Costa Rica Coffee Guide

U.S. Senate Approves Trade Pact

July 1, 2005

THE U.S. Senate voted yesterday, 54-45, to approvethe Central American Free-Trade Agreement with theUnited States (CAFTA), moving the pact one step closerto taking effect and increasing the likelihood that CostaRica will be left out of the agreement, at least temporarily.Meanwhile, the U.S. House Ways and MeansCommittee voted to send the pact to the House floor, wherelegislators will have 15 days to debate it following theirweeklong Independence Day break. Since the House is traditionallyless friendly to trade agreements than the Senate,a tough battle is expected there.Should CAFTA receive approval from both chambersand the signature of U.S. President George W. Bush, itwould take effect between the United States and the threecountries that have approved it to date: El Salvador,Guatemala and Honduras. Costa Rica, Nicaragua and theDominican Republic also signed CAFTA in 2004, but theirlegislatures have not yet ratified it.Although opposition to the pact remains strong and itspassage in the House is by no means assured, U.S. developmentshave increased the urgency of messages fromCAFTA supporters in Costa Rica, who have long warnedthat exports and foreign investment would take a hit if thecountry is left out.COSTA Rica is the only signatory country where thepact has not yet been submitted to lawmakers, andPresident Abel Pacheco shows no sign of taking that step.Members of the Legislative Assembly have said they mayrequire at least nine months to study and vote on the controversialagreement.Should the House reject the agreement, all bets areoff – and, according to observers, the United States may have a hard time convincing other regionsof its free-trade negotiating clout.BUSH submitted the agreement lateJune 23 following a meeting with variouslegislators. In his comments at the WhiteHouse before the meeting, he presentedthinly veiled criticism of anti-CAFTADemocrats – who, according to the agreement’ssupporters, are opposing CAFTAsimply to deny Bush a political victory.Congress has 90 business days to voteon the agreement: 45 days for the HouseWays and Means Committee; 15 days onthe floor of the House; 15 days for theSenate Finance Committee, and 15 days onthe floor of the Senate.Legislators are not required to use allthe allotted days, as legislators demonstratedthis week.MEANWHILE, President AbelPacheco has been criticized by CAFTA advocatesin Costa Rica for wavering in his supportof the agreement, even though it wasnegotiated and signed by his administration.He says he will not submit it to theLegislative Assembly until lawmakersapprove massive fiscal reforms and until heis sure the pact will benefit the nation’s poor.To help resolve doubts, he recently appointeda five-member “council of notables,”which includes scientists, academics and aCatholic priest, to examine the pact andmake recommendations regarding whether itwould help or hurt the country.The group is expected to begin studyingthe pact as soon as council member andfamed U.S.-Costa Rican astronaut FranklinChang, who resides in Texas, can visitCosta Rica for council meetings.CAFTA advocates in Costa Ricamaintain that the country will lose businessand foreign investment if the agreementtakes effect between the UnitedStates and other countries in the region,with Costa Rica left behind.“This puts us in a very difficult position,’’former Foreign Trade Minister AlbertoTrejos, who was part of Costa Rica’s CAFTAnegotiation team, told The Tico TimesThursday. “There are jobs involved here.’’FOLLOWING the news of the agrement’ssubmission to the U.S. Congress,Pacheco reiterated Costa Rica’s right totake its time with its decision about theagreement.“The United States is a sovereignnation, and (Bush) has the right (to sendCAFTA to Congress),” he said in a statement.“We, as a sovereign nation as well,will know when to send it,” he said.Ottón Solís, the 2006 presidential candidatefor the Citizen Action Party (PAC)and a devoted CAFTA opponent, told TheTico Times his party has not given up hopethat U.S. legislators will advocate changesto sections of the agreement that increaseforeign companies’ rights here and requireCosta Rica to open its telecommunicationsand insurance monopolies.“CAFTA has taken much longer in theUnited States than other trade (agreements),”he said Thursday. “We are encouragedbecause a lot of congressmen areputting forward the idea of renegotiation.”He said U.S. ratification of the pactwould likely prompt stronger pro-CAFTAlobbying here.“I’m sure they will say something tragicwill happen in Costa Rica if CAFTA ispassed in the United States,” he said. “Theywill invent something new.”

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