A Brief Political History of DR-CAFTA in Costa Rica

Anti-CAFTA March

On October 7th 2007, Costa Rica will hold a referendum on DR-CAFTA. This may very well be the first occasion on the history the human race that a final decision about a Free Trade Agreement is made by the entire electorate of a country.


Anti-CAFTA Marchers in Costa Rica

On October 7th 2007, Costa Rica will hold a referendum on The Dominican Republic – Central America Free Trade Agreement, referred to as DR-CAFTA. (1) This may very well be the first occasion on the history the human race that a final decision about a Free Trade Agreement is made by the entire electorate of a country.  

DR-CAFTA creates a free trade zone similar to NAFTA, the North American Free Trade Agreement, in which tariffs on about 80% of U.S. exports are eliminated right away, and the remaining 20% is phased out over a decade. U.S. import duties are not substantially affected by DR-CAFTA, since the vast majority of goods produced in the participating countries already enter the U.S. duty-free due to the U.S. Government’s Caribbean Basin Initiative.(2)  

The United States Senate approved DR-CAFTA on June 30th, 2005, and the United States House of Representatives approved it on July 27th. On March 1st, 2006, the pact was ratified by the Legislative Chamber of El Salvador, followed by Honduras and Nicaragua on April 1st, 2006, Guatemala on May 18th 2006, and the Dominican Republic on March 1st, 2007.(3)  

Costa Rica remains the very last country where DR-CAFTA has not yet been ratified, and not much time is left. The final ratification deadline is March 1st 2008, when not only the pact itself must be approved, but also what is known as the "implementation agenda", which includes (among other actions) passing laws that open competition in the state-controlled markets of insurance and telecommunications. 

Passing on the “Hot Potato” 

The initial discussion and negotiation process between DR-CAFTA participant countries began during the past administration of Costa Rican President Dr. Abel Pacheco. When the time arrived to send the bill to the Legislative Chamber, President Pacheco surprisingly decided not to make any decision, and summoned the creation of a "Comisión de Notables" (something like a "Wise Men Committee") to thoroughly study the pact. This select group included Dr. Franklin Chang, widely known for his former career as a NASA astronaut, presently a pioneer and private entrepreneur in the field of plasma-powered space engine construction. The Committee delivered its report on September 16th 2005, explaining this very technical text in simpler terms, nevertheless abstaining from taking a stance on the pact as "good" or "bad" for Costa Rica.(4)  


My Brain Says Yes, and Yours?

Meanwhile, street protests began taking place throughout the country, demonstrating the growing power of DR-CAFTA opponents. President Pacheco waited until the very end of his administration and finally sent the text to begin its discussion at the Legislative Chamber, thus passing the "hot potato" into the next government. Presidential Elections on 2006 were in some degree determined by DR-CAFTA, as the main candidates clearly stated their position. Oscar Arias (5) openly supported and promoted DR-CAFTA. Conversely, Otton Solís(6) very clearly stated his total opposition to DR-CAFTA, at least in its present text. A slightly larger number of voters favored Oscar Arias in the elections, leading him into his second presidency. Arias was awarded the Nobel Peace Prize during his first presidency in 1987. 


My Heart Says No, And Yours?

The new government inherited the pending DR-CAFTA ratification, showing an apparent lack of interest in negotiating with the opponents, suggesting that the Costa Rican people had already manifested approval towards the pact, at once by having elected him President. Then, the main opposition party (PAC) quite fiercely declared a radical NO to DR-CAFTA, and on February 26th, 2007, tens of thousands took the streets, peacefully demonstrating in a massive march to block ratification.(7) Meanwhile, the Government managed to negotiate a weak agreement with other opposition parties which favor DR-CAFTA. In this way, the yes-coalition barely managed to control an exact minimum of 38 favorable votes, needed for legislative ratification. 

Resorting to Referendum 

Just when the course of events seemed to be leading the country towards great social turmoil, the Supreme Electoral Court surprisingly announced a possible admittance to an initiative presented by José Miguel Corrales, a former opposition presidential candidate. Corrales made a formal petition to hold a "citizens’ initiative" referendum, one of the three permitted under referendum law. Under referendum law, the admittance of a "citizens’ initiative" process requires ten months for signature recollection, which must amount at least 5% of the total electorate, in order to declare a referendum. If the Supreme Electoral Court had admitted Corrales’ "citizens’ initiative," it would have meant a stop to proceedings, and the beginning of a 10-month wait.  

Considering it would have been virtually impossible for Costa Rica to arrive to a final DR-CAFTA ratification before the March 1st 2008 deadline with the "citizens’ initiative" proposal, the Costa Rican Government responded by presenting a referendum initiative of its own. First approved by the Legislative Chamber, then made official by the Supreme Electoral Court, this parallel fast-track initiative produced a much sooner date for referendum.(8)  


I Won’t Forget the Memo, and You?

The referendum challenges the voter with just two options: yes or no. DR-CAFTA supporters created a group named the "Alianza del Sí" (Yes-Alliance), which included the government and the chambers of industry and commerce, among others. On the opposite side, unions, state universities and artists, among others, created the "Movimiento Patriótico por el No" (Patriotic Movement for No). 

The Daily newspaper La Nacion published the results of a recent poll on September 24th, indicating that the Yes and No are virtually tied.(9)   From those who have already made up their mind, 49.1% will vote Yes, and 46.3% will vote No. Nevertheless, the difference is smaller than the margin error for this survey, which is 3.4%. 

Older polls showed a much larger support for Yes, which means that there has been a Yes decrease, and No has been growing at a fast pace. This trend may reflect the consequences of the recent memorandum scandal, particularly after Kevin Casas resigned from the office of Second Vice President on September 22nd.(10)  

No DR-CAFTA, No-Fear 

The “memogate” scandal exploded when a secret Government-memorandum was published by Semanario Universidad (an independent weekly newspaper which belongs to the University of Costa Rica). On the memo, sent to the Costa Rican President Oscar Arias back in July 29th by Kevin Casas (former Vice President) and Fernando Sánchez (ruling party legislator), they ask the President to enforce some "dirty tricks."(11) 


US Senators at University of Costa Rica

Although the Government officially states that these unusual political strategies suggested on the memo were never put into practice, opponents claim that the effects of some of these guidelines had already become apparent before the scandal erupted, particularly where the memo directs to stimulate fear. The political cortoon above, from a No website, expresses anger over memogate.

Indeed, the use of fear as a political weapon has been very present on the political scene, both on the "yes" and "no" campaigns. In general terms, the "yes-side" points to the fear of loosing jobs, as a consequence of companies pulling out of Costa Rica if the "no-side" wins the elections.(12) On the other hand, the "no-side" points to the fear of loosing sovereignty and stepping into a model of society where money prevails over human values.(13) Some believe that not only free trade is at stake on this referendum election, but the whole future direction of macroeconomic policy.(14)  

The public evidence of the political use of fear as an official government policy, has severely affected the level of trust in the government. It seems to be producing a reverse effect, as people are beginning to seriously question if there are any solid reasons to fear the rejection of DR-CAFTA, considering that the possible negative effects may have been exaggerated. 

Taking part in an optimistic, no-fear reaction to the government-instigated fear campaign, on September 21st, 2007, U.S. Senator Bernie Sanders (Vermont) and U.S. Congressman Mike Michaud (Maine) participated in a DR-CAFTA conference at the University of Costa Rica.(15) They said that if Costa Rica opted out of DR-CAFTA in the referendum, the U.S. and Costa Rica will continue to be friends. This insinuates that the US might not seek economic retaliation, which would allow Costa Rica to continue exporting under the U.S. Government’s Caribbean Basin Initiative.(2) This agreement already grants a preferential status to most Costa Rican products. 

The Yes – No balance shown in recent polls combined with the US senators’ statements at the recent University of Costa Rica conference leaves much up to speculation. To some, it might seem unrealistic for the country to buck the free-trade trend, but Costa Rica has a history of monumental maverick decisions. On December 1st, 1948 Costa Rica became a world pioneer by abolishing its own army. 59 years late, the future of DR-CAFTA will be determined by a free and democratic referendum, empowering the Costa Rican people with the full responsibility of deciding their economic future.

Daniel Henry Thomas is a contemporary music composer, and a student of organic web development. He presently serves as a team member at Foro TLC. A DR-CAFTA related forum in Costa Rica.


(1) Costa Rica to hold referendum on U.S. trade pact:

(2) Caribbean Basin Initiative

(3) Dominican Republic – Central America Free Trade Agreement:

(4) Informe Comisión de Notables:

5) About Oscar Arias:

(6)  About Otton Solís:

(7) Thousands march in Costa Rica to protest CAFTA:

(8) CAFTA Faces New Uncertainty In Costa Rica With Public Referendum

(9) Virtual empate entre el SÍ y el NO

(10)Costa Rica vice-president quits over trade-pact memo:

(11) WOLA
Washington Office on Latin America
English translation of the memorandum:

(12) Companies Eye Pull-Outs:

(13) Activists Pledge to Keep Up Fight Against U.S. Trade Deal

(14) Costa Rica’s CAFTA referendum will decide the future direction of macroeconomic policy.

(15) No se perderá la iniciativa de la Cuenca del Caribe por la no aprobación:

Other Recommended Sources:

Leaked Memo Sparks Scandal

Tribunal Calls for Investigation Into Government’s CAFTA Campaign

Casas Steps Down as Planning Minister, Will Remain Firm As VP

Vice President Casas Will Not Participate in "Si" Campaign

US Congressional Delegation Promotes CAFTA to Abel Pacheco

Guatemalans Say US Free Trade Costly

OneWorld.net Costa Rica Guide

DR-CAFTA: The Downfall of Costa Rica’s Economy?

Why We Reject CAFTA, political essay by Eva Carazo: