Controversy over US Retaliation - Pelosi, the Ambassador, and the Secretary of Commerce:

The day after Congressmen Sanders and Michaud gave their press conference here, the Costa Rican ambassador to the United States, Tomás Dueñas gave an interview in La Nación, in which he accused Sanders and Michaud of not supporting development and growth in the Central American region. He then admitted that while in principle, a renegotiation of the treaty may be possible, it is very unlikely that this could take place right now with the election process and the loss of trade promotion authority by president Bush. With this he contradicted what has been the official position of the Arias government, namely that renegotiation was simply never a possibility and that it is merely a myth created by Ottón Solís. He went on to argue that Sanders and Michaud do not represent the majority in Congress and the the CBI (Caribbean Base Initiative) benefits are not secured for CR in case of NO vote on Sunday.

On Saturday, Democratic leaders Nancy Pelosi and Harry Reid wrote an open letter to ambassador Dueñas, strongly rejecting his claim that there could be CBI repercussions.

"We understand thatit has been asserted by some that there is a link between the referendum vote and Costa Rica's continued participation in the CBI. We are not aware of any connection between the two. Participation in the CBI is not conditioned on a country's decision to approve or reject a free trade agreement with the United States, and we do not support such a linkage."

But this did not seem enough to stop the controversy. The following day, La Nación quoted Republican Congressman Jim McCrery as saying that no member country of the ICC can be assured that its benefits are eternal. Undersecrataty of Commerce, John Verenau is quoted as saying that the consequences of a NO vote are uncertain. And Dueñas called the letter “vague.”

On Tuesday, La Nación again portrayed the CBI benefit as threatened. In a phone interview with democratic Congress woman Linda Sanchez, they got her to admit that the executive had in principle the power to exclude any country from the CBI. She said: “I don’t have this section in front of me right now, but the thing is that this power is based in the executive branch and I cannot guarantee that the President will not use it in whatever form he likes,” according to La Nación. She emphasized, however,that the CBI benefits do not depend on CAFTA ratification. Finally, Republican leader Roy Blunt stated in a written declaration that there is nothing that commits the US to maintaining the benefits of the ICC for any country eternally and accuses the Democrats of trying to dissuade the Costa Rican people from voting for the CAFTA.

Finally, Susan Schwab, Secretary of Commerce, gave an interview to La Nacion today, in which she repeated that certain CBI benefits (textiles and tuna) are possibly threatened, since the CBI does indeed expire next year, and the US has never confronted a situation in which an CBI partner has refused to sign a trade deal. She called a possible renegotiation unlikely. So the question arises, who is right, Sanders and Michaud, or Schwab? Both, in some way, actually.

The way I understand it, is this: The CBI itself does not expire next year. But, in 2000 the US voluntarily added tuna and textiles to the CBI benefits and gave it a preliminary validity of eight years. In response, a spokessperson for the tuna industry threatened with relocation to El Salvador in case of a rejection of CAFTA, while a spokesperson for the textile industry said he di not see a way for the industry to continue to exists after the its CBI benefits expire.