The CAFTA-DR-U.S. Negotiations on Financial Services: The Experience of Costa Rica
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This task is not easy because the public debate around FTAs tends to become oversimplified and is often colored with emotional pseudonationalistic tones. The Costa Rican experience further indicates the challenges that smaller developing countries face when negotiating with significantly more powerful trade partners. Major superpowers like the United States tend to design negotiation templates in accordance with their own negotiation objectives. This technique allows the superpower not only to respond to the interests of its domestic constituents but also to maintain a coherent framework of rules and disciplines and concessions vis-à -vis its trade partners worldwide. In this context, when a smaller developing economy like Costa Rica deals with a superpower like the United States, the main challenge is to convince the latter to deviate from its negotiation template and to adjust it to the particular needs posed by the smaller economy’s domestic context. Obviously, the task is not easy, not only because most countries negotiating with the superpower pursue the same objective, but also because any deviation from the negotiation template has the potential to become an inconvenient precedent for the superpower in future negotiations with more important trade partners. Thus, smaller economies must be particularly persuasive, creative, and constructive in addressing their specific needs in the negotiation process. In this regard, one of the main challenges for negotiators from smaller economies is to establish a credible and professional working relationship with their negotiation counterparts. Such a relationship, in turn, requires not only strong arguments, but also sufficient preparation and the ability to transfer that into credibility and trust at the other side of the negotiation table. The Costa Rican experience in the CAFTA-DR-U.S. negotiations illustrates that despite the enormous differences in bargaining power when dealing with a global superpower, with adequate preparation smaller economies can find and take advantage of the limited maneuvering space to pursue their negotiation objectives.
Annex 7A: Principal Laws Governing the Financial Sector in Costa Rica Table 7A.1 enumerates the major laws governing Costa Rica’s financial sector.