COSTA RICANS NARROWLY APPROVE CAFTA-DR IN REFERENDUM
Costa Ricans this week voted narrowly in favour of a free trade agreement with the US and five Central American nations, Costa Rica became the last of the six to ratify the accord, and the only one to do so by referendum.
President Oscar Arias, the country’s most prominent supporter of the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR), hailed the vote as a victory for domestic industries, which may otherwise have risked losing preferential access to the US market.
The referendum passed narrowly, garnering 51.58 percent of the votes. Opponents were quick to call for a manual recount, with 97 percent of polling stations reporting, all signs pointed to an approval of the treaty.
Costa Rica is projected to benefit from greater access to the US market, particularly in apparel manufacturing.
Critics claim that CAFTA-DR would likely flood the Costa Rican market with subsidised US farm imports and potentially endanger the welfare state Costa Rica has enjoyed for the past six decades.
The accord will end Costa Rica’s state monopoly on telecommunications and insurance. Although sceptics complained that the status quo was working well, others argued that opening the door for competition would give Costa Ricans lower prices and better services.
Leading up to the referendum, Washington made it very clear that a rejection would lead to no revisions of the agreement. US Trade Representative Susan Schwab went so far as to say that if the treaty was voted down, there was no guarantee that the US would renew current unilateral trade preferences for Costa Rica under the Caribbean Basin Initiative.
A 2005 World Bank study suggests that CAFTA-DR could boost growth and help nearly 500,000 people in the region out of poverty by 2010.
In addition to the US, Costa Rica’s CAFTA-DR partners are the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua.
ICTSD reporting; "US Eyes Next Step after Costa Rica Backs Trade Pact," REUTERS, 8 October 2007; "Costa Rica to Join Free Trade Agreement," ASSOCIATED PRESS, 9 October 2007; "Victory for Costa Rica," WASHINGTON POST, 9 October 2007.
ISRAEL AND EGYPT AMEND THREE-WAY TRADE DEAL TO BOOST EXPORTS TO US
Egypt and Israel on 9 October agreed to reduce the minimum percentage of Israeli components necessary for certain Egyptian products to gain duty-free access to the US, under a three-way trade agreement.
The decision amends a 2004 deal under which Washington promised to allow goods produced in selected ‘qualified industrial zones’ (QIZs) in Egypt unrestricted access to US markets under the US-Israel free trade agreement, as long as they contained a certain percentage of Israeli components (See BRIDGES Weekly, 15 December 2004). The threshold for eligibility has now been lowered from 11.7 to 10.5 percent.
Egypt has also asked for 8 more QIZs to be created, mostly in the southern parts of the country. Israel has indicated support for this request, and both countries have a signed a letter requesting the US to approve the new territories.
Eli Yishai, the Israeli industry, trade and labour minister, and Rashid Mohammed Rashid, his Egyptian counterpart signed the amendment in Cairo.
The agreement, along with similar initiatives in Jordan, is part of a US-led initiative to promote peace through trade and development in the region. Egyptian clothing and textiles exports to the US have increased dramatically over the years. Press reports indicate that approximately 203 companies currently benefit from the QIZs, compared to only 54 in 2005, with exports since then worth $1.275 billion. Israeli exports to Egypt have amounted to $78 million worth of goods to date in 2007, $8m more than last year.
The Egyptian minister said that the protocol helped attract foreign investors to Egypt, and boosted the the performance of companies and industries. He also added that this would not be the last reduction.
The amendment and the original three-way agreement have been controversial. Not only are many Egyptians reluctant to fully normalise relations with Israel, the agreement’s requirement for Israeli content might be deemed discriminatory.
Israel, Egypt sign amended economic agreement-summary," EARTHTIMES.ORG, 10 October 2007; "Egypt, Israel to amend trade agreement," INTERNATIONAL HERALD TRIBUNE, 8 October 2007; "Egypt, Israel to ratify trade agreements," JERUSALEM POST, 9 October 2007; "Egypt and Israel sign amended trade agreement," THE JERUSALEM POST, 9 October 2007; "Egypt, Israel sign deal easing access to US market," REUTERS, 9 October 2007; "Israel and Egypt to boost Exports to US," MIDDLE EAST TIMES, 9 October.