Costa Rica will ratify the Central American Free Trade Agreement with the United States, it is just a matter of when, said Costa Rican Ambassador to the U.S. Tomás Dueñas, who hopes for a fully ratified treaty by the end of May. “The economic and trade realities [between Central America and the U.S.] are already there, so Cafta is going to happen. Can you imagine a Cafta without Costa Rica? No, of course not,” Mr. Dueñas told GlobalAtlanta during the Sumaq Summit last week at the Omni Hotel. “Costa Rica was one of the first negotiators of Cafta, so of course we will try to make it happen,” said Mr. Dueñas, who is currently lobbying U.S. Congress to convince legislators to adopt the treaty. Mr. Dueñas said recent concerns that Costa Rica will not ratify Cafta until after the country’s presidential elections next February have not reflected the full picture. Most companies in Costa Rica are in favor of Cafta; it is only the unionized public utilities that fear their industries will have to open up to competition that are against the treaty, he asserted. “Cafta is one of most important elements in the development of Costa Rica’s foreign trade strategy,” Mr. Dueñas added, because it would make already existing trade with the U.S. easier. Some 50 percent of all Costa Rica exports currently go to the U.S., and more than 50 percent of its imports come from the U.S. Some two-thirds of tourism and foreign direct investment in the country also comes from the U.S., he added.
Estéban Brenes, dean of the INCAE Business School in Costa Rica and Costa Rica’s former agriculture minister, told GlobalAtlanta that Cafta is important because Costa Rica’s unilateral treaty with the U.S. is not necessarily guaranteed or permanent. “The U.S. could decide to pull out of that treaty at any time,” he said.
Generally, Costa Rican business is in favor of Cafta because free trade agreements tend to “bring a net win” for countries involved, he said.
Costa Rica has an average 11 percent tariff on agricultural goods, which is low, Mr. Brenes said. Some Costa Ricans dealing in certain agricultural products that have higher tariffs are worried about Cafta, but they are very few, he said.
Cafta is crucial as a building block for future free trade agreements in the region, Mr. Dueñas said. The treaty would serve as a bridge to Caricom (Caribbean free trade pact) and to Nafta for all countries involved, he said, because most Caribbean countries have bilateral free trade agreements with Mexico, the Dominican Republic and Panama.
Without Cafta, it would be difficult for Central America to compete with countries in the Western Hemisphere that already have trade agreements with the U.S., Mr. Dueñas said. He added that he expects the U.S. and Costa Rica to ratify Cafta “soon.” El Salvador, Guatemala and Honduras have already voted in favor of the agreement.
The Cafta countries – Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua – also represent a large business opportunity for the U.S., he added, noting that these countries did $32 billion worth of trade last year with the U.S. If Cafta signatories were a country, it would be the U.S.’s second largest trading partner in Latin America after Mexico.
With a combined gross domestic product of some $87 billion, Central American countries actually purchase more from the U.S. than they export to the U.S., Mr. Dueñas pointed out.
Contact Mr. Duenas for more information at firstname.lastname@example.org or (202) 238-2284.