Democrats Win Congress but Costa Rica’s US Tariff Stays

Democrats won control of the US Senate in Tuesday’s midterm elections and were projected to take the House, leaving President Donald Trump with a divided government for the last two years of his term. The shift does not, on its own, change the 12.5% tariff on most Costa Rican goods, which rests on executive authority rather than an act of Congress. The Associated Press reported late Tuesday that Democrats had retaken the Senate after wins that included Texas, where James Talarico defeated Ken Paxton, Ohio, where Sherrod Brown beat Sen. Jon Husted, and North Carolina, where Roy Cooper won an open seat. NBC News, CBS News and Decision Desk HQ projected that Democrats will also control the House. The AP had not called the House as of late Tuesday night. Early exit polls cited by CBS News put Trump’s approval among midterm voters at 38%, which the network said is on track to be the lowest for a president in a midterm election. The new Congress takes office in January. The tariff Costa Rica faces comes from investigations the Office of the US Trade Representative (USTR) opened on March 12 into 60 economies under Section 301 of US trade law. The agency concluded on June 2 that Costa Rica had not banned, or effectively enforced a ban on, imports of goods made with forced labor. The additional duty took effect on July 24, with Costa Rica placed at the top of a range of 10% to 12.5%. Coffee, pineapple, bananas, orange juice, plant cuttings, fruit and vegetable seeds and certain refined sugars remain excluded. Textiles and apparel are exempt for Costa Rica and the other members of the CAFTA-DR trade agreement. Medical devices and most other manufactured goods were not among the published exclusions. Because Section 301 authority lies with the president and the USTR, a Democratic majority cannot lift the duty by a vote alone. Any law restricting it would need Trump’s signature, or a two-thirds majority in both chambers to override a veto, and Trump has said he will use his veto to block Democratic initiatives. Control of both chambers does give Democrats oversight tools, including hearings, subpoenas and leverage over spending bills. Those can raise the political cost of trade measures without repealing them. The same limits apply to the other US policies that most directly affect Costa Rica. Immigration enforcement, visa rules, deportation flights and entry requirements such as the health declaration for air travelers that began Nov. 3 are all run by the executive branch. Costa Rica’s own route to a lower rate runs through Washington’s forced-labor finding rather than Capitol Hill. Decree 45941-H-MTSS-COMEX, published Sept. 28, orders the Ministry of Foreign Trade (Comex) and the Ministry of Labor and Social Security to create an official list of goods at risk of being made with forced labor and requires importers to check their purchases against it. The two ministries have 60 days from the decree’s entry into force to set the parameters for the first list. Comex will handle that work under new leadership. Arianna Arce Camacho is serving as interim Foreign Trade Minister after President Laura Fernández removed Indiana Trejos on Oct. 28, the same day Fernández announced Costa Rica would not join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The decrees formalizing the change were published Tuesday. For exporters, the calendar has not changed. The duty remains in place, the new Congress will not be seated until January, and any revision of Costa Rica’s rate will depend on how the USTR judges the forced-labor measures the government is now putting in place.