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Free Trade Agreement Hits a Snag

January 15, 2010

While the Central American Free Trade Agreement with the United States (CAFTA) technically has been in effect in Costa Rica for more than a year, a piece of it still languishes in the Legislative Assembly and awaits approval.

That piece, which treats copyright law, is perhaps the most controversial. It’s the section that ignited massive student protests over the ability to copy from textbooks. It pitted rights-holders against certain radio outlets for use of protected material. And, it’s the part that has unnerved health officials concerned that the process of copyrighting pharmaceutical products would bankrupt the public health system.

Yet, until the final piece is approved, the U.S. is delaying market access to sugar. Costa Rican sugar producers will not be able to sell their product in the U.S. unless legislators approve the last part, known as the 14th amendment.

The original deadline for approval of the final section was Dec. 31, but government processes and political disagreements pushed discussion into this year.

Independent legislator Evita Arguedas said she hopes it will be approved in March. But, she added, that date might be too optimistic.

“The moment that the Legislative Assembly closed for Christmas break there were 121 motions (relating to this law),” Arguedas said. Each motion must be discussed and voted on in commission and then allowed 45 minutes of debate on the floor of the assembly. “The process in the Legislative Assembly is very extensive,” she said.

Arguedas said another issue stalling passage of the 14th amendment is the fact that legislators are looking to pass a law that is more extensive than the requirements of the agreement.

“For me, it’s very important that we finish this final law and that we come to an agreement soon,” she said.

Yet, perhaps the biggest reason for the delay in passing the final amendment is due to this being an election year.

“This is still a hot potato,” said former presidential candidate Román Macaya, who lobbied against CAFTA. “It risks bringing a lot of people out of the woodwork. They’d be asking, ‘Wait. You are talking about CAFTA again?’ It puts the government in an uncomfortable position.”

The controversial free trade agreement with the U.S. was put to a public referendum in October 2007. Hundreds of Costa Ricans carried signs through the streets, mounted campaigns for either side and called radio stations to voice their opinions. In the end, the agreement squeezed by with a mere 3 percentage points.

One year after CAFTA went into effect, the telecommunications and insurance industries remain closed, the promised job creation has not materialized and the lag-time in customs for imported goods continues to be too long, according to U.S. officials. Poor implementation is a chronic problem in Costa Rica, Macaya said.

“All the staff at the Foreign Trade Ministry are geared to signing new trade agreements,” he said. “There is almost no one involved in administering existing trade agreements … You don’t get any stars for administering treaties. No one says you did a great job administering CAFTA.

“No, CAFTA is yesterday’s news. (It’s all about) the next one.”

The administration of President Oscar Arias currently is discussing free trade agreements with the European Union, China and Singapore.

Mark Kissel, economic counselor for the U.S. Embassy, agreed with Macaya that implementing CAFTA could have gone more smoothly and rapidly.

“With the other 13 laws, Costa Rica did what it needed to do,” he said. “Was it as timely as it needed to be? It took a long time. There is one bill remaining and we are hopeful it will pass.”

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