Will Costa Rica Blow It?

Will Costa Rica Blow It?


A few years ago, NEMA and its members lobbied long and hard for U.S. congressional ratification of a free trade agreement with the Dominican Republic and five Central American countries: Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica.  It was a tough, but ultimately successful battle, with the package ultimately passing by a mere single vote in the House.


DR-CAFTA, as the Agreement is known, stands to be a “win-win” deal, with the elimination of foreign trade barriers both boosting U.S. electrical equipment exports and improving these countries’ access to the sorts of high quality infrastructure goods that are closely linked to greatly improved standards of living.  The figures are already looking promising.


But DR-CAFTA has not yet come into effect with one country, Costa Rica, whose Senate has so far failed to ratify it.  There are said to be enough votes there to do it, but the issue has been extremely emotive and particularly opposed by employees of the national telecommunications company, which would lose its monopoly.  A highly-publicized national referendum on the matter last fall yielded a very narrow majority in favor, but the tally was non-binding and the actual politically-tough parliamentary vote has yet to actually happen.


Those Senators better get a move on fast, for if they don’t act by the end of February San Jose’s very eligibility for DR-CAFTA expires, and negotiations would have to start again from zero.  Given the current political climate on Capitol Hill, it’s hard to imagine a new FTA happening anytime in the foreseeable future.


Many would-be free partners of the United States would love to be in the Costa Rica’s position, with the usually toughest step of U.S. Congressional ratification already checked off.  Ironically, the most advanced of the five Central American countries, and the one that’s by far the most visited by U.S. citizens (ie, it’s safe), is about to move in the direction of becoming less advanced than its neighbors.  Costa Rica may be known as the Switzerland of Central America, but it still has a long way to develop before it becomes anything close to Western Europe — and it won't get there anytime soon without taking the plunge.

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