Costa Rica election another blow to US trade pact

By John McPhaul

SAN JOSE, Costa Rica (Reuters) – A U.S. free trade pact
with Central America, already delayed by a legal wrangle, has
run into further trouble at presidential elections in Costa
Rica where voters punished the main pro-trade candidate.

Costa Rica’s electoral board began a recount on Tuesday of
the vote from the weekend, which ended with a near dead heat
despite opinion polls showing free trade advocate Oscar Arias
would win easily.

Arias, a former president who strongly backs the
U.S.-Central American Free Agreement, or CAFTA, won just over
40 percent of votes on Sunday, on a par with main rival Otton
Solis who wants to renegotiate the deal.

A winner should be announced in two weeks. If it turns out
that no candidate garners minimum support of more than 40
percent, a new round of voting will be held on April 2.

“Even if Arias wins, it is still bad news for CAFTA because
Costa Ricans said, ‘Hold on, this is something we have to look
at,”‘ said Michael Lettieri of the Council on Hemispheric
Affairs think tank in Washington.

Costa Rica is the only signatory not to ratify the pact, a
spearhead of Washington’s influence in Latin America where
leftist leaders have increasingly challenged U.S. policies.

Arias’s National Liberation Party failed to win an outright
majority in Congress on Sunday, making it more difficult for
Costa Rica to join the rest of the region in dropping import
tariffs for U.S. goods.

President Bush had to launch a lobbying blitz to convince
Congress to approve CAFTA last July.

Then, implementation of the trade deal was delayed from
January 1 by U.S. demands that its partners tighten their rules
on cheap drugs that compete with U.S. pharmaceutical firms.

Washington says Central America will eventually come on
board.

“I hope we’ll have at least two countries ready on March
1,” U.S. Trade Representative Rob Portman told reporters in
Washington. Those are Nicaragua and El Salvador, he said.

RENEGOTIATE THE DEAL

Costa Rican candidate Solis, a centrist, supports the
accord in general but wants to renegotiate clauses that many
Costa Ricans fear put the small nation at a disadvantage
against subsidized U.S. agriculture imports and giants of U.S.
industry.

Workers have staged strikes and protests against attempts
to open the state telecoms and electricity monopoly to
competition, a plan that would be accelerated under CAFTA.

A social democrat, Nobel Peace laureate Arias backs
business interests. Arias, scion of a rich coffee farming
family, helped end civil wars in Central America in the 1980s
and is Costa Rica’s most famous son.

He fell short on Sunday partly because middle class voters
feel squeezed by efforts to create an export-based economy,
said Alberto Canas, 85, a founder of Arias’ party who later
jumped ship to help Solis found the Citizen’s Action Party.

“This was a country of small property owners, small farmers
and small businesses,” he said. “By opting for big industries
and big banks, the government has abandoned the small
entrepreneurs and they are the ones who protested on Sunday,”
he said.

Much of Latin America has shifted to the left in recent
years but four left-wing parties won very few votes in the
Costa Rica election.

Nevertheless, analysts say the country has also taken a
turn against U.S.-backed free market policies, known as the
Washington consensus.

“It was a vote against the model inspired by the Washington
consensus,” said analyst Rodolfo Cerdas of Costa Rica’s Center
of Political and Administrative Research.

“It’s a model that has promoted the growth of exports and
the enrichment of those in the export sector and impoverishment
of middle-class sectors,” he said.

(Additional reporting by Doug Palmer in Washington)