Daily Edition: San José, Costa Rica, October 29,  2003

Casa Alianza Receives Another Award
Regional child advocacy group Casa Alianza this Friday will be honored with the "Contribution to the Improvement of the Quality of Life" award, given by Costa Rica's Ombudsman's Office.
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Government Agrees to Partial Opening of
Telecom Sector under Free-Trade Agreement
By Fabián Borges
fborges@ticotimes.net

President Abel Pacheco and Foreign Trade Minister Alberto Trejos yesterday formally announced the government's intention to negotiate the partial opening of Costa Rica's telecommunications sector -- specifically high-speed Internet, cellular phone and data-network services -- as part of the Central America Free-Trade Agreement (CAFTA) being negotiated with the United States.

"The United States is interested in competing with certain branches of the Costa Rican Electricity and Telecom Institute (ICE)," Pacheco said during his weekly cabinet meeting. "The United States is not asking us to privatize the institution. All they want is for some of their companies to be able to provide some of the services ICE currently offers. This is compatible with our original position in that ICE will not be privatized. This request is one we can negotiate."

The decision was taken late Monday afternoon following a meeting between Pacheco and Costa Rica's CAFTA negotiating team.

Chief Costa Rican negotiator Anabel González informed Pacheco that, following bilateral meetings last week in Houston, Texas, to discuss the issue of telecommunications (TT, Oct. 24), the U.S. remained firm in demanding that Costa Rica, at the very least, open Internet, cell-phone and data network services to competition under CAFTA.

Pressure on the government to put telecommunications on the negotiating table has been mounting since U.S. Trade Representative Robert Zoellick visited the country last month and warned Costa Rica would be excluded from CAFTA if it refused to discuss the opening of certain sectors of its service markets (TT Oct. 3, 10, 17). Since then, government officials have been scrambling to find a solution that would make it possible for negotiations to continue forward.

Pacheco, who repeatedly has vowed to keep telecommunications out of CAFTA, denied Tuesday's decision represented a change in his position.

"Costa Rica's position has not changed," he said. "We still believe in a strong and nationally owned ICE and are working to make that happen. This is a negotiation; you have to make some concessions to get others in return."

Trejos said the decision will benefit Costa Rica as a whole. In his opinion, it marks the beginning of two crucial negotiations - one with the United States and another with Costa Rica's social sectors.

"We're only beginning to discuss these issues," Trejos explained. "We still have a long way to go before we reach a definitive agreement. We've gone from two incompatible positions to a position from where we can negotiate a mutually beneficial agreement."

Negotiators will attempt to define the basic framework for the telecom agreement with the United States between now and the end of the negotiations in December. However, it will be up to Congress to decide on the specifics of the final agreement and to make the country's laws compatible with private telecom services, he said.

Pacheco and Trejos met yesterday afternoon with leading lawmakers and ICE President Pablo Cob to rally their support and begin working on concrete proposals.

"We have to sit down with the U.S. and negotiate how to open these markets in a way that benefits consumers, businesses and public-sector employees," Trejos said. "The decision we make needs to be one that promotes the country's development and ensures that the services provided are properly regulated and fairly priced."

Although no formal agreement has been reached, the United States reportedly is not interested in providing domestic and long-distance phone service here.

Top priority for the United States is to make it possible for U.S. companies to provide high-speed broadband Internet service in Costa Rica. This would put them in direct competition with ICE's long-awaited and much-delayed advanced Internet ADSL service.

However, to provide these services, foreign companies would be required to pay ICE for the right to use its infrastructure to relay information out of the country.

U.S. companies providing cell-phone service also would need to pay ICE for the right to use portions of the country's electromagnetic spectrum, which it owns the rights to.

The U.S. also is requesting access to private data-network services - private computer networks that allow companies situated in several countries to maintain constant and secure communication between their different offices. Currently, these types of services, which are crucial in attracting investment from large multinational firms, have been available on a limited scale through ICE. Again, companies providing this service would need to pay ICE for the right to transmit data out of the country.

"The way I see it, ICE will come out winning as a result of this deal," Pacheco said. "The company will collect a lot of money charging companies for the right to use the infrastructure it owns. ICE will be strengthened by this."

Read Friday's TT print edition for full story.