Costa Rica Votes to Join Central American Free Trade Agreement

After years of debates, Costa Rica’s lawmakers finally approved the country’s entry into a free-trade agreement that has been in effect for nearly three years.

Even though Costa Rica signed the Dominican Republic–Central American Free Trade Agreement in 2004, several political activists, business owners and labor groups opposed the pact, which lets goods and services flow freely between the United States, Guatemala, El Salvador, Nicaragua, Honduras, the Dominican Republic and, now, Costa Rica.

It took more than four years of debate, two deadline extensions from DR-CAFTA members and several legislative hurdles before Costa Rica’s lawmakers cleared the way on Nov. 11 for the accord to take effect Jan. 1.

Getting the deal done was one of Costa Rican President Oscar Arias’ pledges after taking office in 2006. But Arias had his work cut out for him.

In February 2007, tens of thousands of Costa Ricans marched through San Jose, the country’s capital, to express their disdain with the free-trade agreement. Many opposed the idea that the accord opened the country’s telecommunications, services and agricultural sectors to international competition. Employees of the state-run telecom company, which has had a virtual monopoly on telephone service, were particularly vehement about not joining the pact.

In October 2007, the nation’s voters went to the polls on the issue. The referendum resulted in a nearly 52 percent approval rate for entering the free-trade club.

Costa Rica is not a major exporter of apparel to the United States. But DR-CAFTA has helped garment production in countries such as Guatemala, Nicaragua, Honduras, El Salvador and the Dominican Republic, which export most of those goods to the United States. —Deborah Belgum