El Ice And Cafta

“El ICE” and CAFTA

CAFTA is a commercial settlement signed by the five Central American countries and The United States, it has two parts: a normative, which contains common rules that regulate commerce between the countries that signed the agreement, and another with dispositions about the access of products from one country to another. This second part contains the compromises thatcountries acquired for the gradual elimination of tariffs and commercial restrictions. (CAFTA Intelligence Center)
This paper is made in order to understand in a better way some of the advantages and disadvantages of the free trade agreement between Costa Rica and The United States, focusing in the energy and telecommunications industries.
It is important to know some important facts about CostaRica before we jump into our arguments. With the oldest and most stable democratic government in the region, Costa Rica is considered a Central American success story. The country has a GDP of nearly $50 billion and a population of 4.6 million. Economic growth is forecast to average 4.6% through 2014. The country’s total trade with the world exceeds $20 billion annually. (CAFTA Intelligence Center).* Costa Rica
Latin America & Caribbean (developing only)
Income level:
Upper middle income
GDP (current US$)
$35,831,464,226 2010
Population, total
4,658,887 2010
Source: World Bank Data

Before the settlement was signed in January 1 2009, Costa Rica had a government-run electricity and telecommunications services provider called “El Instituto Costarricense de Electricidad”(ICE), translated as The Costarican Institute of Electricity, born in April 8, 1949 thanks to the Law Number. 449. (Gangas, P. y Retana)
From its beginning, “El ICE” emerged as an autonomous institution, with legal personality and self heritage. The creation of ICE was the culmination of an intense Civil War during the 1940’s, because of the shortage of electric energy, that was happening at themoment, and with the objective of preserving the country’s hydroelectric resources. ("U.S. department of state") Therefore, some of “El ICE” characteristics are: it has a total autonomy, administration, technical and financial independence. They are in charge of the development, execution, production and commercialization of all the public services related to energy and telecommunications, inorder to strengthen the economy and promote the development of the country. In 1963 they had another mission; Establish, improve and extend the operation of services such as, telephony, radiography, and radiotelephony. This starts a new era where “El ICE” is not only in charge of the energy, but also of the telecommunications in the country. Nowadays, “El ICE” has joined forces with other nationalcompanies such as RACSA, in order to satisfy the market necessities, in an evolutionary and competitive way. (Grupo ICE)
However, because of the process of globalization that is been taking over the world, a monopoly such as this one has had some problems, with the approval of CAFTA, top managers understand that they are going to have to compete with companies with better technological resourcesand even though they understand the markets ups and downs they are going to have to work twice as hard to offer high quality services, innovations with less time and also less economical and technical resources.
Even though the future is uncertain, ICE, with more than fifty years of existence, has accomplished multiple achievements without a free trade agreement, such as: the construction ofhydro electrical, thermal, geo thermal plants, the installation of solar panels outside the metropolitan area and the production of Eolic energy, taking advantage of the various sources of energy the country has.
The following graph shows how “El ICE” generates 95% of their electric energy with sustainable sources. (Tico Websites)

Source: siice, ICE and RACSA Engineers and Professionals....