No country has ever had a national referendum on a "free trade" agreement before - which is not surprising since most of these agreements wouldn't be approved by the citizenry. Bill Clinton couldn't even get a majority of his own party in Congress to vote for NAFTA in 1993, and it's been downhill for these types of agreements ever since.
So Costa Rica - the region's richest and most democratic country - will be setting a precedent on Sunday with its referendum on CAFTA (the Central America Free Trade Agreement), which was negotiated in 2004.
Costa Ricans might want to watch out for a repeat of presidential elections last year, where current President Oscar Arias squeezed out a narrow (1.1 percent) victory over progressive candidate Ottón Solís, who criticized CAFTA in his campaign. In that campaign, erroneous polls reported by the media showed Arias with a large lead of 11-19 percentage points. This led to a record low turnout at the polls. Costa Rica could very well have a different president, and a different trade policy, if not for the impact of this false polling.
The latest polls in Costa Rica give an advantage to the "yes" vote, but things have been moving rapidly towards "No" since an embarrassing high-level government memo was leaked a few weeks ago. The memo, as the Los Angeles Times described it, "outlined a campaign of dirty tricks intended to sway voters." This included telling mayors that their cities would "not get a penny from the government for the next three years" if they did not deliver a majority of voters for CAFTA. In the words of the memo, the government also needed to "stimulate fear" among the voters, including "fear of the loss of jobs."
The Bush Administration joined the campaign to "stimulate fear," with the U.S. Ambassador threatening that Costa Rica could lose some of it existing access to U.S. markets if the voters reject CAFTA. This led US Congresswoman Linda Sánchez to remind the Ambassador's boss, Secretary of State Condoleezza Rice, that such interference in Costa Rica's electoral politics violates US, Costa Rican, and international law. Senate Majority leader Harry Reid and House Majority leader Nancy Pelosi also weighed in with a letter stating clearly that Costa Rica's access to U.S. markets under the Caribbean Basin Initiative are not conditioned on acceptance of any trade agreement.
In fact, the threats from the US government, and repeated by the Costa Rican proponents of CAFTA, are empty. There is only a small portion of Costa Rica's trade preferences that Congress would have to renew next year. It is politically inconceivable that the Democratic majority in Congress - which voted against CAFTA when it was approved here - would move to punish Costa Rica for its voters having rejected the same agreement.
Despite the intimidation, Costa Ricans brought a record 100,000 people (equivalent to seven million in the US) into the streets last weekend for a "No" vote. They have good reasons to reject CAFTA: they do not want their farmers wiped out by subsidized grains and other agricultural products from the U.S. They also have a strong environmental movement that vehemently objects to provisions in CAFTA - like NAFTA - that would give corporations new legal rights to challenge environmental laws. And Mexico's post-NAFTA economic performance - about a third of its pre-1980 growth - is less than inspiring.
Of course "free trade" is a marketing slogan rather than a description of the actual policy that is up for a vote. These agreements - including CAFTA - increase some of the most costly barriers to international trade (such as in pharmaceuticals) while lowering others (e.g. for subsidized US agricultural exports).
A "No" vote in Costa Rica would deal another blow to the Bush Administration's foreign commercial policy, which has already suffered numerous defeats: including the collapse of their proposed "Free Trade Area of the Americas;" the stalled talks at the World Trade Organization (WTO); and the administration's loss of "fast track" authority to negotiate new agreements with minimal congressional input.
Costa Rica is one of the richest countries in Latin America, and has a well-developed democracy. That democracy will be put to a new test with this referendum.