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PREVIEW: Costa Rica-US free trade pact faces close election

By dpa news     Oct 4, 2007 in Politics
Costa Ricans are preparing to vote in a razor- close referendum on Sunday that could kill Costa Rica's participation in the United States-Central America Free Trade Agreement (CAFTA.)
Costa Rica remains the only CAFTA signatory that has yet to ratify the treaty. Such matters are normally decided by legislatures, and it is unusual to put such an issue to a grass-roots vote.
The US warned Thursday that the country's current preferential trade status expires next year and would not likely be renewed.
An opinion poll published on Wednesday by the Costa Rican daily Al Dia, prepared by the company Demoscopia, showed the "No" sentiment against CAFTA was 50.8 per cent versus 49.2 per cent for - technically a tie.
Another opinion poll made by Unimer and published Wednesday by the online edition of the daily La Nacion said the "No" vote would win by a larger margin - 55 per cent to 43 per cent, with the remaining 2 per cent not answering.
Earlier polls had all shown the "Yes" vote in the lead.
"Heart-attack next Sunday, it smells like a tie," Al Dia wrote Wednesday.
CAFTA was originally negotiated by Washington with the governments of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, later joined by the Dominican Republic.
It was passed by both houses of the US Congress and signed by US President George W Bush in 2005. The deal went into effect in El Salvador, Honduras, Nicaragua and Guatemala in 2006 and in the Dominican Republic earlier this year.
In the nation's first-ever referendum, some 2.6 million Costa Ricans are entitled to vote from 1200-2400 GMT on Sunday, under the watch of 80 observers from the Organization of American States (OAS).
No exit polls are to be allowed, and no swift results are expected given the closeness of the vote.
The Central American country of 4.3 million people has a history of close elections.
Current President Oscar Arias beat his main rival Otton Solis - on an anti-CAFTA platform - by only 1.1 percentage points in February 2006. The election required a manual recount and official results took a month to calculate.
Still, the country - which has no regular army - is considered politically stable, and both sides have promised to work with whatever decision comes out of Sunday's vote.
Even the "No" camp - trade unions, academic and social movements - insists it is not against CAFTA in principle, but is basically demanding a renegotiation of the conditions.
However, United States Trade Representative Susan Schwab made clear that the deal is unlikely to be modified whatever the outcome of the referendum, although she acknowledged the sovereign right of Costa Ricans to choose.
"It is difficult to imagine any US administration renegotiating the current agreement or negotiating a new trade agreement with Costa Rica if this agreement is rejected. The opportunity for Costa Rica to enjoy the benefits of regional free trade is now," Schwab said Thursday.
As it stands, critics say, the treaty will likely increase social inequality and benefit only the wealthy in a country where around 20 per cent of the population lives in poverty and some 6.6 per cent is unemployed.
The government claims the ratification of CAFTA is of great importance. They insist the deal will attract investment to Costa Rica, generate jobs and allow the country to go global.
If voters reject CAFTA, "we will be left in a very fragile and risky situation," Minister for the Presidency Rodrigo Arias warned Thursday.
The Costa Rican economy - based on tourism, agriculture and electronics - already has a large current account deficit. The country currently sends to the United States around 27 per cent of its exports, and obtains close to 41 per cent of its imports from the northern giant.
Schwab warned that Costa Rica's current preferential access to US markets in textiles, tuna and other products, are set to expire next year and would not likely be extended.
"The United States has never faced a situation where one of our trading partners rejects a reciprocal trade agreement with the United States, but continues to seek unilateral trade preferences," she said. dpa vs pr