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Thursday, June 1, 2023

CAFTA’s Last Amendment Approved

Sugar producers and free-trade advocates celebrated the Legislative Assembly’s approval of the final piece of the Central American Free-Trade Agreement with the United States (CAFTA) on Thursday, April 29.

The year-long delay in approving all of the agreement’s pieces resulted in a freeze on Costa Rican sugar exports to the United States. Until legislators could agree on the final piece of legislation regarding copyrights and other forms of intellectual property, the U.S. refused to honor Costa Rica’s 11,880 metric ton sugar quota under CAFTA.

Rigoberto Vega, legal director of the sugar industry advocacy group LAICA, estimates that as much as $1 million has been lost in potential revenue. Now that the final law is in place, the sugar ban will be lifted within the next three weeks, according to the U.S. Embassy in Costa Rica.

“It took a long time, but it’s a triumph that deserves respect,” said outgoing foreign trade minister Marco Vinicio Ruíz, who was pivotal in the negotiation process. “This administration undertook titanic work. And, for me, there is enormous satisfaction to see it completed.”

Costa Rica officially entered CAFTA in January 2009 after a 2007 nationwide referendum approved the treaty, spurring its proponents in the Legislative Assembly to pass sweeping policy reforms that opened state insurance and telecommunications monopolies to private competition.

But up until the end of their terms last week, lawmakers remained at odds over legislation governing patents and copyrights, known as Amendment 14. According to trade officials, the agreement would only enforce Costa Rica’s existing laws and would not introduce further protections on patented or copyrighted products. However, left-leaning legislators argued that the law would force many businesses to close, as it would forbid mass copying of textbooks and unauthorized use of songs.

“If you think it’s a crime to sing mariachi or play music in a restaurant, vote for this bill,” Congressman Sergio Alfaro said during Thursday night’s debate, according to the daily La Nación.

Lawmakers with the left-of-center Citizen Action Party (PAC) stalled the bill by sending it to the Constitutional Chamber of the Supreme Court for review. Judges refuted their concerns and returned the bill to the legislature on April 26, just in time for its approval before the membership of the Legislative Assembly turned over completely on May 1.

Román Macaya, a candidate in the PAC presidential party primary and an outspoken opponent of the agreement during the 2007 referendum, said the final law goes too far on intellectual property issues.

“It wasn’t CAFTA,” he said. “It was CAFTA-plus. It went beyond what the agreement required.”

Though the portion of Amendment 14 governing agrochemical products was thrown out, Macaya still fears the current situation could have a negative impact on farmers here. Due to an executive decree related to the final version of CAFTA, a select number of agrochemical companies will have monopolies on the market.

“The highest cost item in tropical agriculture is agrochemical products,” he said. “And the only thing that determines those prices is competition. What President Oscar Arias is leaving us is undue monopolies, which will mean higher costs for agrochemical products and, in turn, higher food prices.”

Macaya said, “Legislators should have rejected (this law). They should have sent it to the trash can. At the very least, it should have been renegotiated.”

A year after the majority of CAFTA laws went into effect, the benefits of the agreement are still being debated.

Some analysts point to the numbers and say that it failed to live up to its promises.

Since the agreement took effect in January 2009, exports to the U.S. have fallen 15 percent, imports from the U.S. have decreased 30 percent, unemployment has risen to 7.8 percent (from 4.9 percent in 2008), and foreign direct investment has gone down by an estimated 30 percent (TT, Jan. 15).

But others say the numbers were affected by an extremely severe and unforeseeable recession.

“Last year was marred, not by how CAFTA did in and of itself, but really by the fact that because of the fall in the U.S. market, no exporter in the CAFTA region did well at all,” David E. Lewis, vice president of Manchester Trade Ltd., told The Tico Times in January. Manchester Trade represents U.S. government and business interests in free-trade negotiations in Latin America and the Caribbean.

Costa Rican President Oscar Arias said the treaty’s benefits extend far beyond the numbers by causing a significant shift in mentality in Costa Rica that opened the country to subsequent trade agreements.

During Arias’ last formal address, delivered to the Legislative Assembly on Saturday, May 1, he addressed the significance of CAFTA for Costa Rica, saying, “The discussion and approval of the free-trade agreement and its implementation agenda was the most exhausting task this government assumed and, perhaps, the most important.”

He said, “Thanks to these difficult, politically tense months, our (country) has removed the rust from its gears.”


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