor Arbitration [ES], Where is our progress? [ES] , etc), It shows a clear example of the diversity of opinions on the topic of free trade. When the moment arrives for deciding, nobody it can say there was no information.

Supporting the free trade agreement does not mean that we support the North American government. Nor that we agree with its manifold international policies. But we recognize that, as a small country, we need a commercial partner. We need their market and we need a treaty which guarantees the right to their market which are now without control. With a treaty, we have a “contract” that would not allow them from preventing our entrance in the future.


  • Larry

    What makes so many think that they will achieve a better treaty by saying NO and waiting? This puzzles me, but be aware the Democrats are gaining power in the US and would love to take away even this opportunity, were it not already offered.

    It has been accepted by all the isthmus but CR, to negotiate a different deal would be a slap in the face to all the earlier participants, could not be considered, and if you are honest you will admit it.

    Businessmen make investment decisions based on a level playing field. If you refuse TLC and tilt the soccer field uphill toward yourselves, you may think you are being clever but will send not only new investment northward, but the existing employers will leave, as well. Tariffs on production are no joke, they are a fact of business life, and businesses have no fear of change away from here, nor change of any kind, unlike many Costa Ricans, from appearances.

    If things could even just stay the same as now, the risk would not be so great. But they cannot. Things will deteriorate rapidly. I repeat, I strongly feel a new deal will not come; it cannot come. Caribbean Basin Initiative will expire with a gasp, and you will be outside, sorry. Vote Yes.

  • Robert Lanod

    Seems like there are more people against TLC, then in favor, at the moment.
    Have you been to Mexico lately?? Business is brisk, middle class have better living conditions, living conditions are improving for the underclass.
    Let’s the ask citizen people of Mexico, … abolish NAFTA, turn the clock back to the good old days! .. I don’t think so!
    Turning down CAFTA will certainly help decrease the population of Costa Rica, as the Nicaraguan Immigrants will be heading home for better jobs.
    Those that choose to look like an osterich, better keep their heads in the sand.
    Aug 24 Donaldo

  • Jared

    “Have you been to Mexico lately?”. Sure, business is brisk. But have you actually spoken about this to the poor? Conditions are not improving for them. Mexico, as a nation, has never been so vulnerable.

    A question one should ask is: How has the history of Costa Rica contributed to it being the most equitable, socially developed country in Central America? One will find that it is (in part) because they have always rejected these ‘free-trade’ agreements and maintained sovereignty over their nations, that they have done so well.

    But the tables have started turning in Costa Rica: money for education is down, support for the poor is down, health improvements are down. Conversely, crime and social strife is up. The turn to unfettered capitalism is the cause and CAFTA will only accentuate this.

  • […] Protesta, General | Este post ha sido publicado en el prestigioso blog Global Voices Online (CAFTA: Point of Disagreement in Costa Rica (Ing) […]

  • Steve

    I have been trying to sort out the + ‘ & -‘s of the TLC, but what seems to be missing are the actual real facts, not the hundreds of interpretations. WHAT ARE THE REAL FACTS? I get the feeling that the TLC will benefit investors in CR were their products and services will see the profits headed North, free or minimal import fees to the US, but what about goods coming into CR from the US. The tariffs paid by the Ticos should be equally reduced.

    Granted, competition can be a healthy commodity, if ICE has the best rates in town, they will continue to have them especially when competition would expect to be making a profit. What ICE needs to do is have a look at their customer service!

    This writer spends a number of months every year in CR, spending $$$, supporting the economy, providing work, and being environmentally concerned. Costa Rica is our second home.

  • It is time for equilibium , the time to deal directly with the idea that we Humans are no longer able to face future with fear about how much money we can make. In fact we should be aware that gobal warming is here and there are for. Those big deals with third parties in a traditional way is not longer afordable. I will vote NO To TLC with dignity, rejecting not the commerce but the type of commerce that the so call ” Washington Concensus Commerce” is offer.

  • Violeta Duarte Fonseca

    As far 3 days for the Referendum Tlc or Cafta,the Costa Rican people will go out and vote with a rotund No to this bad treaty bad negotiated and bad for the Costa Rican people.

  • This next 7 of October, we must vote, by our future, our economy, our exports, the country, our stability, our prosperity, by our children, vote Yes.

    Vote Yes.

  • Robert Lanod

    ….. Everyone seems to have a crystal ball looking straight into the future of Costa Rica.
    People of Costa Rica are so fortunate to be able bring about changes by simply getting out to vote.

    How important is importance, will be decided Oct.7th. at the polls.
    Do your part, … just get out and vote, no matter what your fate for TLC dictates.


  • CRH

    Costa Rica, Ticos:

    Vote your hearts, vote your heritage, vote your history, vote your independence, vote your sovereignty, vote your future and that of your children.

    Hyper-capitalism that is good for the few, at the cost of all this?

    No TLC

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