December 9, 2016 Print

Sugar cane production is a big business in Costa Rica, but the country’s regulatory regime and protectionist trade restrictions prevent competition and keep prices high. Atlas Network partner Instituto de Políticas Públicas y Libertad (IPPL) seeks to educate the Costa Rican public about public policies that expand and retract freedom within the country, including threats to free competition in the sugar cane industry, the relationship between taxation and labor, and outsourcing.

“This year, the IPL successfully conducted about a dozen academic research papers on diverse areas, such as education, the domestic sugar cane industry, social security, taxes, and public policies,” said Diego Vincenzi León, an IPL researcher. “We built important alliances with foundations and NGOs, which made a huge academic contribution, and we lead the editorial board of the university journal Rhombus.”

In one of its recent publications, “A de Facto Monopoly: The Sugar Market in Costa Rica,” IPL has found discrepancies between the country’s constitutional principles that are supposed to ensure free competition in Costa Rica and the Agricultural League of Sugar Cane’s (LAICA) authority to regulate acquisition, importation, exportation, storage, and marketing of sugar produced in Costa Rica — including its the ability to set national prices for the sale and resale of sugar at separate stages of commercialization. Article 46 of the Political Constitution of the Republic of Costa Rica prohibits private monopolies, as well as laws that limit the freedom of agriculture, industry, and trade.

“But the truth is that there is no legal basis for the activity of LAICA,” wrote study author Lic. Vicente Calatayud Ponce de León (translated from Spanish). “Consequently, because of its status as a legal entity under private law, in its exercise of marketing activities to promote industry image, and in setting governance standards, it must necessarily be subject to the antitrust provisions advocated in the Constitution.”

According to LAICA’s website, the laws that created and reorganized the league grant the organization its own special legal status, in both a public and private capacity, allowing it to operate both as a regulatory power and a commercial entity.

“That is precisely what has happened and is happening to LAICA, which in practice operates as a monopoly, not only de facto but also de jure,” Calatayud continued. “Because the same law established it without saying, protecting, or creating a mixed regime, by alleging a nonexistent public interest, with gross violation of constitutional mandates. In Costa Rica it is common to say that ‘if it walks like a dog, eats like a dog, and barks like a dog ... it is a dog.’  And once LAICA’s operation is analyzed, its monopolistic character is undeniable, which detracts from the principles in the letter and spirit of its Constitutive Act, and that they themselves declared intended.”

The analysis provided in “A de Facto Monopoly: The Sugar Market in Costa Rica” is only one of several thorough pieces published by IPL this year, and the organization hopes to expand its operations so that it can help combat the region’s tendency toward active government involvement in the economy.

“All the steps taken by the IPL during this year are leading us to take a more active role in the promotion of liberal values into the vast public policy discussion held in Costa Rica,” Calatayud said. “The results have been enthusiastic and well received by our audience. However, many challenges remain in Costa Rica ... IPL looks forward to creating an international and collaborative network of liberal think tanks to spread freedom in Costa Rica and Central America.”