TWN Info Service on Free Trade Agreements

09 October 2007


Referendum held in Costa Rica on its US Free Trade Agreement

The Central America-Dominican Republic Free Trade Agreement (CAFTA) involves the USA, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.

Like all US free trade agreements (FTAs), it had to pass both Houses of the US Congress to begin operation. In 2005, CAFTA passed the US Congress with a one-vote margin.

After widespread protests in the Central American countries, CAFTA passed the necessary legal steps and started operating for all the CAFTA countries, except Costa Rica.

In Costa Rica, CAFTA has been so controversial that the first ever referendum in Costa Rican history was held on it last weekend. The weekend before the referendum was held, about 100,000 people (from a population of 4.1 million) filled the streets of the capital to protest against CAFTA in the largest march in Costa Rica in years.[1]

Costa Rica is the first nation to put a trade agreement to a national referendum.[2]

Leading up to the referendum, there was an intensive campaign led by Costa Rica’s president (who warned that rejecting CAFTA would be "collective suicide")[3], months of radio and television advertising in favour of the pact, and pressure from the White House.[4]

The anti-CAFTA vote received the majority in most rural regions, where fears about campesino displacement drove opposition to the pact. The pro-CAFTA vote won narrow majorities in most urban, populous regions, where remarks made by the Bush Administration in the days before the referendum were widely covered by the media, despite a legally mandated black-out on advocacy for or against CAFTA in the press.[5]

Group monitoring CAFTA claim that the Bush Administration repeatedly suggested removing Costa Rica’s existing Caribbean Basin Initiative (CBI) trade preferences (where the US Government unilaterally lowers its tariffs on Costa Rican products) if Costa Ricans voted against CAFTA, even though the program was made permanent in 1990 and only an act of the US Congress could terminate it. The Democrats have control of both Houses of the US Congress now and the Democrat House Speaker Nancy Pelosi and Democrat Senate Majority Leader Harry Reid sent a letter to Costa Rica’s ambassador to the United States stating that “Participation in CBI is not conditioned on a country’s decision to approve or reject a free trade agreement with the United States, and we do not support such a linkage.”[6]

The groups monitoring CAFTA also point out that U.S. ambassador to Costa Rica, Mark Langdale, was given a rare formal denunciation before Costa Rica’s Supreme Electoral Tribunal after he waged a lengthy campaign to apparently influence the vote on CAFTA. As part of that, Langdale allegedly employed misleading threats and suggested there would be economic reprisals if CAFTA was rejected. This was why Pelosi and Reid had to send their letter correcting these misconceptions that Costa Rica would lose its CBI trade preferences if the Costa Ricans voted against CAFTA in the referendum. In addition, US Representative Linda Sánchez who serves on the House Foreign Affairs Committee’s Western Hemisphere Subcommittee, wrote a letter to US Secretary of State Condoleezza Rice demanding the cessation of Langdale’s interventions. “Even the perception of such interference harms the U.S. image in a region already suspicious of our intentions,” Sánchez wrote. “If we are to be seen as respecting democracy, sovereignty, and economic development, we must not interfere in any way with the historic popular referendum on CAFTA in Costa Rica, the region’s oldest and strongest democracy.” Despite this, President Bush’s U.S. Trade Representative reportedly renewed the pressure last Thursday, and the White House issued a statement repeating the threats on Saturday – just hours before the referendum began.[7]

There has been widespread criticism of the pressure from the White House. One editorial said such threats were ‘an excessively thuggish thing to say to a small, peaceful, pro-U.S. democracy’.[8] (Costa Rica has no standing army and falls under the military protection of the USA).[9]

When discussing Costa Rica’s CAFTA referendum, US Senator Bernie Sanders noted that ‘when the people in a free, democratic and independent country like Costa Rica vote their conscience they should not be punished by the world's superpower. That is not what democracy is about.’[10]

During the lead-up to the referendum, a leaked memo by Costa Rica’s Second Vice President and another high-level government official to Costa Rican President Arias and his brother (a government minister) recommended a public relations campaign to scare voters into voting for CAFTA and advocated punishing local governments (by withholding their funding) if their constituents voted against CAFTA, according to the Los Angeles Times.[11] The campaign was recommended to include inventing labour figureheads to support CAFTA.[12] Costa Rican press report that CAFTA supporters spent $500 million on publicity (compared to $30 million by opponents of CAFTA).[13]

In addition, according to an analyst with the International Relations Center, several of the Costa Rican government's negotiators received their salaries from the Costa Rica-United States Foundation (CR-USA)—an agency specially created to channel funds from USAID (the U.S. Government’s Agency for International Development). The CR-USA Foundation administers money from the U.S. government and spent US$901,460 to support the Costa Rican FTA negotiating team to negotiate with the USA.[14]
Based on reports from 97% of the precincts, 51.5% of voters in the Costa Rican referendum supported CAFTA.[15]

However, CAFTA opponents have not conceded because most polls had predicted the majority would vote against CAFTA[16] and so they are awaiting a manual recount which begins today and must be completed within two weeks[17]. CAFTA opponents are also investigating polling station irregularities[18] and have claimed there were violations of the Costa Rican Electoral Code, which prohibits distributing any type of campaign materials for the two days preceding a referendum.[19]

There are also serious questions as to how the referendum was conducted, including doubts about the impartiality of the Electoral Tribunal. For example, there is no fiscal control of media outlets, most of which have expressed a clear bias in favor of the agreement’s approval; nor are there rules as to the use of the president’s and ministers’ time and resources in producing material in favour of approval. Efforts were reportedly made to silence opposition from the public universities but no mechanism was created to give media access to those sectors opposed to the agreement.[20]


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Notes

[1] http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-10-07T214041Z_01_
N07266567_RTRIDST_0_COSTARICA-TRADE-UPDATE-2-PIX-TV.XML
[2] http://www.latimes.com/business/printedition/la-fi-trade8oct08,0,3374876.story?coll=la-headlines-pe-business
[3] http://afp.google.com/article/ALeqM5gprLG9_pgiIldXQpXfxXSU7vycUw
[4] http://www.citizen.org/pressroom/release.cfm?ID=2527
[5] http://www.citizen.org/pressroom/release.cfm?ID=2527
[6] http://www.citizen.org/pressroom/release.cfm?ID=2527
[7] http://www.citizen.org/pressroom/release.cfm?ID=2527
[8] http://www.scrippsnews.com/node/27422
[9] http://afp.google.com/article/ALeqM5gprLG9_pgiIldXQpXfxXSU7vycUw
[10] http://www.sanders.senate.gov/news/record.cfm?id=285027
[11] http://www.bilaterals.org/article.php3?id_article=9730
[12] http://www.bilaterals.org/article.php3?id_article=9844
[13] http://www.bilaterals.org/article.php3?id_article=9844
[14] http://americas.irc-online.org/am/4062
[15] http://ap.google.com/article/ALeqM5jqvBS0SRM5A0eIqUIVIS9juXbLGgD8S5B4J00
[16] http://washingtontimes.com/article/20071009/BUSINESS/110090022/1006
[17] http://ap.google.com/article/ALeqM5jqvBS0SRM5A0eIqUIVIS9juXbLGgD8S5B4J00
[18] http://www.citizen.org/pressroom/release.cfm?ID=2527
[19] http://www.allheadlinenews.com/articles/7008763325
[20] http://www.bilaterals.org/article.php3?id_article=9744