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Country’s president Arias flip-flops on support for the regional free trade deal

SAN JOSE, Costa Rica – 05/24/07 – Dealing a major blow to the White House’s expansive free trade agenda, Costa Rica’s President Oscar Arias has said his country will hold a referendum on whether the country's legislature should ratify the Central America Free Trade Agreement.

Known as CAFTA, the trade pact is in force in much of Central America, but has faced vocal resistance from opposition lawmakers in Costa Rica.

"For the first time, Costa Ricans ... will be able to directly decide the future of a very important law for the country," Arias said at a recent news conference in the capital of San Jose.

The referendum, which could take place within the next three months, opens the possibility that Costa Rica might well reject the deal altogether.

Some recent opinion polls in the Central American country show backing for CAFTA is waning, with less than 40% of those polled in full support of the trade pact.

Costa Rica is the only participant whose legislature hasn’t ratified the agreement.The move would make Costa Rica the first country to hold a referendum to decide the issue, rather than have Congress vote.

The other participants in CAFTA are the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.

Arias made passing the pact into law a central part of his campaign platform ahead of the presidential election last year.

According to media sources, he announced his flop on the pact only after it looked like his opponents would force the measure with or without his support.

The White House struggled to win support for CAFTA in the US House of Representatives in 2005, where a battle along party lines almost sunk the deal.

The passage of CAFTA is considered one of the Bush Administration’s more significant free trade achievements.

Some in Costa Rica and other Central American countries oppose CAFTA on the grounds that competition from US producers could hurt local farmers, while still others assert that the CAFTA could lead to the privatization of the state-run telephone company and hurt the social security system.

Arias' announcement came after Costa Rica's top election court ruled it might authorize a referendum if citizens collect signatures in favor totaling 5% of the country's electoral roll over a nine-month period.

The agreement was signed August 5, 2004, and, if completed in its whole, would create the second-largest free trade zone in Latin America for US exports.

If entered into full force, the CAFTA agreement would eliminate 80% of the tariffs immediately, with the remaining tariffs phased out over a 10 year period.

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