WORLD TRADE
ORGANIZATIONG/LIC/N/3/CRI/2
18 June 1998
(98-2480)
Committee on Import Licensing Original:  Spanish
REPLIES TO QUESTIONNAIRE ON IMPORT LICENSING PROCEDURES1
Notification under Article 7.3 of the Agreement on Import Licensing Procedures2
COSTA RICA
The following notification, dated 7 May 1998, has been received from the Permanent Mission
of Costa Rica.
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Notification under Article 7.3 of the Agreement on Import Licensing Procedures
COSTA RICA
Outline of systems
1. In connection with its accession  to GATT in 1990, Costa Rica undertook to eliminate all
existing import licensing requirements within four years.  This commitment was completely fulfilled
at the end of 1994 with the entry into force of the Law on the Implementation of the Uruguay Round
Agreements, No. 7473 of  20 December 1994.  Article 1 of that Law provides specifically for the
elimination of existing licensing requirements a nd in general for the elimination of any similar
procedure requiring permits, prior authorization or approval for the importation of goods.
Accordingly, import licensing requirements of a commercial nature were entirely eliminated.Furthermore, in conformity with its co mmitments under the Uruguay Round Agreement on
Agriculture, Costa Rica has established tariff quotas for certain agricultural commodities for whichnon-tariff import barriers were tariffied.  These quotas are not administered through import licences,
like those which existed prior to December 1994, but through an innovative market mechanism
requiring certain administrative procedures which, though they have already been notified to our
trading partners and the WTO, are described again below.
Thus, in Costa Rica, there is only one import licensing system currently in force with concrete
applications restricted to specific situations consistent with our international obligations.
Purposes and coverage of licensing
2. The tariff quota administration system is governed by the Regulation on the Allocation of
Tariff Quotas.  In compliance with the provisions on the tariffication of import licensing for
                                                     
1See document G/LIC/3, Annex, for the Questionnaire.
2This notification covers the period 1996 and 1997.G/LIC/N/3/CRI/2
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agricultural products in the Uruguay Round Agr eement on Agriculture, current access and minimum
access tariff quotas are administered through a procedure involving commodity exchange certificates
authorizing importations within the indicated tariff quot a at a lower tariff rate than for imports outside
of that quota.
This procedure consists in a transparent mechanism whereby licences (certificates) are
awarded on the basis of a market system.  They are awarded through the commodities exchange to the
importer or exporter making the best import bid, a process which does not involve any payments that
might distort the price contained in the sale and purchase contract for the item in question (apart from
the fees charged for the actual exchange transactions).  The licence does not consist in an
authorization to import per se  (not required for imports which normally pay only the MFN tariff in
force), but in an authorization to import on the basis of the preferential tariff (less than the MFN)
assigned to the quota.
These transactions may take place on any commodity exchange authorized to operate within
the country.  Only the Bolsa de Productos Agropecuarios S.A.  (Stock Exchange for Agricultural
Commodities Ltd.) is currently in operation.  In principle, as soon as the procedure is initiated,
potential parties to the exchange transaction (foreign exporter or domestic importer) may at any timeestablish, through a member of the exchange, the terms of the sales contract, provisionally laying
down the price, the quantity and the specifications.  Prices are quoted DDP (delivery duty paid). The
preliminary contract is then put out to public auction, in which process the commodities exchange
may award the contract to any party (exporter or importer) improving on the price conditions set out
in the preliminary contract. If no better terms are offered, the preliminary contract is accepted and theimporter is entitled to an import licence for the product in question, a licence which is provided in the
form of a certificate.  The quantity of goods thus transacted is deducted from the tariff quota for that
commodity, the amount of which, as explained below, is known to the parties.
Official control of the quota is ensure d by conducting a cross-control between the
commodities exchanges and the Ministry of Agriculture and Livestock of the amount transacted.  The
licence holder must actually have imported the goods within a maximum time-limit published by the
Ministry of Agriculture.
These commodities exchange transactions, both individually and jointly, are subject to a
maximum quantitative limit equal to the maximum amount that can be imported in accordance with
the tariff quota. The quotas are allocated periodically.
3. The mechanism draws no distinction as to th e origin or provenance of the imported goods.
Indeed, it seeks to ensure free trade and non-discrimination, and consequently, the goods may come
from any country in the world.  The aim is to control the quantity of imported goods and not their
origin.
4. The mechanism is designed to control the quantity of imports, and not their value.
Consideration was given to other methods for the allocation or sale of licences by auction, but
these were rejected for two reasons:  first, because in Costa Rica, the collection, administration andallocation of the funds raised through the sale of licences would require the drafting of a special law
and the moment was not considered right for this option;  second, because charging for a licence
would distort the import price of the goods.
5. The Regulation on the Allocation of Tariff Quotas is contained in Executive
Decree 23914-COMEX-MAG of 22 December 1994, published in Official Gazette No. 246 of
27 December 1994 and revised by Executive Decree 24599-COMEX-MAG of 9 August 1995,
published in Official Gazette No. 176 of 18 September 1995.  Article 5 of the Law on Implementation
of the Uruguay Round Agreements, No. 7473 of 20 December 1994, provides the legal basis for theseG/LIC/N/3/CRI/2
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decrees.  Licensing is statutorily required.  Costa Rican legislation does not leave the designation of
products subject to licensing to administrative discretion;  the goods concerned are those tariffied in
accordance with the rights and obligations negotiated in the Uruguay Round.  The Executive Branch
is entitled under Law 7473 to abolish or amend li censing procedures without legislative approval.
Finally, a COMEX-MAG Executive Order scheduled the distribution of quotas in 1996 and
established the tariffs applicable.
For 1997, the Executive Branch changed the legal format used since 1995 for putting the
system into effect from an Executive Order to an Executive Decree, which gave it greater legal
standing.  This is now issued not just by the Ministry of Foreign Trade and the Ministry of Agriculture
and Livestock but with the participation of the Ministry of Economy, Industry and Trade;  normally,
the distribution of quotas is scheduled over the year and the tariffs applicable established, but on thisoccasion the distribution was scheduled not only for 1997 but also for 1998.
Procedures
6.I Quotas not allocated to any country or person in particular, but are placed at the disposal of
the economic operators in general, who may partic ipate in the transaction through the commodities
exchange.  The transaction does not involve any special formalities, and no prior applications are
required for licences.  Nevertheless the economic operators must work through a member of the
exchange, who is required to present a "transaction order", in which the operator authorizes the
member of the exchange to carry out the transaction on his behalf.  Consequently, there is no need topublish information concerning allocation of quotas and formalities or to provide any information on
that subject to possible importers, governments, export promotion bodies or trade representatives.
While the overall amounts of the quotas and the date of their opening is made public
beforehand, publication of the amount allocated to each country or each importer is not required, sincethe mechanism is not based on any kind of prior allocation.  The opening of quotas is announced in
the Official Gazette ten working days in advance.  A public announcement is also made through the
most widely-read newspapers.  The law does not provide for any exceptions or derogations from the
licensing requirement.
II. The size of the quotas was determined on the basis of the methodology and commitments
established during the negotiation of the Uruguay Round Agreement on Agriculture
(Schedule LXXXV for Costa Rica).  For those products, quotas were determined for the entire period
of application of the commitments contained in the Agreement (1995-2004). Article 4 of the
Regulation on the Allocation of Tariff Quotas authorizes the Ministry of Agriculture and Livestock to
determine the intervals at which tariff quotas are made available to the public.  The interval may vary
according to the characteristics of each product.  The total or partial opening of a quota for a givenperiod is made public ten days in advance.  The licence or certificate  awarded by the commodities
exchange must be used within the time-limit specified  in the document itself, and is not transferable.
The licence holder must effect the imports during the period of validity of the licence, failing which
he may not apply that licence to a quota subsequently opened for the same product.
III. The mechanism functions as described above.  In no circumstance may licences be allotted
partly or only to the domestic producer of like goods.  Like all other economic operators domestic
producers are entitled to participate in the exchange procedures, subject to the same conditions.
Article 14, paragraph 3 of the Regulation stipulates that any buyer or seller, whether a
physical or legal person, who has firmly committed himself to such a transaction and subsequently
breaks his contract without effecting the imports, or who, contrary to his responsibilities, fails to
effect the imports within the set time-limit, shall be barred from participating in the negotiation of
quotas either directly or through a third party for a period of two years from the date of theG/LIC/N/3/CRI/2
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transaction.  The same provisions shall apply to those who cancel a transaction to which they have
firmly committed themselves.  In order to apply these measures, the Ministry of Agriculture and
Livestock shall institute ordinary administrative  proceedings, ensuring due process of the law for
those affected.
The Regulation does not authorize the addition of unused allocations for a given year, in full
or in part, to quotas for a succeeding year, and it is not possible to do so.  However, if the amount of a
quota for a given year is broken down into periods within that year, then unused quotas may be
transferred between periods.
Under Article 18 of the Regulation, the commodities exchanges are required to keep a
detailed register containing each transaction carried out by them, and to publish the information
periodically in the Official Gazette in summary form.
IV. Bids may be submitted to the exchange as soon as the quotas are opened, i.e. ten working
days following the announcement of the quotas.
V-VI. This question does not apply to the procedure described.VII. As there are no prior applications, nothing has to be submitted to any administrative entity.VIII. The allocation of quotas to a given importer is based on market criteria.   A quota is awarded
to the importer offering the best price.  There is no maximum amount to be allocated beyond thelimits of the quota.
IX-X. This question does not apply to the procedure described.XI. There are no products for which licences are issued only on condition that goods should be
exported and not sold in the domestic market.
7. Not applicable:  the system described deals exclusively with quantitative limits.8. This mechanism does not involve applications for licences.  Those who do not submit the best
offer do not receive allocations.  Because of the nature of the trade transaction, there is no need either
for the commodities exchange or for the public institu tions involved to give reasons for refusal, nor
can the result of the proceedings be appealed.  There is an understanding that the award will not go to
someone who has not submitted the best offer.
Eligibility of importers to apply for a licence
9. Any national or foreign physical or legal person has the right to participate in the negotiation
process through a member of the exchange without prior registration or authorization.  The only
condition is that he must participate through a duly authorized member of the exchange.
Documentational and other requirements for application for a licence
10. No application is required in order to engage a member of the exchange to participate in a
transaction.  This is done on the basis of a private arrangement between the economic operator and the
member of the exchange.
11. To clear the goods for importation, the customs authorities require the ordinary international
trade documents and the certificate awarded by the commodities exchange in which the transaction
took place.  That certificate entitles the licence holder to import a given quantity of goods at a
preferential tariff rate during a pre-established period.G/LIC/N/3/CRI/2
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12. There is no licensing fee or administrative charge.
13. The issue of a licence is not subject to any deposit or advance payment.Conditions of licensing
14. For each case, the Executive Branch may set a maximum time-limit for the importation
of the goods in question.  That limit, together with the conditions for its extension, is indicated in
the decision which periodically opens the quotas.  In 1996, the time-limit was two months, extendable
for a further period of two months.  In 1997, the maximum time-limit was established up to the first
two months of 1998.
15. The sanctions applied are described in paragraph 6.III above.
16. Licences are not transferable.17. There are no other conditions attached to the issue of a licence.Other procedural requirements
18. There are no other administrative procedures, apart from licensing and sanitary or
phytosanitary requirements.
19. The banking authorities provide the foreign exchange required for the payment of imports
immediately.  No licence is required in order to obtain foreign exchange.  There have been no
problems of scarcity of foreign exchange thus far.  There are no special formalities for obtaining
foreign exchange.
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