Bridges Weekly Trade News Digest • Volume 12 • Number 31 • 25th September 2008

Costa Rican Court Stalls CAFTA-DR Implementation

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A ruling of the Costa Rican Supreme Court has thrown into question whether the country’s government will be able to pass legislative reforms required to implement a regional free trade agreement in time to meet a 1 October deadline.

The 4-3 Constitutional Court ruling stated that the Legislative Assembly should not have passed legislative changes affecting the country’s intellectual property regime - the subject of the last bill - without consulting indigenous groups “in accordance with Convention 169 of the International Labour Organisation.” The court ruled that Costa Rican lawmakers must now fix their error and, in accordance with the 1989 UN Convention, pass the bill again.

Following the verdict, the government issued a statement expressing concerns that Costa Rica might not be able to fulfil the commitments required to enter the Central American/Dominican Republic Free Trade Agreement with the US (CAFTA-DR).

The government is “greatly concerned about the impact of this ruling, in particular because of the issue of deadlines that Costa Rica has committed to,” said the statement, according to newswire EFE.

Costa Rica’s Minister of Foreign Trade, Marco Vinicio Ruiz, warned that the ruling undermined the credibility of Costa Rica in the eyes of the other members of the regional trade deal. The export sector argued that the implementation delay risked blocking the creation of 15,000 new jobs.

CAFTA-DR, which was ratified by Costa Rican voters in October 2007, was originally intended to be implemented by the end of February of this year. But that deadline was pushed to 1 October when it became clear that the government would require more time to complete the legislative and regulatory processes needed to enact the agreement. All of the other CAFTA-DR signatories - the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and the US - have already implemented the treaty.

Costa Rican authorities have already begun the process of applying for the implementation deadline to be pushed back even further.

Under the comprehensive trade deal, the US has eliminated tariffs on 80 percent of US exports of consumer and industrial products to CAFTA-DR members, with the remainder of the duties to be phased out over 10 years. The agreement also provides reciprocal access for US products and services.

ICTSD reporting, “Costa Rica: Cómo se consulta a los pueblos indígenas,” TRIBUNA DEMOCRÁTICA, 17 September, 2008; “Costa Rica: Fallo de Sala IV sobre Cafta Ilegó a Asamblea,” EL FINANCIERO, 16 September, 2008; “Costa Rica seeks more time - again - on CAFTA,” TICO TIMES, 16 September, 2008; “Costa Rica court strikes down CAFTA bill for overlooking indigenous,” TICO TIMES, 12 September, 2008; “Costa Rica top court blocks US trade pact approval,” ASSOCIATED PRESS, 12 September, 2008; Gobierno y los 38, frenados por Sala IV en último proyecto TLC,” NUESTRO PAIS, 11 September, 2008.