Costa Rica held a referendum on Sunday October 7th to decide whether or not it would approve the Dominican Republic and Central America Free Trade Agreement with the United States, and the ayes have the day with 51.6% against 48.4% nays.

I have always been conflicted about DR-CAFTA. This is a TRIPS-plus agreement implementing an IP maximalist agenda of strict anti-circumvention measures, erosion of exceptions and enactment of parallel import measures that may hinder access to generic medicines. However, for small countries located in the trade shadow of the U.S., any competitive advantage could prove crucial in attracting or repelling fickle foreign investment. While all of our neighbours have voted the agreement and fully implemented it, Costa Rica has held out because of tremendous popular opposition to the agreement. Not voting the agreement could open the gates to a migration from high-tech companies vital to the Costa Rican economy (such as Intel). I also believe that Costa Rica needs a good incentive to break the public monopolies in some sectors, particularly telecommunications and insurance, and DR-CAFTA may very well be the kicking that we require.

Similarly, I have been troubled by the fact that the CAFTA trade struggle has become the latest battleground in the ongoing cold war between the United Stated and Venezuela. With many countries moving to the left as a response to decades of American intervention in the region (and Hugo Chavez and his big chequebook), I have seen my country of origin become a proxy in the Bush – Chavez struggle for the heart of Latin America. I do not like either of them… one an uneducated buffoon and the other a character from a Magical Realism novel.

Almost on cue, S&P has given a stable rating to the Costa Rican economy as a response of the referendum. For a more detailed look at some of the issues, see the report on CAFTA and e-commerce by Jordan Hatcher, Abbe Brown and yours truly.


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