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Costa Rican economist says CAFTA is a bad deal

Miami Herald

Costa Rican economist says CAFTA is a bad deal

By Jane Bussey

3 November 2008

Costa Rican economist and former presidential candidate Ottón Solís spent the spring at the University of Florida as the Bacardi Family Eminent Scholar, teaching a course on free-trade agreements in the Americas at the university’s Center for Latin American Studies.

His stay was his first extended living experience in the United States, and Solís said he was impressed with the level of safety enjoyed by Americans and dismayed by the waste in the consumption of food, clothing and appliances. Back in Costa Rica, Solís said, he is dedicated to activities in the left-of-center Citizen Action Party, although insiders say Solís, who lost the 2006 election by less than 1 percent of the vote, will run again for Costa Rica’s top office.

Solís campaigned against Costa Rica joining the Central American Free Trade Agreement, which includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. He is outspoken about why he believes the trade accord with Washington is a bad deal for Costa Rica, which is still not formally a member.

Even without the preferential trade agreement, Costa Rica received more foreign direct investment than the rest of Central America together — in part, he said, because investors are looking for stability and better-educated workers, not just free-trade rules.

Solís spoke with The Miami Herald during the recent Americas Conference in Coral Gables.

Q : What is your thinking about the current financial crisis in the United States ?

A : The first lesson to be learned is that full-fledged trust in markets as a solution for everything is over. The United States must understand that those of us who have opposed free-trade agreements, [did so] precisely because we do not think that free market forces will lead to maximizing our welfare.

Q : What should be the reaction in Latin America ?

A : We need to take preventive measures. The U.S. economy is going to slow down, and that is our main market. For many of our countries, more than 50 percent of our exports go to the United States. Many of our countries get remittances from workers in the United States who might be sacked as a result of the economic situation. Foreign investment from the United States might also drop.

We hope that official lending is available from international financial institutions and also from bilateral sources to allow governments to finance.

Q : Your presidential campaign centered on opposition to the free-trade agreement negotiated with the United States. How would you describe your opposition ?

A : There are three types of Latin Americans : Those who fully support free-trade agreements drafted in Washington ; those who oppose them fully like [Venezuelan] President Hugo Chávez ; and those of us who want free-trade agreements with the United States but who think that the type of agreements being promoted so far benefit mainly multinational corporations and not the people of our countries.

Q : What would a free-trade agreement look like that would be good for your countries ?

A : An agreement that would not open our countries to agricultural imports as long as the United States has farm subsidies. An agreement that maintains the rules of intellectual property protection of the World Trade Organization and no more. An agreement that would permit protections for nascent industries or ones taking technological risks. An agreement that would permit more rigorous environmental and labor rules. One that has symmetry in government contracts because only 23 states in the United States allow Central American companies to participate in their [government] bidding processes. Something that we are worried about in Costa Rica is that the free-trade agreement opens up the production and commercialization of weapons.

Q : The United States has proposed a Pathways to Prosperity in the Americas, an effort of regional cooperation with the countries — Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Panama and Peru — that have free-trade agreements with the United States. What is its future and what about the proposed Free Trade Area of the Americas ?

A : This sounds like a manifestation of good intentions. If for example, the United States commits to cooperating with countries that have free-trade agreements, this is little more than the CAFTA [and the Dominican Republic]. If the United States does things like this, it throws everyone into the arms of Chávez, so that Chávez throws them money.

CAFTA does not contemplate a single cent of cooperation. If CAFTA is generating progress, [it] is not being felt. For this reason countries are starting to join PetroCaribe [an oil alliance with Venezuela]. This shows that promises of prosperity from the free-trade agreement are not true. Why are the countries of the [political] left and right in Central America all turning to PetroCaribe ?

The [FTAA] is dead.