Costa Rica Free Trade Agreement –Good, Bad and the Ugly

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    San Jose [TCRN] – Costa Rica is struggling with the private sectors onslaught since the opening of the markets with Central American Free Trade Agreement (CFTA) or the TLC.

    Before the trade agreement the pace of Costa Rica development moved at the speed of ‘Tico time’. Before FTA, mañana didn’t mean tomorrow, it just meant ‘not today’. But at the current rate the market has been opening up to the private sector and the rate that the Costa Rica government is signing new trade agreements (especially with China), maybe Costa Rica should step back and take a breath, because they may wake up mañana and not recognize their country.

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    As state run capitalism dissolves into the private sector, Costa Rican’s can expect period where business and trade out pace governance.

    The Good is that the private sector will open markets, create competition, bring new products and services, as well as a large amount of foreign investment money that will be used in a variety of positive ways, such as infrastructure improvement, public security, labor wage increases, etc.

    Today private sector dollars, businesses and choices are flooding the markets. An example is ICE a once slow ponderous giant holding all the cards now finds itself with $40+ million loss last year because competition moved in and found a elementary take-over solution – all the competition had to was have a thing called ‘customer service’.

    The Bad – Many small local operators in many areas will ultimately suffer. One example is the local rice or bean farmers, soon to be a thing of the past as imports with lower priced products (at least initially) flood the market, driving the little guy out of business. Once the little guys can’t afford to stay in business, the monopoly price hikes will kick in, and Tico’s will be reminiscing, “remember when it only cost 600 colones for kilo of rice?”

    The Ugly – misappropriations, scandal, ‘lost money’, back room negotiations and deals. Some are pointing to port of Limon deal with large Holland company APM which doesn’t seem to make sense as it out competes the government operations, and will put many out of work. Another example is the controversial $900 million joint venture with China’s state oil company CNPC for the expansion of the refinery at the Caribbean port of Moin, Limon Costa Rica. Money is changing hands at an unprecedented pace, but governance seems to be lacking.

    Summary – Free Trade is expensive.

    The Costa Rica News (TCRN)
    San Jose Costa Rica

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