Costa Rica Doesn’t Need CAFTA to Benefit from U.S. Trade Preferences

By Public Citizen's Global Trade Watch

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Costa Rica benefits from provisions of the Caribbean Basin Initiative (CBI), which is used as shorthand to refer to three interconnected U.S. trade initiatives: the Caribbean Basin Economic Recovery Act (CBERA) of 1983; CBERA’s conversion into a permanent preference program with additional benefits with the same name in 1990; and the Caribbean Basin Trade Promotion Act (CBTPA) of 2000, which provides additional benefits for countries meeting certain criteria. News reports have indicated that some U.S. and corporate officials are trying to pressure Costa Rica into ratifying the NAFTA-modeled Central America Free Trade Agreement (CAFTA) in the upcoming October 7 popular referendum on the false basis that duty-free access for Costa Rican exports to the U.S. market will disappear because U.S. preference programs for Costa Rica will expire.

However, as this report explains, CBI is a permanent program, with no expiration date, that can only be terminated by an express act of the U.S. Congress to revoke the legislation that made CBI permanent in 1990. Furthermore, only a tiny fraction of Costa Rica’s trade depends on aspects of CBIthat require renewal, and these aspects of the program are also very popular and likely to be renewed,for reasons that are explained in the report. The non-linkage of CAFTA with CBI was most recently confirmed in letters written by Senate Majority Leader Harry Reid (D-Nev.), House Speaker Nancy Pelosi (D-Calif.), and Rep. Linda Sánchez (D-Calif.) of the House Foreign Affairs Committee in September 2007. All have supported preference program renewal in the past, along with the majority of Congress. Their letters are included as an appendix to this report.