Costa Ricans approve free-trade pact

The Bush administration and business groups yesterday hailed Costa Rica’s narrow approval of an a free-trade agreement with the United States — handing the White House a hard-won victory despite early polls that predicted the measure’s defeat.

With 98 percent of the vote counted in Sunday’s referendum, 51.6 percent of Costa Rican voters backed the Central American Free Trade Agreement (CAFTA) and 48.4 percent voted against it, according to the country’s electoral tribunal.

“Reason prevailed,” said John Murphy, vice president for international affairs of the U.S. Chamber of Commerce.

“Simple facts, such as the likely disappearance of more than 50,000 jobs in the near term if CAFTA had been defeated, proved very convincing,” he said.

Failure of the agreement would have signaled to business that Costa Rica was not interested in outside investment, Mr. Murphy said.

The agreement sharply divided the country between supporters who believed it would bring economic development, and opponents who feared it would harm farmers and small businesses.

The results contradicted most earlier polls, raising the suspicion of opponents who said they will wait for a mandatory recount, set to begin today, before recognizing the referendum results.

The hand recount, required by Costa Rican law, can last no longer than two weeks.

Of the six Latin American countries that signed the pact, Costa Rica is the only one that has not ratified it. CAFTA is in effect in the Dominican Republic, Guatemala, Honduras, Nicaragua and El Salvador.

The White House said that the pact would improve that country’s access to the U.S. market, attract U.S. investment and link Costa Rica to other countries in the Western Hemisphere. Pact opponents object to requirements that the country open its telecommunications, services and agricultural sectors to a possible flood of cheap imports from the United States.

The White House fought a bruising political battle to get the deal ratified by Congress in 2005, when it passed the House by just two votes.

Commerce Secretary Carlos Gutierrez, in Uruguay for trade and economic talks, said yesterday that with their endorsement of the pact, “the people of Costa Rica have said ‘si’ to opportunity, ‘si’ to investment and ‘si’ to a prosperous future.”

Douglas Goudie, director of trade policy for the National Association of Manufacturers, noted that bilateral trade agreements with Peru, Panama and Colombia are still pending in Congress and expressed hope that progress could be made to integrate the hemisphere “into a single free-trade zone.”

However, Thea M. Lee, policy director in the legislation department of the AFL-CIO, said trade agreements are controversial in developing countries, which is “contrary to the received wisdom in Washington that everybody in these countries is lined up waiting to get these free-trade agreements.”

Ms. Lee noted the closeness of the vote and said that with other agreements in the wings, “I think people should tread carefully and not assume that these trade agreements are universally welcome.”

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