Costa Rica Continues To Dwell On CAFTA

by Mike Godfrey, Tax-News.com, Washington

05 May 2005

Costa Rican President Abel Pacheco's decision to refer the matter of the country's involvement in the CAFTA Central American Free Trade Agreement to a self-appointed committee of experts is likely to delay the country's involvement, and ultimately the multilateral agreement itself, for some months to come.

The so-called "council of notables", a five member panel to be chosen by the President himself, will be tasked with reassessing the country's involvement in the free trade deal which involves the United States, El Salvador, Guatemala, Honduras and Nicaragua.

In March, it emerged that labor unions and business leaders were agreed on putting the issue to a referendum, but there is little time left, because any referendum would have to be held not less than 6 months before the next presidential elections, set for February, 2006.

The President has angered supporters of the free trade pact by insisting that his long-delayed tax reform bill - still languishing in the Congress - is approved first. Growing ever more impatient with the government, businesses (along with the Libertarian Movement Party, which is opposing the tax package) have countered that Pachecho's’s stance on the issue will scare away foreign investors, and have warned that the ongoing delay in CAFTA’s approval will threaten the country’s economic prospects.

The latest example of Pacheco's procrastination on the issue has further angered the business community and pro CAFTA politicians.

In the meantime, El Salvador and Honduras have both ratified the treaty. US President George W. Bush is expected to send it to Congress before July. Legislators in Guatemala and Nicaragua continue to discuss the agreement.

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