Costa Rica approves DR-CAFTA in referendum

For the first time in the history of Costa Rica, adherence to a free trade agreement has been subject to a referendum.

The referendum took place on October 7 2007. Just over 51% of voters supported the ratification of the Dominican Republic-Central America Free Trade Agreement with the United States (DR-CAFTA). The close vote reflected the polarization of Costa Rican society on the issue.

Costa Rica was the only one of seven member countries that had not approved the treaty due to political disagreements among decision makers, which led to the organization of a referendum on the matter. The other member countries - El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic and the United States - have been enjoying the benefits of the treaty since March 2006.

The DR-CAFTA will be ratified in Costa Rica as a result of the referendum. The Costa Rican legislature must now amend or enact a series of laws on or before March 1 2008 in order to comply with the terms of the DR-CAFTA. Heated debates are expected in the coming months, as the legislature is divided on this issue. Many of the new or amended laws would open the state-owned monopolies in the telecommunications, energy and insurance sectors.

Adherence to the treaty implies significant legislative changes to improve the protection of trademark rights. National laws must now be amended to include, among other things:

• protection for sound and olfactory marks;
  
  
• protection for appellations of origin; and
  
  
• new criteria for the assessment of damages.

Moreover, it is no longer mandatory to register licensing agreements for such contracts to be enforceable. The Trademark Law Treaty must be ratified and best efforts shall be made to ratify the Madrid Protocol.

The United States had already announced that it would be reluctant to negotiate a new agreement if Costa Rica did not approve the DR-CAFTA. This would have complicated joint free-trade negotiations with the European Union and Central America.

José Roberto Romero, Romero Pineda & Asociados, San Salvador