Costa Rica, officially the Republic of Costa Rica, has a history of government stability unmatched anywhere in Central or South America. For a country approximately the same size as Switzerland, Costa Rica has a weight in world affairs far beyond its size. It was the first country in the world to constitutionally abolish its army in 1949. In 2007 Costa Rica said it wants to be the first carbon neutral country by the year 2021. The government continues to set precedents that if followed by other countries, would lead to a better world for us all.

Costa Rica is a republic with three powers: the executive responsibilities are vested in a President, currently Oscar Aries Sanchez, the legislative power is vested in the Legislative Assembly, and the Judicial power is vested in the Supreme Court.

Political Parties

Costa Rica's prominent political parties are the social democratic Partido Liberación Nacional (PLN), the reformist left/ center-left Partido Acción Ciudadana (PAC), the libertarian Partido Movimiento Libertario (ML) and the Christian democratic Partido Unidad Social Cristiana (PUSC). A number of minor parties have some congressional representation and several new parties participated in the recent elections of 2006, but with limited success.

The most recent presidential elections occurred in 2006. Former President from 1986-1990 and PLN candidate Oscar Arias Sanchez won in the closest election of any kind in modern history. Arias was declared the official winner with 40.9% of the votes against 39.8% for his primary rival. Sanchez has been at the helm during some of the most critical times in Costa Rica's history. He is currently the only head of state with a Nobel Peace prize. He was awarded the prestigious destinction after brokering a 1987 peace deal for the civil war in Nicaragua.

Since returning to office, Sanchez has overseen a long standing public debate over whether to approve or reject CAFTA. The people of Costa Rica eventually followed the lead of their president, and after calling for a national referendum regarding the debate, CAFTA was ratified after a majority voted "YES" in the national referendum late in 2007.

Costa Rica has had the longest standing democracy in all of Latin America, currently at over 150 years. With world renowned and respected political leaders such as Oscar Arias at the helm, Costa Rica is poised to be a successful democracy over the next 150 years and beyond.

CAFTA

Following the largest public debate in the country's history, on 7 October 2007 Costa Rica narrowly voted in favor of ratification of the Central American-Dominican Republic-United States Free Trade Agreement (hereafter CAFTA-DR), with a tiny majority of 51.6% of the population voting "Si".

The treaty is likely to consolidate the trade relations of the Central American (hereinafter defined as CAM) countries with the U.S. With the approval of CAFTA, the access to the U.S. market will become permanent for the CAM countries. Under CAFTA companies in Costa Rica could use inputs from countries other than the U.S. improving their cost competitiveness and profitability. CAFTA would also help some of these countries compete more effectively in the textiles sector against China. At this point in time, it is difficult to quantify the effect CAFTA will have on Costa Rican exports, though anecdotal evidence suggests that the upturn in exports is likely to be modest in the short term. Other main benefits of the treaty would be greater legal certainty and better access for certain products such as sugar, ethanol, dairy, and other agro-based industries, non-traditional agricultural plants, ornamental flowers, and ethnic products.

If CAFTA causes exports and foreign direct investment flows to pick up in the region in response to greater market opportunities, then the treaty will be quite helpful in diversifying Costa Rica's economy and further in the tradable-goods sector. In addition, growth in non-traditional exports could make them less vulnerable to commodity price swings. Higher growth and employment creation resulting from the treaty could also strengthen the democratic institutions in these countries. The addition of CAFTA could help pave the way for broader trade integration of South America with the U.S. helping bolster the Costa Rican economy.