This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 SAN JOSE 002389 
 
SIPDIS 
 
SENSITIVE 
 
WHA/CEN 
EB FOR WCRAFT, BMANOGUE 
EB/CIP FOR WAYALA 
E FOR DEDWARDS 
WHA FOR WMIELE 
WHA/EPSC FOR KURS, LGUMBINER 
H FOR JHAGAN 
STATE PASS TO USTR FOR RVARGO, NMOORJANI, AMALITO 
 
E.O. 12958: N/A 
TAGS: ETRD ECPS ECON PREL PGOV SOCI CS
SUBJECT: COSTA RICA AND CAFTA-DR 
 
REF:  (A) SAN JOSE 02008 
      (B) SAN JOSE 01828 
 
¶1.  (SBU) Summary.  President Pacheco continues to say he 
will send the United States-Central American-Dominican 
Republic Free Trade Agreement (CAFTA-DR) to the Legislative 
Assembly.  The question remains "When?"  Nicaragua's recent 
passage of CAFTA-DR has brought increased focus by the media 
and interested parties on the lack of movement on 
ratification of the agreement in Costa Rica, with CAFTA-DR 
proponents stating that each day that passes without moving 
forward on CAFTA-DR, Costa Rica suffers economically and 
loses business to the other countries that have already 
ratified the agreement.  Opponents claim that Costa Rica 
should continue the national dialogue on this issue and the 
other countries' decisions to ratify the agreement should 
have no effect on Costa Rica's ratification process.  Some 
point out with pride that Costa Rica has always benefited 
from taking a different path than the rest of Central 
America.  End Summary. 
 
¶2.  (SBU) After the Nicaraguan Congress passed CAFTA-DR on 
October 10, 2005, Costa Rica became the last signatory 
country to not have yet ratified the agreement.  More 
notable is the fact that President Pacheco continues to 
delay in sending the agreement to the Legislative Assembly 
to start the lengthy ratification process (Ref A).  His 
recent comments about when he will send CAFTA-DR to the 
legislature have been vague, occasionally inconsistent, and 
always noncommittal.  Based on recent statements made by 
President Pacheco, he may send CAFTA-DR to the Assembly as 
early as October 20 when he returns from the 15th Ibero- 
American Summit in Salamanca, Spain, or he may wait until 
the sure-to-be-contentious bills to strengthen the Costa 
Rican Institutes of Electricity (ICE) and Insurance (INS) 
are introduced and passed by the Assembly.  The latter 
would surely mean that CAFTA-DR would not be submitted 
before the next Administration takes office in May 2006. 
The most recent press statement from the Office of the 
President states that he will submit CAFTA-DR to the 
Assembly at the same time the bill to strengthen ICE is 
submitted. 
 
¶3.  (SBU) Reportedly the bills to strengthen ICE and INS 
are under review by the Administration and will be 
submitted to the Assembly within the next several weeks. 
The Administration is careful to not give exact dates as 
prior submission time period estimates have come and gone. 
Another important legislative project that the GOCR says it 
will submit to the legislature is the Telecommunications 
Act which should propose laws to comply with the 
telecommunications portion of CAFTA-DR - to gradually open 
the telecommunications market to competition.  All of these 
legislative projects and CAFTA-DR will be intensely debated 
in the Assembly and because of the Costa Rican legislative 
process, CAFTA-DR likely will require at least six months 
or more to ratify. 
 
¶4.  (SBU) To date, the only CAFTA-DR-related legislation 
that has been submitted to the Assembly is that associated 
with funding the complementary agenda to CAFTA-DR.  This 
concerns  Assembly approval for three loans from the Inter- 
American Development Bank, the World Bank, and the Central 
American Bank for Economic Integration (Ref B) to fund 
initiatives to increase the competitiveness of Costa Rican 
businesses and improve infrastructure. 
 
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COMMENT 
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¶5.  (SBU) The situation in Costa Rica regarding 
ratification of CAFTA-DR has not changed since Nicaragua 
passed the agreement.  Pacheco may send the agreement to 
the Assembly as early as the end of October or he may wait 
until the Assembly passes the still-to-be-submitted 
proposed laws to strengthen ICE and INS.  Costa Rica, 
arguably, has the most work to do with regard to the 
changes that need to be made not only to comply with CAFTA- 
DR but also to make fundamental changes to ensure Costa 
Rica can take advantage of the opportunities offered by the 
agreement.  Regardless of when he sends CAFTA-DR to the 
Assembly, the Costa Rican process to approve CAFTA-DR will 
be lengthy and it is very likely that the agreement and 
associated legislative projects will not be approved until 
sometime after the next President and Legislative Assembly 
members take office in May 2006. 
FRISBIE