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Costa Ricans go to the polls to vote on US trade deal

Costa Ricans went to vote on a free-trade deal with the US yesterday in a referendum that has split the Central American nation like no other issue in decades.

Opponents fear the Central American Free Trade Agreement (CAFTA) will weaken the country's prized welfare system, among the strongest in Latin America.

Supporters, led by Costa Rican President Oscar Arias say Costa Rica needs to open its economy more since it is a small country with few natural resources.

The White House said on Saturday that if Costa Ricans vote against the CAFTA deal, the Bush administration would not renegotiate the agreement. The White House also suggested it may not extend trade preferences now afforded to Costa Rican products and set to expire next September.

"The United States has never before confronted the question of extending unilateral trade preferences to a country that has rejected a reciprocal trade agreement," White House press secretary Dana Perino said in a statement.

A poll last week in La Nacion newspaper showed Costa Ricans rejecting the trade deal by 55 percent to 43 percent. Other recent surveys showed the country -- home to 4 million people and the most prosperous and stable in Central America -- sharply divided.

The agreement would open state-run sectors like telecommunications and insurance to competition from foreign firms. Opponents say that threatens institutions that have contributed to the country's social stability for decades.

Critics also say the deal will mean a flood of cheap US farm imports and limit the country's sovereignty by taking investment disputes to international arbitration.

"The experiences of other countries that have signed CAFTA have not been good -- a lot of unemployment and a concentration of wealth in the hands of the few," hardware store owner Alex Cordero said.

Costa Rica is the only one of the six Latin American signatories to the trade deal that has yet to ratify it. The deal is in effect in the Dominican Republic, Guatemala, Honduras, Nicaragua and El Salvador.

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.

Costa Rica, which has no army and boasts of pristine beaches and jungles, has enjoyed almost uninterrupted democratic government for over a century and has much better free education and health care than its neighbors.

Arias, who won a Nobel Peace Prize for helping end Central American civil wars in the 1980s, says CAFTA will help Costa Rica stay ahead in the region.

Also see story:
The growth of regionalism in Latin America

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