Costa Rica has backed a free trade agreement with the United States, with voters overcoming deep reservations to hand a narrow referendum victory Sunday to President Oscar Arias on the issue.
"The people of Costa Rica have said yes to the free trade agreement, and that for me is a sacred wish," Arias said in a televised address to the nation after Costa Ricans voted in their tens of thousands on the measure.

"They have given me a mandate and as a committed democrat I will obey it," he added.

Turnout was 60 percent -- far above the 40 percent threshold needed for the result to be binding and the deal automatically ratified.

The Central American Free Trade Agreement (CAFTA) has been ratified by several other countries in the region, but faced widespread opposition in Costa Rica, where Arias was forced to call a referendum after three years of debate.

"The FTA is not what divides us," he said in his address after polling. "What divides us is the poverty in which 90,000 Costa Ricans live, the lack of jobs for the young, the violence that sows distrust in all our communities."

With more than 90 percent of votes counted, just over 50 percent of voters said yes to the agreement against 47.6 percent who voted no, the Supreme Electoral Tribunal said.


These results were a surprise after public opinion surveys taken before polls closed had indicated Arias' bid to join the agreement was headed for defeat.

US officials had warned the agreement would not be re-negotiated if Costa Rica rejected the measure. It has been ratified by Guatemala, El Salvador, Honduras, Nicaragua and the Dominican Republic.

A "no" vote would have been a snub to Washington, and a political blow to Arias, the 1987 Nobel peace prize winner who scraped to power last year against a leading opponent of free trade, the center-left economist Otton Solis.

Many in Costa Rica, a highly literate, relatively prosperous nation in a poor part of the world, fear that assets such as the state's lucrative public telecom and insurance monopolies would be sold off under the deal.

Businesses fear they would have to shift production to poor neighboring countries such as Nicaragua and Honduras.

Opponents also believe the agreement will open the gates for multinational companies to ship Costa Rica's bananas and pineapples to the United States and flood the home market with cheap produce.


Costa Rica gets nearly a tenth of its revenue from tourism, with export earnings coming mostly from selling coffee and fruit. It has no standing army and falls under the military protection of the United States.

Arias earlier warned that to turn down the free trade treaty would be "collective suicide," freezing out the biggest economic partner in the region. Costa Rica exported 3.4 billion dollars worth of goods to the United States in 2006 -- two-fifths of its total.

Washington ahead of the vote reiterated its desire for Costa Rica to jump on the regional free trade wagon.

"This trade agreement ... would expand Costa Rica's access to the US market, safeguard that access under international law, attract US and other investment, and link Costa Rica to some of the most dynamic economies of our hemisphere," the White House said in a statement Saturday.

CAFTA supporters meanwhile say that accepting it would boost Costa Rica's exports by half a billion dollars from the first year.

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