Recently, the Colombian Senate endorsed a free trade agreement (FTA) with Costa Rica following a second reading. As part of the treaty, Costa Rica has agreed to immediately cease tariffs on 74 percent of industrial products arriving from Colombia. Tariff reductions on an additional 24 percent of products will be phased in over the course of the next 15 years. The remaining two percent of the tariffs will be eliminated if Costa Rica proves to be successful in joining the Pacific Alliance. Products included as part of the immediate tariff relief include paints, fertilizers, automobiles, pharmaceuticals, toys, auto parts, and some clothing and textiles. Eventually, cosmetics, agro-chemicals, wood products, appliances, furniture, and footwear will become tariff-free.
Last year, bilateral trade between Costa Rica and Colombia reached more than $394 million, an increase from $239.4 million just a decade ago. Costa Rica has established ambitious plans to become a full member of the Pacific Alliance, but in order to do so will need to sign FTAs with all of the current members, which includes Peru, Mexico, Colombia, and Chile.
Costa Rica’s Entry into the Pacific Alliance Bloc
Consultation regarding Costa Rica’s entry into the Pacific Alliance began in late June of last year. The Ministry of Foreign Trade launched a formal consultation regarding the process of joining the trade bloc in an effort to clear up any doubt, particularly from the industrial and agricultural sectors, both of which have expressed concerns regarding the matter. Costa Rica had previously signed a declaration of intent to join the bloc earlier in the year. The consultation period ran until the end of last year.
Gaining entry into the alliance will require Costa Rica to allow more commercial leeway with member nations, which is one reason why the industry and agriculture sectors have expressed opposition. Despite such opposition, Costa Rica is continuing to move forward with plans to become a member of the current five-nation bloc, as evidenced by the signing of the recent FTA between Colombia and Costa Rica.
Costa Rica Courting Other FTAs
Costa Rica is certainly no stranger to the concept of free trade agreements. Recently, the president of Costa Rica met with the president of the People’s Republic of China to discuss a number of topics. The two countries have grown increasingly closer over the past several years and signed a FTA in the summer of 2011. The China-Costa Rica FTA makes Costa Rica China’s second-largest Central American trading partner.
In addition, Costa Rica has also set its sights on Qatar as a potential Middle East gateway for a variety of trade-related and economic initiatives. Minister of Foreign Trade Alexander Mora recently traveled to Qatar for a two-visit. During his visit, Mora met with HE the Minister of Economy and Commerce Sheikh Ahmed bin Jassim bin Mohamed al-Thani. Mora stated that that the meetings between the two countries focused on the export of Costa Rica’s grains, tropical fruits, meats, flowers, and other produce via Qatar to the Middle East.