The CAFTA Report
Lawmakers finally OK last trade treaty measure
last trade treaty measure
By Jay Brodell
For The CAFTA Report
(Posted April 30, 2010)
The road to a free trade treaty with the United States was long and rocky. The issue divided the country.
Lawmakers, as expected, voted April 29 to pass the final measure of the so-called implementation package. There were 14 bills that changed the nation's laws to conform to what it had promised to do in the treaty.
The last measure involved stiff penalties for stealing intellectual property, such as music and video CDs and all other forms of creative work. The measure strongly benefits the United States because much of the commercial intellectual property is an American product, including Hollywood movies.
Then-president George Bush unveiled plans for a free trade agreement with Central America in early 2002.
In addition to the commercial aspects, the proposed free trade agreement with the United States would commit the countries involved to even greater openness and transparency, which would deepen the roots of democracy, civil society, and the rule of law in the region, as well as reinforce market reforms, the White House said at the time. Miguel Ángel Rodríguez still had four months left in his term as president when Bush spoke.
When Abel Pacheco took over as president May 8, 2002, he voiced support for the trade agreement. But his administration was defined by large protests against the treaty, even though he had said marches against the free trade treaty were tantamount to marching against access to the nation’s principal market.
Other Central American countries also had protests against the treaty, but Costa Rica delayed acting on the measure. Passage of the free trade treaty became the No. 1 priority of U.S. Embassy workers here.
Officials in the Dominican Republic recognized the treaty as a good deal and signed on late.
Pacheco faced massive demonstrations during his term, and many concerned the free trade treaty. Some of the opposition found support from leftist Latin leaders who were setting up a trade organization of their own. Pacheco stalled taking action and left the job to the next administration.
The Feb. 5, 2006, election was seen as a vote on the trade treaty. Union leaders and others opposed to the free trade treaty threw their weight behind Ottón Solís of the Partido Acción Ciudadana in the presidential election. Arias, who was considered a sure winner, squeaked out a narrow,18,000-vote victory of 1.6 million ballots cast. But his Partido Liberación Nacional was able to stitch together a two-third majority coalition in the legislature. Still, the treaty had many hurdles.
Arias said shortly before taking office that those employees of the governmental monopolies who fear a free trade treaty are doing so because they really fear competition.
Eventually opponents decided to seek signatures for a national referendum on the treaty. The signature gathering process was to be lengthy, effectively freezing the pact. Arias called their bluff and used his presidential powers to call a referendum quickly. That took place Oct. 7, 2007, and the treaty gained passage. Opponents claimed the government had cheated. A famous memo leaked to Universidad de Costa Rica writers outlined tough political measures to win approval. Vice President Kevin Casas, one of the authors, quit his post so he would not be an issue in the bitter referendum campaign even though his ideas never were used.
Arias signed the document Nov. 21, 2007, but the fight was not over yet.
By September 2008 of the six countries that had signed the free trade agreement, including El Salvador, Honduras, the United States, Nicaragua, Guatemala and the Dominican Republic, Costa Rica was the only one that had not yet begun fully implementing the treaty, due to opposition and the complex legislative, judicial and bureaucratic delays.
Each one of the 14 implementing bills faced a struggle and long debate in the Asamblea Legislativa. There were frequent Sala IV constitutional court appeals. Costa Rica had to seek two deadline extensions from the United States and other signers to the treaty.
The effects have been massive. The Instituto Costarricense de Electricidad no longer has a monopoly on cell phone service. A handful of private companies are about to submit bids on getting electromagnetic spectrum to install their own systems.
The Instituto Nacional de Seguros is no longer a monopoly, and private firms are in the process of entering the insurance market. Regulatory agencies have been created.
Despite the lengthy approval process, the treaty's effects have not been highly visible in other areas. Sugar farmers will have more markets. The idea of private competition in other areas is not such a divisive issue.
Some of the enabling legislation provides benefits for the former state monopolies allowing them more flexibility.
Costa Rica has easily negotiated other trade treaties, including pacts with Panamá, Singapore and China.
Arias signed the final free trade bill May 5 and ended a long ordeal for the country. President-elect Laura Chinchilla is expected to carry on the Arias free trade legacy.