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Mar 30, 2018 | 19:53 GMT

2 mins read

Costa Rica: Sunday's Presidential Election Will Be a Vote for Trade Too

The Big Picture

The South American free trade bloc known as the Pacific Alliance is expanding, but Costa Rica may decline to join the bandwagon. Costa Rica initially showed an interest in the alliance but later expressed concerns that joining would hurt local farmers. Other Central American states in a similar position may also resist joining the bloc, which would have to focus its expansion efforts more resolutely on South America in response. Stratfor covers South American trade on the topic page "South America: Split Decisions on Trade."

Costa Ricans will choose a new president April 1, and the decision will have important implications for trade. Presidential candidate Carlos Alvarado of the ruling center-left Citizen's Action Party (PAC) opposes joining South American free trade bloc the Pacific Alliance, while Fabricio Alvarado of the conservative National Renewal Party (PRN) supports joining it. The disagreement boils down the impact joining would have on a key domestic constituency: farmers.

Costa Rica first expressed interest in joining the Pacific Alliance in 2014. But under President Luis Guillermo Solis, the Costa Rican government pumped the brakes on the accession process, partly because of growing fears that joining the alliance would hurt Costa Rica's agricultural sector by reducing tariffs on imports. For this reason, any PAC support for joining the Pacific Alliance would be risky. 

If the country does join the alliance and it turns out to hurt Costa Rican agricultural producers, the party could pay the price at the polls later on.

Whatever happens in Costa Rica, it could affect how other Central American countries – in most of which large segments of the population work in agriculture — treat the Pacific Alliance as well. Guatemala, Honduras, and El Salvador, all countries largely amenable to free trade agreements, will likely resist opening their borders completely to South American produce. This means that unless the Pacific Alliance makes exceptions for agricultural products, it can probably count out Central American participation for the long term. Instead, it will begin pressing for closer integration with South America's other trade bloc, the Common Market of the South, to expand its influence and participation.

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