Thread: Costa Rica election another blow to US trade pact

Costa Rica election another blow to US trade pact
Tue Feb 7, 2006 6:33 PM ET164

By John McPhaul

SAN JOSE, Costa Rica (Reuters) - A U.S. free trade pact with Central America, already delayed by a legal wrangle, has run into further trouble at presidential elections in Costa Rica where voters punished the main pro-trade candidate.

Costa Rica's electoral board began a recount on Tuesday of the vote from the weekend, which ended with a near dead heat despite opinion polls showing free trade advocate Oscar Arias would win easily.

Arias, a former president who strongly backs the U.S.-Central American Free Agreement, or CAFTA, won just over 40 percent of votes on Sunday, on a par with main rival Otton Solis who wants to renegotiate the deal.

A winner should be announced in two weeks. If it turns out that no candidate garners minimum support of more than 40 percent, a new round of voting will be held on April 2.

"Even if Arias wins, it is still bad news for CAFTA because Costa Ricans said, 'Hold on, this is something we have to look at,'" said Michael Lettieri of the Council on Hemispheric Affairs think tank in Washington.

Costa Rica is the only signatory not to ratify the pact, a spearhead of Washington's influence in Latin America where leftist leaders have increasingly challenged U.S. policies.

Arias's National Liberation Party failed to win an outright majority in Congress on Sunday, making it more difficult for Costa Rica to join the rest of the region in dropping import tariffs for U.S. goods.

President Bush had to launch a lobbying blitz to convince Congress to approve CAFTA last July.

Then, implementation of the trade deal was delayed from January 1 by U.S. demands that its partners tighten their rules on cheap drugs that compete with U.S. pharmaceutical firms.

Washington says Central America will eventually come on board.

"I hope we'll have at least two countries ready on March 1," U.S. Trade Representative Rob Portman told reporters in Washington. Those are Nicaragua and El Salvador, he said.

RENEGOTIATE THE DEAL

Costa Rican candidate Solis, a centrist, supports the accord in general but wants to renegotiate clauses that many Costa Ricans fear put the small nation at a disadvantage against subsidized U.S. agriculture imports and giants of U.S. industry.

Workers have staged strikes and protests against attempts to open the state telecoms and electricity monopoly to competition, a plan that would be accelerated under CAFTA.

A social democrat, Nobel Peace laureate Arias backs business interests. Arias, scion of a rich coffee farming family, helped end civil wars in Central America in the 1980s and is Costa Rica's most famous son.

He fell short on Sunday partly because middle class voters feel squeezed by efforts to create an export-based economy, said Alberto Canas, 85, a founder of Arias' party who later jumped ship to help Solis found the Citizen's Action Party.

"This was a country of small property owners, small farmers and small businesses," he said. "By opting for big industries and big banks, the government has abandoned the small entrepreneurs and they are the ones who protested on Sunday," he said.

Much of Latin America has shifted to the left in recent years but four left-wing parties won very few votes in the Costa Rica election.

Nevertheless, analysts say the country has also taken a turn against U.S.-backed free market policies, known as the Washington consensus.

"It was a vote against the model inspired by the Washington consensus," said analyst Rodolfo Cerdas of Costa Rica's Center of Political and Administrative Research.

"It's a model that has promoted the growth of exports and the enrichment of those in the export sector and impoverishment of middle-class sectors," he said.

(Additional reporting by Doug Palmer in Washington)

© Reuters 2006. All Rights Reserved.

Washington says Central America will eventually come on board.

I hope not!

I hope not also, Darlene. This would ring the death knell for their middle class, as it does ours.
I pray to God they hold out.
RR

Good for Costa Rica. Apparently they love their country more than Americans do. By the way, Costa Rica is a nice place to vacation and retire, much better than Mexico. Seems Costa Ricans want to keep it that way.