San José, Costa Rica, since 1956

Costa Rica Gets Yet Another Crack at CAFTA

Costa Rica has three more months to pass legislation required to enter the Central American Free-Trade Agreement with the United States (CAFTA), approved by voters one year ago in a referendum.

The United States, the Dominican Republic and four Central American countries agreed this week to extend Costa Rica’s Oct. 1 deadline (which had been extended from February) to Jan. 1.

Casa Presidencial announced the news Tuesday afternoon, after Nicaraguan President Daniel Ortega joined his trading partners in signing the extension.

In a two-day visit to Costa Rica this week, U.S. Secretary of Commerce Carlos Gutiérrez discussed bilateral trade ties with President Oscar Arias and Foreign Trade (COMEX) Minister Marco Vinicio Ruiz.

“I come to reiterate the Bush administration’s complete support for Costa Rica’s entry into CAFTA,” Gutiérrez said at a press conference. “It’s hard to imagine Costa Rica without CAFTA.”

Lawmakers are now working to pass the last of 13 bills required for Costa Rica to enter CAFTA. But even this legislation falls slightly short of standards set by the U.S. Trade Representative (USTR), said Tomás Dueñas, Costa Rica’s ambassador to the United States.

Gutiérrez said he will make CAFTA his priority upon returning to Washington. “I want to sit down to talk with the USTR. I want to understand if there is a problem, or if there is simply a misunderstanding.”

Dueñas said COMEX is talking with USTR to figure out how to fix what they are calling “minor” problems, either through presidential decrees or even new legislation.

For now, he said, both governments are focused on pushing through the 13th bill, which intends to strengthen intellectual property rights.

The Constitutional Chamber of the Supreme Court (Sala IV) struck down the bill in early September because lawmakers did not consult the indigenous community on a clause that affects them. Lawmakers appear likely to delete the clause and pass the bill again.

Perhaps the most controversial issue in recent Costa Rican history, CAFTA was signed in May 2004 and approved in a national referendum last October. But opposition in the Legislative Assembly has twice forced Arias to ask his trading partners for an extension to pass implementing legislation. The first extension was granted in late February.

“We all need to take a deep breath and get ready for the last battle in this fight for CAFTA,” said Michael Borg, president of the board of directors at the Costa Rican-North American Chamber of Commerce (AmCham). “It has been an odyssey, years of ups and downs and hopefully this will be the last down.”

Costa Rica is the only CAFTA signatory that has not yet entered the pact, which includes the United States, the Dominican Republic, Honduras, El Salvador, Guatemala and Nicaragua.

CAFTA countries make up the third-largest market for U.S. exports in Latin America and the Caribbean and the 14th largest market in the world for those exports, Gutiérrez said at a luncheon hosted by AmCham Wednesday.

Gutiérrez added that trade with the United States accounts for 40 percent of Costa Rica’s imports, 35 percent of its exports and over half of the foreign investment that enters the country.

“Now there is an opportunity to make that relationship permanent,” he said.

Gutiérrez added that free-trade agreements are a “seal of approval” that will help attract U.S. capital, which is likely to become scarce during the deepening financial crisis.

“Companies are going to have to be very, very selective about where they put their money,” he said to an audience of business leaders at the AmCham event. “You’re going to have to do more – more to have the right transparency, to have the best infrastructure, to improve education, to improve intellectually property protection, to improve all the areas that attract capital.”

Accompanying Gutiérrez on his visit were representatives from 10 U.S. companies, including Best Buy, Citibank and Home Depot, that are interested in forging or strengthening business ties here.


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