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20 years

Solis to Russian TV: Free Trade Agreement with United States has done nothing for Costa Rica

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April 9th, 2014 (InsideCostaRica.com) In a television interview with Russian global broadcaster, RT (formerly known as Russia Today), President-elect of Costa Rica, Luis Guillermo Solis discussed his goals as the country’s next president, including fighting corruption, inequality and poverty, and economic growth.

 

Speaking on the latter subject, Solis pointed out that he was a strong opponent of the country’s Free Trade Agreement with the United States (CAFTA), which passed by national referendum seven years ago, saying he believed the agreement damaged the agricultural sector and other sectors of Costa Rica’s economy.

 

“In fact, CAFTA has not brought us any benefit, among other reasons, because the principal market is not working,” referring to the US economy.

 

Solis said that in his view, the Costa Rican economy “doesn’t grow because of close ties to the US economy, which has been in recession for several years,” adding that Costa Rica has important trading ties with several other world economies.

 

Solis said that a “monogamous marriage” with the United States is not beneficial for foreign trade, adding that stronger ties between Russia and Central America could be “very helpful,” in terms of political dialogue and other areas.

 

Russia made it clear earlier this year that it hopes to expand its sphere of influence in Latin America, including the establishment of a military base in neighboring Nicaragua, as well as Venezuela and Cuba.

 

President Laura Chinchilla’s government said at the time that it strongly opposed the Russian plan.

 

Solis’ interview was aired on RT yesterday, the same day Intel and Bank of America announced they were closing their Costa Rican operations.

 

Click here to watch a short excerpt of Solis’ interview with RT (Spanish).

 

Click here to watch the complete interview (~22 minutes).

 

 

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  • Karen Mata

    As I understand (and I may be incorrect here) CR has complied with the agreement in the same fashion they complied with the gold mining rights on the border where they reneged, and the offshore drilling rights where they once again reneged. (They are being sued by both of those companies that paid for and were granted those rights.)

    This from trade.gov at the US dept of commerce.
    “CAFTA requires member states to implement the agreement within 2 years after it took effect in March 2006 and despite approving CAFTA, CR is still the only signatory to have not yet implemented the agreement.”

    • expatin paradise

      Full compliance with CAFTA’s terms requires that the government make changes in its institutions and laws. As with everything else involving government here, finding consensus is virtually impossible.

      Of course, compliance cuts both ways. Costa Rica is not the only signatory that has not complied with the terms of CAFTA. The US farm subsidy program (and other US programs that involve direct subsidies to companies that produce items traded internationally) violates the agreements the US has made with its various trading partners. Since it was the US that wrote these agreements, its noncompliance is much more egregious than that of the countries coerced into signing off (that is not too strong a characterization – the Bush administration did some serious eleventh-hour arm twisting).

      Frankly, some of the privatization under CAFTA (e.g., telecommunications) has been good for people here; however, others have been harmful – INS jacked up my health insurance premiums 600% in one year (in effect, cancelling my policy), citing CAFTA changes as permitting the practice of adjusting previously fixed rates based on usage.

      I see no real benefit of CAFTA to the average Tico, although I’m sure that some of the rich and powerful have become richer and more powerful under CAFTA. Regardless of the merits of CAFTA, Costa Rica should not be in an exclusive trade deal with the US. Especially after yesterday’s announcements of business closures here, Costa Rica is wise to expand its international base. The Costa Rican government should be more cautious in all its negotiations so that it does not find itself again in the position of reneging on ill-conceived agreements.

      Costa Rica should be especially cautious about dealing with Russia, as that country apparently cannot be trusted to keep its promises (part of the agreement for Ukraine to turn over its nukes to Russia was that, in exchange, Russia would never invade Ukraine). Also, Russia appears intent on re-establishing the empire or the Soviet Union, and is open about establishing military bases in socialist states in this hemisphere, a move that will not be welcomed by the US or its allies. Of course, it might be wise for CR to be on good relations with Russia (if Russia could be trusted), since Russia plans to arm our perennial enemy just across the (disputed) border.

      By the way, characterizing our leaders as “the skirt” or “the Jamaican” is pretty offensive. It isn’t necessary to respect or like them, but such name calling is just rude.

      • Ken Morris

        I always appreciate your thoughtful comments, expatin paradise.

        In this case, I suspect that you and others are making a mistake to conclude that CAFTA’s opening of the telecommunications sector is beneficial. This conclusion is based upon lower consumer prices and massive capital investments by foreign companies. I think those investments are a one-time thing–start-up capital–and long term the outflows will be greater than the inflows. Consumer prices may remain lower–contrary to lore, monopolies and oligopolies don’t always overcharge consumers–but consumer prices may be the wrong measure. The better measure, I think, is which direction the profits flow. They will I’m afraid flow outside of the country, which in turn will restrict the capital inside the country and make CR more dependent on foreign investment. This is not, I’m afraid, a good long term economic path to be on.

        With respect to insurance, the jury is still out. We all though know what private insurers did in the US, namely cherry-picked its customers and excluded everyone who posed a risk. I’m afraid that CR is making a Faustian bargain with respect to insurance, since again long term the Devil will extract his due.

        BTW, I actually read the World Bank 5-year assessment of CAFTA and could find no good news in it. A lot of the data are subject to different interpretations both ways, while a lot of it (like telecom and insurance) are too short term to draw conclusions (even though the report tries to draw happy conclusions). My chief concern is that imports from the US keep rising faster than exports to the US, which I’m sure is what the US wants but doesn’t look good for CR.

        • Ben

          Good points thanks for your thoughts

  • Karen Mata

    Heartening though that one of the Jamaican’s first interviews is with RT, and he’s critical of the US.

    • Ben

      Karen he is Tico that means Costa Rican not Jamaican.

  • Karen Mata

    Yes, I agree with your story a couple days back. The Jamaican IS a centrist.

    American taxpayers, are you enjoying watching your tax dollar at work, as you helped pay for this gentleman’s education.

  • Andrew

    what Karen printed from trade.gov proves that Luis the Jamaican is every bit as “out to lunch” as Laura the Skirt.
    Perhaps Tico candidates should be forced to get all of their education in-country–if memory serves, Laura the Skirt attended Georgetown, an excellent US university–and look at the good it did her!

  • Jerry

    What has the US gained.

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