 |
Minister of External Trade,
Alberto Trejos Zuñiga |
| Courtesy Ministry of External
Trade |
 |
Eduardo Lizano,
former president of the Central Bank |
| Courtesy Central Bank |
Last January President Bush increased US attention
to Central and Latin America, when he announced: “Our
purpose is to strengthen the economic ties we already
have with these nations and to reinforce their progress
toward economic, political, and social reform.”
Soon after, the passage of “fast track”
legislation gave US President Bush concrete tools
to speed up this integration process, which will eventually
lead to the world’s largest free trade agreements
–The Free Trade Area of the Americas (FTAA),
expected to become effective in 2005. One of the reasons
why this agreement has an urgent nature is that it
has to be finalized before the next round of US presidential
elections in 2004.
Before this can happen, many gradual steps will be
taken, and a lot of research and negotiations will
be conducted. The Free Trade Agreement of Central
America (CAFTA) is the next step in this long process.
Many say that this is a window of opportunity also
to Costa Rica. Among Central
American countries, only Nicaragua exports more to
the US than Costa Rica, and almost 90% of imports
to Costa Rica originate from the US.
Not only will the CAFTA and FTAA bring a mutually
beneficial relationship of a permanent nature, as
they will erase the Caribbean Base Initiative, but
they will also add to the sense of globalization.
Democratic values, peace, stability, human rights,
rule of law and transparency will spread around the
region.
Moreover, it will hopefully bring more equality and
open more opportunities to more people. The difference
in per capita GDP between Costa Rica and the US is
about one to eight, but the difference between Costa
Rica and Nicaragua is also about one to eight. GDP
per capita in Costa Rica is about $4,000; GDP per
capita in Nicaragua is about $500. “These disproportionate
numbers will become more similar in Central America,
and that is important for us as well,” said Anabel
Gonzalez, Costa Rican Special Ambassador to the trade
negotiations.
Costa Rica highly qualifies for this kind of ambitious
and demanding agreement. It is already very active
in the World Trade Organization (WTO). Despite the
fact that it is a very small country, it is a very
active participant in the international arena. It
has also contributed in many ways to the use of the
complex resolution mechanism of WTO, and has made
the European Union and the United States change over
conflicting laws.
Costa Rica’s trade policy has also reflected
a certain continuity and sustainability over the years.
Since 1985 Costa Rica has had one of the highest rates
of export growth and highest investment per capita
in Latin America.
At the end of this year, the Free Trade Agreement
between Costa Rica and Canada will become effective.
According to the Costa Rican Minister of External
Trade, Alberto Trejos, “We are going to have
in effect a very good deal with Canada, one that provides
significantly better access conditions in both directions.
The impact we believe is going to be very strong among
others in agriculture, like coffee or sugar, which
traditionally have been doing very well, but which
because of the world market prices haven’t done
very good. Therefore we are very happy that this treaty
opens new opportunities.”
The benefit will also be in the areas of electronics,
medical equipment, software, food products, and other
agricultural products such as ornamental plants. The
Agreement with Canada, one of the seven largest markets
in the world, is the first free trade agreement between
one of these seven countries and a small, developing
economy.
But when countries move from bilateral agreements
to multilateral ones, which include many negotiating
bodies, many more issues have to be agreed to. For
example, in the case of CAFTA, some countries will
want a very deep agreement while other countries will
seek something shallower.
However, as Minister Trejos describes his region,
“In this continent we have very trade-oriented
countries.”
By the time CAFTA becomes effective, Central America
will have a deal in place with Canada. It already
has one with Mexico, the Caribbean, and Chile.
Many argue that if this kind of negotiation with the
US had taken place ten years ago, it may have been
very complicated to accomplish. Due to the recent
experience and global situation, many today agree
that this is however the way to proceed and fight
against poverty, crimes, discrimination and inequality,
which potentially lead to serious negative consequences,
such as – at worst – terrorism.
Costa Ricans feel that they are in a very good
position in terms of taking advantage of the CAFTA
agreement. According to Ms. Gonzalez, “For
us it is better to live in a region where everybody
is poor but looking into the future and at opportunities
to prosper than to live in a region with no opportunity.
This would bring us our own immigration challenges
in terms of other Central Americans coming into
our country, and even if that is very good for the
economy, it also poses a number of pressures over
educational and medical systems. Again, it is better
to see a difference of one to six than one to 15.”
Mainly due to the lack of knowledge and information
concerning the true nature of the free trade agreement,
some producers are concerned about the balance –will
it be a win-win, win-lose, or what type of an agreement?
Certainly one of the biggest challenges is how to
develop a model where one can integrate smaller developing
economies like the Central American countries with
a large developed country as the US. Furthermore,
when the time comes to negotiate the Free Trade Area
of the Americas, where out of 34 countries 24 are
small economies, it becomes important to develop a
model, which will help to solve and smooth the transition.
This is where the agriculture sector comes up again.
Former President of the Central Bank of Costa Rica,
Eduardo Lizano, suggests, “The US knows that
Costa Rica cannot open its agriculture in one night.
A little, yes, but we need some kind of internal measures
for that." Moreover, he suggests that in addition,
a so-called friendship and peace agreement should
be signed between the countries joining the CAFTA.
This would enforce and guarantee peaceful and civilized
problem-solving.
Naturally, every country has its sensitive aspects,
which are currently protected by trade barriers. Costa
Rica feels that it will come out a winner in agricultural
areas like coffee, manufacturing and services, mainly
because these are the areas where Costa Rica is already
a successful exporter. There are a few products, such
as for example rice, sugar and beans, where many Costa
Ricans feel that they might become less winners, but
then again the country as a whole has to evolve and
it cannot let certain products drag the economy down.
A way to move forward is again the introduction of
high-value added products.
There are also other areas in which Costa Rica is
not a producer at all, so even though the trade agreement
does not close any export opportunities it renders
opportunities for easier access for cheaper access,
specifically in all mineral basement materials, heavy
industry and some specific technology. Even a technology
producer needs sometimes to become a technology importer
in some other aspects.
So, what are the areas on which Costa Rica needs to
work? There are some similar necessities to poor countries,
and some standards still need to be improved. One
of these issues is the intellectual property right
and trademark, and the US is pushing Costa Rica to
better the situation soon. |
