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Just a short response, I respect everyones opinion on this issue but I have to disagree wholeheartedly. These are just a few of the issues discussed. There is so much more that is bad about this agreement and if you take the time to research what is involved in this, you will find for yourself that this is really not free trade and this is not just a effort to get CR into the global marketplace which they are already becoming a part of without CAFTA.
First the environmental and labor laws of CR are at risk. One example is oil drilling off the coast of CR which a Halliburton subsidary recently attempted to propose but did not meet CR environmental regulations. They are now trying to sue CR for non compliance with the agreement. Under CAFTA, CR will not be able to resolve these legal issues in its own courts. Who do you think is going to win out on that battle? All disputes with international trade will be out of CR hands. Is that fair? I dont think so. Free trade is a great idea. I have no problem with that. The problem I have is that this is not Free trade. Again why is this agreement needed other than to protect US interests? Remove the tariffs and you have free trade. It does not take this extensive agreement which basically takes away the sovereignty of Costa Rica.
Also if you think that by letting international insurance companies, electric and telecommunications in to CR is going to make prices go down due to competition, you are living in a dream world. There is plenty of competition in the US and I can guarantee you that people are paying substantially more for services of all kinds than people in CR. You mention that it is subsidized by the Govt and taxes. That is true but isnt that what taxes are for? At least the taxes are used to provide affordable services to the people. Look where they spend our tax dollars in the states. How much benefit do we get out of what we pour into the govts pockets? On another note about subsidies and CAFTA. How do you think the CR farmers will be able to compete with government subsidized farming in the US. CR govt does not subsidize their farmers. Is that fair trade? All of the countries that have recently signed CAFTA have had their imports increase while their exports have decreased. What does that mean for the overall economy? CR is doing just fine without this agreement and the US will continue to do business with them regardless. This agreement is blatantly just a trade protection plan that benefits the US and insures that CR will do business with the US and not look overseas to China and others for goods and services.
Ripple33,
First of all, what did you do to the other 32 Ripples?
Thanks for your response. Let me try to give you another side of things, not that I think I’m going to “turn” you. However, I just don’t think CAFTA is the spawn of the devil as you do. It’s simply one more step among many in the natural and inexorable process of globalization.
You are right in that breaches of CAFTA will go to the WTO. You are also right that CAFTA, and globalization in general, means a loss of sovereignty for all (including the US). However, bi-national and multi-national treaties are all bound by international laws and bodies. Otherwise, they wouldn’t be worth the paper it’s written on. A treaty can’t exist where both parties have the right to force their own interpretation, you need a 3rd party referee.
You are also right that CAFTA is not “free trade”, whatever that it. It’s an agreement to start stepping down tariffs and government subsidies which give national companies an advantage over foreign companies. Each government has the right to negotiate these items, and the CR government has been doggedly doing so for years now. The idea is to eventually eliminate tariffs and subsidies over time.
You suggest that if we want “fair trade” we simply do away with all tariffs and subsidies. This would be disastrous, as it would give no time for companies in signatory countries to prepare. The U.S. would truly overwhelm Costa Rica economically if this were to happen, and U.S. farmers and other heavily subsidized industries in both countries would vanish overnight. Now THAT would be painful.
You go on to state that taxes are there to “provide affordable services to the people”. This is not true in a market economy where taxation has two main functions: 1. To fund government agencies; 2. To minimize the disparity of wealth. One of the primary roles of government in such an economy is not to “make things cheap for people” (like food, housing, education and healthcare in Cuba), but rather to create an environment where the private sector can offer the highest quality products and services at the lowest cost. Does it work perfectly? No, but better than Cuba. We’re (the US) still not doing it right anyway.
BTW, Costa Rica does subsidize their farmers, with minimum pricing regulations (canasta basica), tax breaks for agricultural investments, lower tariffs on the importation of agricultural machinery, emission exceptions for rural vehicles, etc. CAFTA does not necessarily eliminate these, just as it won’t in the U.S. It will, however, begin to step them down gradually so the businesses will have the chance to survive the transition.
Finally, you say that “All of the countries that have recently signed CAFTA have had their imports increase while their exports have decreased”.
1. CAFTA has not been enacted. The U.S. has not yet ratified it.
2. The balance of trade is only one component of international exchange. The other, and many times more important part, is the balance of investment (“Current Accounts”). This doesn’t get the press that the trade imbalance does, but it should. I truly believe that with the passage of CAFTA foreign investment in CR will increase significantly. It’s the perfect place to set up administrative offices for corporate Central American operations (unless it fails to integrate).
3. You (and most other people) have a mind set that exportation is good and importation is bad. This is not necessarily the case. If CR can save money by importing a product more cheaply than they could produce for themselves, then more importation is a good thing. This frees up capital to invest in the production of goods and services which can be produced more cheaply in CR, and then subsequently exported at a profit.
Yes, the US will continue to do business with CR even if CAFTA is not passed, but it will be limited. CAFTA signatories will continue their march towards economic integration, becoming stronger and more competitive every day, and Costa Rica will remain on the margin.
However, the reverse is also true. If CAFTA is passed in CR, this will not impede them from continuing to strengthen their economic ties with countries outside of CAFTA, like China. As a matter of fact, they will be able to conduct more business with such countries because they’ll be part of a larger trading block, with greater power of negotiation, as well as an economy more heavily imbued with international standards of quality and industrial processes.
CAFTA is by no means a magic pill. It will not, alone, make Costa Rica a better place. It’s up to the Costa Rican people and their government to do that. However, neither is it an evil plan by the US to te Costa Rica. It’s somewhere in the middle. The discussion should be centered on just how much in the middle it is.
In the end, it will be a compromise which will ward off the extremes. I think that CR will die on the vine if they opt out. The same will happen (at least to the part of Costa Rica we all love) if they completely submit themselves to US influence. The negotiation of this treaty, and the manner in which the CR government utilizes the resources created by it, represent the means by which Costa Rica will avoid the worst of these two fates.
GringoTico,
First of all, you are mistaken. CAFTA has been ratified by the US and is in effect for the countries that have already ratified it. Starting with El Salvador, Honduras, Guatamala, and Nicaragua. US Congress and Senate passed it in 2005 and it was signed by Bush in 2006
Next as far as the WTO is concerned, who do you think carries a bigger stick with the WTO? Who do you think they will represent in any disputes? If you think they are a fair international group then you are sadly mistaken. The IMF, World Bank, and WTO have a history of representing the people who created the organizations not the countries they were designed to help.
You mention that if all tariffs were removed that it would be a disaster for CR. If that is true then what is the difference in removing tariffs on 80 percent right from the start and then removing the rest with time. 80 percent/100 percent it really does not matter. The end results will be the same. As you say painful.
On the tax issue, you mention that one of the primary goals of government is to create an environment where the private sector can offer the highest quality products and services at the lowest cost. If that is true then what kind of quality products and services do we get in the US for a low cost? Last time I checked most all products and services are much more expensive than in the US. Unless you are talking about electronics or Automobiles. The basic services such as Education, Health Care, Utilities, Telecommunications, Insurance ect are much cheaper and available to more people in CR than in a market like the US. What do you think will happen when these services are privatized. In my opinion the cost of all of these go up and become available to only those that can afford them. When you take away the basic needs of the poor what is the result? If you think crime is bad in CR now, just wait and see what happens if CAFTA does pass.
I will not even bother to address the subsidies that CR farmers get in relation to US farmers because that is clearly not even a valid argument considering the millions of US dollars dumped into our farming industry.
As far as foreign investment, CR has already attracted plenty of foreign investment and does not need CAFTA to attract more. Besides, why would a corporation set up offices ect in CR if they can set them up in India for a whole lot less? If you say because of proximity to the US then wouldnt Mexico be the more likely choice?
You mention in regards to Imports and exports that if CR can save money by importing a product more cheaply than they can produce it for themselves then importation is a good thing. Isnt that what the US is dealing with now with the ever growing trade deficit with China? Doesnt that create a dependency on foreign goods and services? How many people lost their jobs in the US after NAFTA(600000)? This just does not make sense financially or politically. This is the reason China has the US by the small hairs and owns the US economy. The US sold themselves to foreign governments due to their faulty trade policies. Also it is a huge reason for the devaluation of the dollar. The only way to pay off foreign debt is to create more money. We all know what happens then.
Costa Rica is already in the process of dealing with the EU and eventually China. There is no need for CAFTA or a larger trading block. Also you admit that CAFTA will mean a loss of sovereignty. That to me is not worth any trade deal for the US or for CR.
I respect your thoughts and opinions but I must disagree as I am sure you will continue to disagree with me. I am always willing to listen and glad you are willing to listen to me as well.
Pura Vida
You have made some very valid points, several of which I have come to the same conclusion. My post today is if anyone can tell me how soon after the referendum vote the results are expected and will be announced? I’m planning on being there to witness a very important part of CR’s history and I need to determine how long I should be there. The results factor in greatly as to whether I will make my move to live there or not, thanks a mil!
Chuck
Ripple33,
It seems CAFTA doesn’t even exist in my head until Costa Rica is a part of it. I can’t believe that didn’t register! My first big “senior moment” (that I can remember…).
However, I took the time to confirm your assertion that “All of the countries that have recently signed CAFTA have had their imports increase while their exports have decreased.”
Where are you getting your information?????
According to http://www.indexmundi.com, exports from Central America spiked after the agreement went into effect:
% rise in exports from 2005-2006:
Honduras: 18%
Nicaragua: 107%
Guatemala: 35%Me, I’m a ditz. What’s your excuse?
GringoTico, There is much more to evaluating the effects of CAFTA than just looking at export numbers. First most of the exports would have increased anyhow without CAFTA. Second much of those numbers are due to products being exported which were already covered under the CBI. If you break it down, the areas which were opened with CAFTA that were not included in CBI have gone down. Look at Textiles for example. Also you must consider the overall trade numbers. If exports increase and imports increase even more than exports then you are still running a trade deficit.
It is a mute point now, since CR is already doomed to follow the path of Mexico and others down the road to poverty, increased crime, and economic slavery. This is not to say that there will not be those who profit from it. There will be much corporate profit from this agreement both in the US and in CR but the bottom line is, it will be the people and the country that suffers as a result. A very sad week in CR I must say. I hope you are right but history tells another story particularly with NAFTA.
Exports & imports 2005-2006
Honduras: imports 25% exports 18%
Guatemala:imports 0% exports 35%
Nicaragua:imports 42% exports 106%All in all, pretty stellar numbers. I have to ask you again, where are you getting your information from? Your assertion does doesn’t hold water.
Furthermore, the trade deficit only tells half the story. The Current Accounts deficit (direct foreign investment, services and such) is just as important, or even more so. It’s what has kept the U.S. afloat all these years of soaring trade imbalances. These numbers are harder to come by, but I can only imagine that CAFTA has resulted in increased foreign investments in these countries as well. How could it not?
CINDE, the Costa Rican government’s marketing department for promoting foreign investment, has a terrific web presentation on their sight at http://www.cinde.org. Anyone who browses through it should get a better appreciation for just how ready Costa Rica is for CAFTA.
Now I hope for three things:
1. The large and vocal minority won’t gum up the works too much.
2. The CR government will wisely invest the profits they will reap from CAFTA.
3. The inevitable detriment to Costa Rican society and values as a result of its accelerating entrance into the global community is minimized.
Yeah, well, we’ll see how it goes… I’m glad they chose the way forward, but sad too that yesterday is gone.
A fact here, a fact there. Pretty soon you’ll have a compelling argument. Their minds are made up, don’t confuse them with the facts. Lest you wish to be labeled insensitive, and thereby become anathema.
Edited on Oct 12, 2007 04:09
A usually reliable source/friend told me this afternoon that, while Costa Rica has adopted CAFTA with its recent referendum, the U.S. Senate has not ratified it. Can anyone confirm or deny this?
Has Costa Rica gone through all this hate and discontent and even now be working on enabling legislation on behalf of a treaty that the senior partner hasn’t accepted? If this is true, does anyone have any reliable sense of what the Senate may do and when?
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