Monday, October 8, 2007

Tico Trade

In a rare popular vote on a free trade agreement Costa Ricans voted to accept CAFTA (Central American Free Trade Agreement), by a narrow margin of a few percentage points on Sunday. Those against the trade agreement rallied for a march of 100,000 citizens (link) in the capital last week. They cited US agricultural subsidies that pay farmers for milk and grain production, making it difficult for Costa Rican farmers to compete. There were concerns over privatizing state run telecommunication and public works monopolies. Finally, there were also worries that the US would include stricter enforcement of intellectual property rights on drug patents.

All of the reasons cited are legitimate concerns, but Costa Ricans passed the bill in part because of the U.S. unwillingness to renegotiate the trade agreement if the referendum on CAFTA was rejected (link). The greater lesson in all this is it is difficult for small countries like Costa Rica to bargain with the United States.

On a related noted, I once asked the then President of Costa Rica in the summer of 2000 who I met at a forum in DC if there were ever any protest against free trade agreement like Seattle in US a few years ago. He said that would never happen in Costa Rica. Things have changed.

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