Business Sector Hails ‘Yes’ Vote

October 12, 2007

The business sector reacted quickly to the yes vote on the Central American Free-Trade Agreement with the United States (CAFTA), with at least one announcement of a large investment that had been on standby pending the referendum result.

Foreign Trade Minister Marco Vinicio Ruiz said more announcements are in the works, and that with CAFTA in the rearview mirror Costa Rica and the rest of Central America are ready for negotiations with the European Union on an association agreement, talks that will kick off Oct. 22 in San José.

The Foreign Trade Ministry is very satisfied with the result of the referendum, Ruiz said, adding that he believes it will help further the country s development.

Reacting to the results of the referendum, Standard & Poor s Rating Services released positive ratings of Costa Rican government bonds.

The day after the vote, Sardimar, a tuna producer in the Pacific port town of Puntarenas, announced it would invest $6 million in its processing plant and storage facilities, a move that will effectively double the company s production.

Tuna is one of the principal industries that benefits from the trade agreement, since U.S. trade preferences for tuna from Costa Rica had been set to expire next year absent approval of CAFTA (TT, Sept. 14).

With the preferences locked in, however, Sardimar is investing in more cold storage, a larger production plant and more water-treatment facilities that will also create employment, said Gabriela Muñoz, Sardimar s business development manager.

Muñoz said the investment had been queued up before the vote but put on standby.

In addition to traditional canned tuna, Sardimar sells more costly hand-processed tuna that is packaged in glass jars and sold at high-end supermarket chains like Trader Joe s and Whole Foods, a niche that Muñoz said the company is looking to expand in the coming years.

The idea is to turn Sardimar into the number-one gourmet tuna brand in the United States, she said.

Sardimar isn t out of the woods yet. Leaders on both sides point out that Costa Rica still has to pass the 12 laws needed to implement the trade agreement, and it must do that by March of next year to be part of the treaty (see separate story).

Costa Rica exported $1.2 million in tuna to the United States last year.

Meanwhile, Costa Rica is preparing to host the first round of talks on an association agreement between Central American countries and the European Union. Set to begin Oct. 22, Ruiz said this round of talks will mark the field for subsequent discussion between the two groups.

E.U. representatives have said that they will negotiate with Central America only as an integrated region that includes Panama.

That country has yet to join the region s Customs Union project that seeks to standardize member countries tariff schedules and is part of the E.U. s regionalization requirement for negotiations.

Still, Panama will be sitting in on negotiations as an observer.

Costa Rica has its own problems with the Customs Union, namely that it hasn t yet signed onto the framework agreement for the Union, even though Ruiz had said in June that Costa Rica would immediately move the process forward once CAFTA was approved (TT, June 29).

Ruiz and Vice-Minister of Foreign Relations Amparo Pacheco said the framework is in a consultative period, and Ruiz said he thought it would move ahead relatively rapidly.

It wasn t that once the referendum passed we would sign the framework, Pacheco said. Just that we would continue the consultative process.

That s not good enough for the Chamber of Industries, which issued a statement criticizing the delay.

We don t see why this subject has to be treated as political if it s a purely technical one in the sense that it seeks to allow goods to flow freely and rapidly through the region, said Jack Liberman, the president of that chamber.

Two days after talks with the European Union commence, President Oscar Arias is set to visit China and sign a variety of accords among them an agreement to begin studying the possibility of a free-trade pact between Costa Rica and China.

 

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