San José, Costa Rica, since 1956

Gov’t Seeks to Prepare Country for CAFTA

WHILE some small business ownersand farmers worry they will be casualtiesof the pending Central American Free-Trade Agreement with the United States(CAFTA), government officials this weekpromised that appropriate steps are beingtaken to guarantee these sectors surviveand thrive under the trade agreement.On Tuesday, President Abel Pachecoand Finance Minister Federico Carrillopresented what is being called the complementaryagenda for CAFTA. The agenda isa multimillion-dollar endeavor meant toprovide small businesses, farmers andthose in rural areas with the tools necessaryto survive when faced with more internationalcompetition, as well as increase thenumber of jobs in Costa Rica.Carrillo said the agenda is designed toensure that Costa Rica’s entrance intoglobal markets “is done intelligently,allowing all Costa Ricans to capture theopportunities and benefits.”WHILE Carrillo declined to explainspecific details of the plan, he said projectsinclude improving rural roads,encouraging companies in Costa Rica touse local products, constructing newschools in rural areas, training small producersand farmers in improving theirproducts to meet international standards,and developing an Agricultural DevelopmentBank to provide low-interest loansto small businesses.Total investment in these and otherprojects of the complementary agenda willamount to slightly more than $355 million,with $136 million coming from the governmentand the remaining amount comingfrom low-interest loans from internationaldevelopment banks. The LegislativeAssembly must still approve the loans,which define each of the complementaryagenda’s projects.Pacheco said he expects to present thecomplementary agenda (and loan proposals)to the Legislative Assembly in August,“if everything goes well.”CARRILLO explained the complementaryagenda is part of a greater planto move Costa Rica forward. These plansinclude not only CAFTA, the complementaryagenda, and other proposedchanges, such as insurance and telecommunicationsreforms, but also thePermanent Fiscal Reform Plan currentlyunder debate in the Legislative Assembly.Without fiscal reform, the country cannotafford to put itself into further debt,Carrillo said.The complementary agenda will alsoallow Costa Rica to better benefit fromtrade agreements already in effect withother nations, according to a statementfrom the Executive Branch’s EconomicCouncil.The agenda focuses on supportingsmall and medium businesses, fosteringsustainable agriculture, and strengtheningrural education.MOST of the funding – $287.7 million– will be directed toward helping small andmedium enterprises (SMEs), which represent77% of the companies based in CostaRica that export and employ 50% of thepeople who work in the private sector. Thegoal of the complementary agenda is toimprove the quality of these producers’products, widen their markets and createthe conditions necessary for these companiesto generate more jobs.These improvements will be madethrough increased technical support andtraining, increased development and use ofnew technologies, and directing universityresearch toward productive applications.The agenda also seeks to promote thedevelopment of SMEs by helping themorganize into consortiums that would grantthem better bargaining power when sellingand exporting their products and wouldoffer programs to help local firms becomesuppliers for foreign firms operating in thecountry.“If an investment arrives in CostaRica, a hotel, for example, we need togenerate around the hotel a chain of productsand services that meet the hotel’sneeds, so they are not imported,” Carrillosaid. Such services could include bilingualschools, bed-makers and art suppliers,he added.IN addition, the complementary agendaproposes facilitating the exportprocess by improving 2,000 kilometers ofrural roads and teaching municipalitieshow to improve road maintenance,Carrillo said.Improved roads would allow producersto bring their products faster and easierto points of sale and ports, Carrillosaid.Carrillo’s policies on roads have beencriticized in the past as municipalities haveaccused him of failing to turn over fundsfrom a special tax on gas specifically dedicatedto road maintenance.WHILE farmers would benefit frommany of the SME programs, an additional$17.6 million would be directed specificallytoward agriculture and the 39,000 smalland medium farmers in the country,Carrillo said.Agriculture programs include trainingcommunity leaders in agriculture and creatingan Agricultural Development Bank,which would be managed by one of thecountry’s public banks.While these efforts are “positive,” theyare also “insufficient,” according to OscarCampos, president of National RiceCorporation (CONARROZ).“There is no reason to bring the countrymore debt when we have the resources hereto do what needs to be done. What we needis the political will,” he said. “Enough liquidassets exist in the banks, but we need towiden the agenda…We need investment inirrigation systems, we need more agriculturalresearch to meet our needs, we need toexamine the size of the state’s institutions.”THE final $50 million of funds wouldbe used for the strengthening of rural education,including construction of newschools, renovation of classrooms andimplementation of new teaching andteacher-training models.The financers of the complementaryagenda – the World Bank, the Inter-American Development Bank, and theCentral American Bank for EconomicIntegration – have already approved thespecific projects proposed under the agenda,Carrillo said.

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