US embassy cable - 05SANJOSE2008

UNCLAS SECTION 01 OF 02 SAN JOSE 002008 
 
SIPDIS 
 
SENSITIVE 
 
WHA/CEN 
EB FOR WCRAFT, BLAMPRON 
E FOR DEDWARDS 
WHA/EPSC FOR KURS, LGUMBINER 
STATE PASS TO USTR FOR RVARGO, NMOORJANI, AMALITO 
 
E.O. 12958: N/A 
TAGS: ETRD, ECPS, ECON, PREL, PGOV, SOCI, CS 
SUBJECT: THE PROCESS OF RATIFYING FTAs IN COSTA RICA 
 
1.  (SBU) Summary.  The process to ratify free trade 
agreements such as the United States-Central American- 
Dominican Republic Free Trade Agreement (CAFTA-DR) in Costa 
Rica is not simple.  It is not even clear whether the 
agreement must be passed by a simple or a two-thirds 
majority.  The Assembly members (deputies) will have to 
vote at least twice on the agreement -- once before and 
once after the Constitutional Court reviews it for any 
potential conflicts with the Costa Rican constitution.  The 
entire process will take at least 6 months and possibly 
much longer, and the process can begin only after President 
Pacheco sends the treaty to the Legislative Assembly.  Post 
is hopeful that that will occur this calendar year, but the 
President has not made a decision yet.  End Summary. 
 
 
 
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SIX FTAs DOWN AND ONE TO GO 
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2. (U) The GOCR, with the Ministry of Foreign Trade (COMEX) 
as the lead governmental organization, has negotiated and 
the Assembly has approved five FTAs already: Mexico in 
1995, Canada in 2001, Chile and the Dominican Republic in 
2002, and most recently CARICOM, a group of 12 Caribbean 
nations comprising Antigua and Barbuda, Barbados, Belize, 
Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, 
Saint Lucia, St. Vincents and the Grenadines, Suriname, and 
Trinidad and Tobago.  (Note: In 1973, prior to COMEX's 
existence, the GOCR ratified an FTA with Panama.)  As an 
example of the process, COMEX started negotiations with 
CARICOM on October 22, 2002, and ended on March 14, 2003. 
After President Pacheco signed the agreement on March 9, 
2004, the agreement was sent to the Assembly where it was 
referred to the International Relations and Foreign Trade 
Commission for study.  After voting to send the agreement 
for a vote on the Assembly floor, the Assembly approved the 
FTA in its first debate on the issue on May 9, 2004. 
 
3.  (U) As required by law, the Constitutional Court 
reviews all international agreements, including FTAs, to 
check that all procedural requirements are met and that 
there are no potential conflicts with the Costa Rican 
constitution.  After finding no significant issue with 
respect to the agreement with CARICOM, the FTA, by law, had 
to be voted on a second time.  On August 9, 2005, 41 of the 
48 members present in the Costa Rican Legislative Assembly 
voted final approval of the FTA with CARICOM.  The second 
vote occurred approximately one year after the Assembly 
first started discussions on this issue.  The agreement was 
signed by President Pacheco on August 23, 2005, and will be 
published in the official government gazette, after which 
the FTA will be considered officially ratified. 
 
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A POSSIBLE TIMETABLE FOR CAFTA-DR 
--------------------------------- 
 
4.  (U) Currently Costa Rica remains the only signatory 
country of CAFTA-DR that has not already sent the agreement 
to its legislature.  The Administration is waiting for "the 
appropriate time" to send it for ratification.  Assembly 
President Gerardo Gonzalez from the President's Social 
Christian Unity Party (PUSC) is still pursuing the 
acceptability of a deputy submitting CAFTA-DR to the 
Assembly if the President will not.  COMMENT:  Most 
constitutional experts believe that only the President is 
permitted to submit an international agreement such as 
CAFTA-DR to the Assembly for ratification.  END COMMENT. 
 
5.  (SBU) The Constitutional Court finds problems with many 
bills it reviews and in that likely case would send its 
comments on potential conflicts to the Assembly for 
correction.  If there are significant issues, the agreement 
may be sent back to the International Relations and Foreign 
Trade Commission to study the Court's comments and to 
implement corrective changes, if possible.  With respect to 
CAFTA-DR, Assembly staff sources told Econoff that the 
President of the International Relations and Foreign Trade 
Commission Rolando Lacle (PUSC) has primed the process by 
discussing conduct of the review with Commission members. 
The first vote is expected in approximately three to four 
months, followed by an at least one-month review by the 
Constitutional Court.  In a best-case scenario, a second 
vote would be held approximately four to five months after 
CAFTA-DR is introduced in the Assembly.  (Note: In the case 
of the CARICOM FTA, which was not contentious, 16 months 
elapsed between the first vote in the Assembly and the 
agreement coming into force.  Many Costa Ricans estimate 
that 6-8 months of debate may be needed for CAFTA-DR before 
the first vote.) 
 
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SIMPLE MAJORITY OR TWO-THIRDS TO PASS CAFTA-DR? 
--------------------------------------------- ---- 
 
6.  (SBU) There still exists a question as to whether a 
simple majority or two-thirds majority is required to pass 
CAFTA-DR.  The prevailing opinion from many sources is that 
only a simple majority (half plus one) is necessary in each 
of the two Assembly votes to approve CAFTA-DR.  However, 
there are some political experts who believe that a two- 
thirds majority will be necessary.  Based on information 
provided by a former COMEX official and Legislative 
Assembly staff members, all previous FTAs were passed by 
more than a two-thirds vote, although the stated 
requirement was only a simple majority.  During the most 
recent FTA vote, Assembly President Gerardo Gonzalez issued 
a ruling stating that the approval of the CARICOM FTA 
required only a simple majority. 
 
7.  (SBU) The Constitutional Court reviewed the case and 
did not take issue with his ruling.  FTAs may vary in the 
breadth and detail of the texts.  It appears that the issue 
regarding how many votes will be needed to pass CAFTA-DR 
remains unclear.  A former COMEX official stated that the 
investment-related portions of CAFTA-DR may be an aspect 
that could lead one to believe that a two-thirds majority 
is required.  COMMENT:  Based on information available to 
Post, there may be enough support for CAFTA-DR in the 
current Assembly to pass the agreement even if a two-thirds 
majority is required, especially if most of the PUSC, 
National Liberation Party (PLN), and Libertarian Movement 
Party (ML) deputies vote in favor of CAFTA-DR, as they 
currently say they will.  END COMMENT. 
 
8.  (SBU)  Legislative Assembly staff members insist that 
only a simple majority is required for CAFTA-DR approval 
and cite the most recent FTA with CARICOM as an example. 
Based on information provided by these sources, a review of 
a minimum of three to four months until the first vote is 
expected.  The Constitutional Court review will take at 
least one month, followed by the second vote or, in the 
case of finding significant issues, perhaps another lengthy 
review process. 
 
9.  (SBU) Proponents of requiring a two-thirds majority to 
pass CAFTA-DR refer to a much-disputed 1993 Constitutional 
Court ruling involving the World Bank's International 
Center for Settlement of Investment Disputes (ICSID).  The 
Constitutional Court stated that due to the ceding of 
control of legal remedies to a supra-national body, a two- 
thirds majority was required.  However, according to a 
former COMEX official, this ruling appears to be based on 
an obscure 1960 change to the constitution that was passed 
to discourage closer ties with other Central American 
countries.  The Constitutional Court's decision in that 
case seems not to have been based on precedent and has not 
been repeated during the review of numerous other 
international agreements, such as joining the World Trade 
Organization, in which Costa Rica ceded far broader 
jurisdiction on commercial disputes than is contemplated 
under CAFTA-DR. 
 
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COMMENT 
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10.  (SBU) The Legislative Assembly's history regarding the 
length of time it takes to approve an FTA does not bode 
well for a rapid approval of CAFTA-DR.  The Assembly took 
approximately 18 months to approve the most recent FTA with 
CARICOM.  Post believes that the process to approve CAFTA- 
DR, once it is in the Assembly's hands, will take at least 
six months.  Complicating the CAFTA-DR approval process are 
the Presidential and Legislative elections that will be 
held in February 2006.  The President and entire Assembly 
will be replaced in May 2006 as consecutive terms are not 
permitted under Costa Rica's constitution. 
FRISBIE