San José, Costa Rica, since 1956

Turmoil Worries CAFTA Proponents

GROWING conflict over President Abel Pacheco’scontroversial stance on the Central American Free-TradeAgreement with the United States (CAFTA) left TradeMinister Manuel González holding the resignation lettersof some of the country’s leading trade officials this weekand placed him at the center of an increasingly bitter politicaltug-of-war.This upheaval gave CAFTA supporters, already nervousabout the agreement’s future in Costa Rica, new reasonsto fret.Pacheco has said for months that he will not send thecontroversial trade agreement to the Legislative Assemblyfor ratification until equally polemic tax reforms, whichhave been under consideration in the assembly for morethan two years, are approved (TT, July 16, 2004).González’s public support for this position, which free-trade-advocates say will negatively affect businesses hereif the rest of Central America approves the pact first, hascaused critics to question his commitment to CAFTA’sapproval.NOW, only one member of the group of seven CAFTAnegotiators dubbed the “Dream Team” by the daily LaNación remains in his post, creating even more doubt as towho will lobby for the agreement’s successful passage inthe assembly.General trade director Fernando Ocampo announcedhis resignation Jan. 10, and Roberto Echandi, who wassecond-in-command to former lead CAFTA negotiator Anabel González, resigned Jan. 14. Thesame week, Irene Arguedas, director ofcommercial negotiations, was fired for“loss of confidence.”Both Ocampo and Echandi said disagreementswith González prompted theirresignations.Then-minister Alberto Trejos, alongwith Anabel González and vice-ministerGabriela Llobet, resigned in Septemberafter a conflict over government priorities(TT, Sept. 10, 2004).Only Federico Valerio, Costa Rica’sintellectual property rights negotiator forCAFTA, remains at the ministry.Minister González told The Tico Timeson Tuesday that he expects to namereplacements for Arguedas and Ocamposoon. Echandi will not be replaced, sincehis primary duties as a negotiator havealready been completed, González said.ECHANDI said González’s compliancewith Pacheco made it impossible forthe former trade official to do his job.“This is a crucial year for promotingand discussing reforms that are vital for theeconomic future of the country, but nevertheless,the Executive Branch continuesinsisting on avoiding that discussion,”Echandi said in a statement.“It is evident that the Executive Branchdoes not have any interest in CAFTA beingdiscussed during the present administration(and) that Minister González doesn’t pullenough weight to affect that decision,” headded.Political analyst Luis Guillermo Solísvoiced similar doubt of Pacheco’s commitmentto the pact.“Pacheco doesn’t want CAFTA,” saidSolís, director of the University of CostaRica’s political science graduate program.“I think he is convinced at the bottom of hisheart that a lot of people will be hurt by(the agreement)” without other legislationto improve the distribution of wealth.Pacheco himself seemed almostpleased by the resignations.“Let them keep pulling their hair out,”he said Tuesday of worried CAFTA supporters,adding that those who resignedwere in a needless hurry to get the pactapproved.GONZÁLEZ’S response to the riftincluded seemingly contradictory positions.He expressed his support for CAFTAand warned of “immediate negative consequences”if it is not approved, while simultaneouslymaintaining his loyalty to “myboss,” as he called Pacheco, and reiteratingthe President’s right to take his time andprioritize tax reform.“The country cannot lose its sense ofurgency,” he told The Tico Times. “If wesay no to CAFTA… foreign investment willgo where the sun is warmer. Little by little,companies will dismantle here.”However, “If we say yes to CAFTA,that isn’t the solution either,” he said.“We won’t have Disneyland here the nextday.”He maintained optimism about theeventual resolution of the CAFTA controversy“in this puzzle we call Costa Rica,”and pointed out that the free-trade pactwith the Caribbean countries, submitted tothe assembly in July 2004, “has movedalong – if you’ll pardon the expression –like butter.”NEGOTIATIONS for CAFTA beganin January 2003. The final pact was signedin May by the United States, Guatemala, ElSalvador, Honduras, Nicaragua and CostaRica, and later re-signed to include theDominican Republic. The legislatures ofthe United States and one other countrymust ratify theagreement for it totake effect in thosecountries.El Salvador ratifiedthe treaty inDecember (TT,Dec. 24, 2004) thelegislatures of Nicaragua,Hondurasand the DominicanRepublic are discussingit as well,increasing the pressureon Costa Rica to follow suit.“We’re very concerned,” Lynda Solar,executive director of the Costa Rican-American Chamber of Commerce(AmCham), told The Tico Times. “Wehave the same concerns as the people whohave been resigning. CAFTA has beenheld hostage by the fiscal reform program.”AmCham plans to begin meetings withCosta Rican workers in early February todisseminate information about CAFTA’sbenefits, she said.She expressed confidence about theagreement’s future in U.S. Congress, andsaid former U.S. Trade RepresentativeRobert Zoellick, recently named deputyassistant to Secretary of State CondoleezaRice, will use his new position to lobby forthe agreement he negotiated.“What Zoellick starts, Zoellick finishes,”Solar said.HOWEVER, the agreement’s future inthe U.S. Congress is being placed in doubtnot by Costa Rica, but by Guatemala,where a new law regarding data protectionfor drug companies violates CAFTA’sintellectual property rights clauses, accordingto U.S. officials.According to the U.S. Embassy inGuatemala, a law approved in Guatemalain December 2004 limits pharmaceuticaltest data protections for foreign companiesto new drugs not previously approved inGuatemala or any other country. Sincemost U.S. drugs are approved domesticallybefore reaching foreign markets, Guatemala’snew law effectively eliminates dataprotection for U.S. companies.CAFTA stipulates that countries providefive years of data protection for companies’clinical trial information for newdrugs, a statement on the embassy Web sitesaid. Manufacturers of generic drugs musteither wait five years to register theircopies or pay for their own tests – requirementsCAFTA opponents argue wouldimpede access to affordable medicines inCentral America.“We are very disappointed thatGuatemala has enacted a measure that violatesits promises under CAFTA,” said aU.S. Trade Representative statement on thesite. “We understand that President(Oscar) Berger will correct the problem inJanuary.”The statement indicated that “we cannotsend CAFTA to the U.S. Congress”unless all signing countries are in compliancewith its obligations.(Tico Times reporter Rebecca Kimitch contributedto this report.)

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