Costa Rica appears to seal CAFTA

mexico city -- Costa Rican voters gave an almost-certain thumbs up Sunday to a controversial free-trade agreement with the United States in a national referendum that had bitterly divided that Latin America nation.

With 90% of the votes counted, 52% were backing the Central American Free Trade Agreement, with 48% rejecting it, according to official results.

The apparent approval of CAFTA capped a roller coaster couple of weeks that saw support for the pact build, plunge, and then rise again amid a dramatic series of events that included a leaked memo from pro-CAFTA government officials advocating dirty tricks, the resignation of a high-level Costa Rican official and public pressure from the White House for Costa Ricans to support the agreement.

The agreement would eliminate nearly all trade barriers, such as tariffs and quotas, among the U.S. and the other six participants over the next 10 years.

Pro-CAFTA forces were jubilant Sunday night, dancing and cheering when the election tribunal announced early results of the referendum.

Alfredo Volio, head of the “Si” (or “Yes”) campaign, was ecstatic. The agreement will bring the divided country together again, he said.

“Now we’re one whole,” Volio said. “There is no ‘Yes.’ There is no ‘No.’ Only Costa Rica.”

Costa Rica is the first nation to put a trade agreement to a national referendum. President Oscar Arias said it was an important moment for Costa Rica’s democracy because it showed that “decisions don’t have to be made with the edge of a sword . . . but that they can be made in a voting booth, with an X on a ballot.”

CAFTA opponents retreated behind closed doors, vowing to review the results before making a decision about what to do next.

Many blamed a campaign of dirty tricks by CAFTA backers in the nation and unrelenting pressure from the United States for scaring voters into backing the deal.

“Scare tactics worked,” said Mark Weisbrot, co-director for the Center for Economic Policy and Research in Washington who opposed CAFTA.

In recent days, the White House and office of the U.S. trade representative issued statements informing Costa Rican citizens that the administration wouldn’t negotiate a new agreement if CAFTA was rejected. They also cast doubt on whether existing trade preferences on Costa Rican products that expire in September 2008 would be extended.

College student Jose Vargas of San Jose, Costa Rica, said that the recent statements from the U.S. government that there would be no possibility of renegotiating CAFTA caused him concern. “Really, it makes you think,” he said.

Costa Rica was the only nation in the seven-member pact that hadn’t ratified the agreement, which includes the United States, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua.

The deal dismantles most trade barriers among the partners within a decade. Many consider the accord to be a Central American version of NAFTA, the landmark 1994 trade agreement between the U.S., Canada and Mexico.

Costa Rica’s approval would be a big win for the Bush administration, which has touted CAFTA as a model for multilateral pacts it would like to replicate worldwide. Trade experts say a “no” vote by Costa Rica -- a stable, free-market democracy and close ally of the United States -- would reverberate across the region.

CAFTA supporters say it’s a way to bullet-proof trade access to the United States, the destination for about half of Costa Rica’s exports of coffee, fruit, apparel and high-tech products.

Critics feared it would mean a flood of cheap U.S. farm imports and damage state-run companies, endangering funding for Cost Rica’s welfare state.

The agreement exposes state-run sectors such as telecommunications and insurance to competition from foreign firms.

“It seriously hurts the poor and it has benefits for the wealthy class,” said 29-year-old student Luis Sanchez.

The United States has struggled recently to push its trade agenda in Latin America. A planned Free Trade Area for the Americas has stalled largely because of opposition from regional giant Brazil.

The referendum split Costa Rica, a coffee-producing nation of 4 million people known for its political stability in a region that was torn by civil wars in the 1980s.

In the largest march in Costa Rica in years, about 100,000 people filled the streets of the capital last weekend to protest the trade pact.

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marla.dickerson@latimes.com

Special correspondent Peter Krupa in San Jose, Costa Rica, contributed to this report.