The Ties that Bind

“Costa Rica,” Luí­s Guillermo Solí­s Rivera told TBY, “is one of the most open economies in the world.” Currently partnered with 2.5 billion people through its 14 free trade agreements, the country is acutely aware of the benefits of a well-integrated economy. As the Costa Rican economy continues to reach new levels of development, it is renewing its commitment to regional integration with the long-term goal of forming mutually beneficial partnerships and becoming a leader in the region.

Costa Rica’s most important regional alliance is arguably its participation in the Central American Integration System (SICA). Created by the Protocol of Tegucigalpa in December 1991, the SICA’s founding members were Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, and Panama. Belize and the Dominican Republic joined in 2000 and 2013, respectively, and Brazil, Mexico, Chile, China, Spain, Germany, and Japan are observers. The goal of SICA is to achieve the Central American goals of peace, liberty, democracy, and development through collaboration and sustainable decision-making. It includes a host of committees that represent different interests (including business, labor, and indigenous populations) that want to find solutions to regional problems and advance shared interests. Some of the key issues facing SICA are regional security, strengthening the fiscal system, and working toward a regional system of economic and social justice. In recent years, it has started creating new linkages with global powers; in 2014, for example, India hosted an 18-member SICA delegation to discuss trade and information technology connections between the two regions.

Costa Rica’s participation in SICA has not always been without conflict. For example, it is not a member of the Parlacen, SICA’s parliamentary body, because of its belief that the latter is an overly bureaucratic organization that offer scant benefits in return for its high costs. In early 2016, President Solí­s chose to take a step back from SICA over conflicts over how best to deal with Cuban migrants, after more than 6,000 of them were stranded in Costa Rica in 2015 when Nicaragua, Belize, and Guatemala closed their borders. In addition to institutional gridlock, Costa Rican officials had also been irritated by the lack of resources dedicated to regional issues within the organization. After meetings with regional presidents in July 2016, Solí­s announced he was satisfied with the proposed reforms and rejoined the regional body. Beginning in January 2017, Costa Rica will assume the pro-tempore presidency of SICA, and Solí­s will doubtless continue working to strengthen and reform it.

Costa Rica is also looking into the possibility of membership in two key global organizations: the Pacific Alliance and the Organization for Economic Cooperation and Development (OECD). Of the two, OECD membership appears the more likely in the short term. Costa Rica’s government has been aggressive about its interest in joining the 35-member organization. “Costa Rica approached the ECD seven years ago,” Minister of Foreign Trade Alexander Mora told TBY. “Since then, it has embarked upon a process with six main phases. Costa Rica’s reputation and capabilities have shown that the country, as a pioneer in cutting-edge policy, has an immense potential to contribute to the OECD.” The OECD formally invited Costa Rica to begin the accession process in 2015, and it is currently in the fourth of six stages in this process—the completion of which is currently one of the government’s top trade priorities. Mora, for one, is hopeful this will result in improvements to Costa Rica’s trade platform, and President Solí­s shares this optimism, noting that Costa Rica is ahead of OECD standards in certain regards: “[The process is] progressing well thus far… the organization is happy, advances have been significant, and there are areas in which Costa Rica is far beyond what might be expected of a country our size with an economy as relatively vulnerable. In clean energies, for example, we exceed the OECD.”

The Pacific Alliance, a Latin American trade bloc comprised of Chile, Colombia, Mexico, and Peru, is another regional association Costa Rica is considering entering. More explicitly focused on free trade than the OECD, the Pacific Alliance includes provisions that allow for eased travel and the integration of stock exchanges. Currently a candidate country in the process of attaining full membership, Costa Rican industry has expressed some concerns about joining. One possible barrier to entry is Costa Rica’s fiscal deficit; as Solí­s explained, “If we do not have the financial sustainability that the alliance requires, we cannot make the most of the advantages an FTA has to offer, nor can we compensate for the negative effects that these agreements can have upon certain sectors of the economy.” Manuel Antonio González Sanz, Minister of Foreign Affairs and Worship, concurred, telling TBY, “We are still interested in becoming full members of the Alliance… however, we do have concerns and we also have other problems that need to be addressed first.” With a government that understands the benefits of increased regional integration, membership appears likely within the next few years, but Costa Rica is well aware of the importance of a stable domestic foundation that will allow new regional agreements to work for it as well.