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Costa Rica To Vote On CAFTA In September

by Mike Godfrey, Tax-News.com, Washington

21 May 2007


Costa Rican voters will go to the polls in September this year to decide whether they want the country to ratify the Central American and Dominican Republic Free Trade Agreement (CAFTA-DR), although a review of the agreement by the constitutional court may yet throw the referendum into doubt.

With the government and the national assembly seemingly at loggerheads over whether to accept the trade deal, the Supreme Electoral Tribunal (TSE) has announced that the people will decide on the issue in the country's first ever referendum, set for September 23.

However, following weeks of speculation, Costa Rica's Constitutional Chamber of the Supreme Court (Sala IV) has announced that it will review the text of the 2,000 page agreement to ascertain whether it violates the country's constitution. This review, which was announced on May 11, is expected to be completed after a month. If the court rules that CAFTA-DR is unconstitutional, it is unclear whether the referendum will go ahead in September as planned. Although the court's ruling would be non-binding, local reports suggest that this would clearly have some kind of bearing on whether the vote can still take place.

While all the other signatories of CAFTA-DR, including the United States, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua, have signed and ratified the agreement, Costa Rica remains the only country to waver on its commitment following fierce protests from labour unions who fear more competition would lead to job losses and drive wages downwards. Other opponents fear that the agreement could lead to a loss of sovereignty as Costa Rica would be required to defer to a multinational arbitration panel in the event of a trade dispute. On the other side of the debate, the business community has been demanding that the government send the agreement to the assembly, saying that the seemingly never-ending delay could cost Costa Rica lost business opportunities and foreign investment.

CAFTA would immediately eliminate duties on more than half the value of US farm exports to the region, expand IP protections and open telecommunications and other markets. It would also eliminate tariffs on 80% of US exports of consumer and industrial goods in signatory countries, with remaining tariffs phased out over 10 years.

While the government of President Oscar Arias supports CAFTA-DR, the groundswell of public opinion would appear to indicate that most are against more free trade, and opinion polls have shown that less than 40% of voters would support the agreement.


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