The Central American Free Trade Agreement (CAFTA) was already approved in the other partner countries years ago. Last year, also Costa Rica ratified, however not overwhelmingly, the CAFTA by a referendum. Nevertheless the "complementary agenda", proposing necessary changes in legislation and linked directly with the agreement, is still in Congress (Competition in the mobile telephony, the possibility for private insurance ). Wetter you agree or not with its content, without this agenda there is no CAFTA! The logic would of course be, if CAFTA was aproved in referendum, these projects should pass without further discussion. This is however, not what happened. Endless discussions and tons of motions have slowed down the process and even obligated the government to ask for more time in the ratification process. All other projects in Congress have been delayed because of this!
Instead we should focus on an other agenda, meant to counter the negative effects of CAFTA. Because with that I agree; CAFTA will help some sectors in the country or is even a matter of live or dead (think of the textile industry for example), but for others it could have negative effects. Thus instead of fighting over things we will have to approve anyway, it would be better to discuss in a constructive way about how to confront the future and how to assure that Costa Rica will maintain its position or even improve and especially about how to help sectors who might encounter negative effects of CAFTA.
The text below I wrote some time ago, based on two very interesting publications made by the international center for sustainable Human development (CIDH). This investigation center works together with international organisms, such as the World Bank, the UNDP, the IDB to promote sustainable human development through investigation and dialogue.
Note: In the text below the Complementary agenda refers to an agenda to counter CAFTA's negative effects.
1. Introduction
The Free Trade Agreement between the United States of America and the Central American countries was already ratified in most of the involved countries, except of Costa Rica. In the light of future negotiations over an association agreement with Europe, from which a Free trade agreement will be a part, it is necessary to analyze the possible negative as well as positive effects of the CAFTA in the region.
2. Actual problems
For the Central American countries there exist several problems and challenges it will have to face when ratifying the CAFTA. If these problems are not resolved in time the social disparities could increase and government income could fall, causing a collapse in its social expenses.
- The tributary income of the Central American governments is at this moment much to low (about 14% of its regional GDP) and could be further reduced with free trade agreements, eliminating most tariffs on imports. Unfortunately many of the fiscal reforms planned seem to be too much a compromise and will do little about this problem.
- As a consequence of the limited tributary income, the social expenses are reduced and could be even further reduced. That however, especially, education expenses should be increased to be more competitive in these new realities.
- Effects of economic policy changes have been very limited in time. The growth has been fragile, because of persisting economical problems, such as the fiscal deficit and low growth rate. The economic growth has not been sustainable.
- While unemployment is considered quiet low in most of Central America, the informal labour market is averagely almost 40% and thus problematic. These workers receive mostly very low income and without any social insurance.
- A last, but however, very important problem in Central America is the high social asymmetry and inequality illustrated by a regional GINI coefficient of 0,564.
3. Possible effects
In short term it is difficult to predict any effects of the presence of the CAFTA-agreement. In medium term however we could say that competition will be harder than ever before and that in these circumstances Costa Rican companies should be much more dynamic than they are now.
The group of Central American companies who benefit from the CAFTA is conformed in first place by the "Agribusiness", responsible for 35% of the regional GDP, 70% of export and 50% of employment in the region. Other sectors such as the textile industry, the High Tech industry and some other smaller sectors such as the chemical sector, Tourism, ethnic products and wood production are also considered to be beneficiaries of the Free Trade agreement with the US.
But the list of companies considered as "fragile" under the CAFTA-agreement is much longer. Most industrial firms do not have any experience in more competitive markets. But the biggest problem is with the small, micro and medium sized companies, since they mostly don't have the capacity to compete in these new realities. Most companies in Central America we could classify exactly under this segment. Actually there are only 1% of all Central American companies considered as big non agricultural companies.
An extra difficulty is the existence of opposite analysis over the effects the CAFTA will have on for example employment. Some say the CAFTA would bring more jobs, while others say the contrary. It is however certain that in some sectors jobs will be lost, while in others the CAFTA will bring new jobs.
4. Complementary agenda
A complementary agenda to counter the negative effects and help the most vulnerable is a must. Without these policies disparities might increase. As part of this complementary agenda we could think of:
- An impulse to change the production system into a more sustainable and competitive system, as it is now based on low labor cost, deficient social and physical infrastructure and a not sustainable exploitation of the natural recourses.
- Special support to the little, medium and micro companies
- A Fiscal reform is necessary to counter not only the already existing fiscal deficit, but also to face a possible further decrease of fiscal income, caused by the elimination of many import tariffs
- There must exist a program to stimulate Foreign Direct investment
- It is very important to increase attention and resources for Scientific and technological development.
- Education is one of the most important elements in a process to make the country more competitive. But besides increasing quality of the traditional education, there should also be given more importance to training at the work floor
5. Conclusion
As Central America's first trade partner is still the United States of America, the importance of the CAFTA-agreement should not be underestimated. But it is also necessary to make an integral analysis of both positive and negative effects. A complementary agenda is definitely required to make sure the insertion of the Central American economies in a much more competitive system.
Recently a lot of controversy was caused by the online publication of the anti-Islamic film, Fitna, made by Dutch politician an MP, Geert Wilders. A lot of public figures, including the Dutch Prime Minister and the UN Secretary General, have already condemned the movie. If you have seen the full 15 minutes long video, you might understand that Wilders has brought us only a very populist and incomplete work of investigation. Enough, so I think, for a brief comment.
Another important fact we have to take into consideration, is that the violent content of religious works, is not something exclusively preserved for the Koran. Also the Bible we find a lot of violence, both in the Old Testament and the New Testament. We could actually easily do the same with the Bible, as did Wilders with the Koran. 
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