WORLD TRADE
ORGANIZATIONG/STR/N/4/CRI
25 February 1999
(99-0736)
Working Party on
State Trading EnterprisesOriginal:  Spanish
STATE TRADING
New and Full Notification Pursuant to Article XVII:4(a) of the GATT 1994 and
Paragraph 1 of the Understanding on the Interpretation of Article XVII
COSTA RICA
The following communication, dated 10 February 1999, has been received from the
Permanent Mission of Costa Rica.
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REPLIES TO THE QUESTIONNAIRE ON STATE TRADING
(Period from 30 June 1997 to 30 June 1998)
I. ENUMERATION OF STATE TRADING ENTERPRISES
In Costa Rica there is only one enterprise covered by the provisions of Article XVII of the
GATT 1994.  This is the Refinadora Costarricense de Petróleo S.A. (RECOPE) which has a
monopoly on the importation, refining and wholesale distribution of crude oil, fuels derived from oil,
asphalt and naphtha.  RECOPE is a state trading enterprise which was established as a joint stock
company.  All its shares are held by the State.  It  is a legal person regulated, as far as its commercial
activities are concerned, by private law.
The list of products marketed by RECOPE is as follows:
Product Tariff heading
Caño Limón 27.09.00.10.00
Lagotreco 27.09.00.10.00
Tiajuana 27.09.00.10.00
Vasconia/Cusiana 27.09.00.10.00
Guafita 27.09.00.10.00
Aviation gasoline 27.10.00.52.90
Diesel 27.10.00.73.20
Regular gasoline 27.10.00.55.10
Gasoline Ron 95 27.10.00.55.20
Gasoline Ron 95 Ox. 27.10.00.55.20
Jet fuel 27.10.00.59.10
LPG 27.11.11.00.00
Fuel oil 27.10.00.72.00
MTBE 29.09.49.00.90
Naphtha Mix 27.10.00.64.00
Heavy naphtha 27.10.00.63.00G/STR/N/4/CRI
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II. REASON AND PURPOSE
The Government of Costa Rica considers that the marketing of fuels is a strategic national
interest, so that State control or participation in this activity is very important.  State intervention is
aimed at guaranteeing the best price and the best quality for products needed by the consumer on the
domestic market.  Given the size of the Costa Ri can economy, dividing up the domestic market could
lead to inefficient production and marketing, and for that reason a single enterprise works better.  Astate enterprise is able to take proper account of the needs and responsibilities relating to the country's
energy programme and general economic development.
State intervention makes it possible to exercise control over fuel price policy.  Fuel prices
have a powerful impact on the stability of the prices charged for a wide variety of other goods and
services.  In Costa Rica, even a slight change in fuel prices is enough to stoke up inflation.
Consequently, the State intervenes in order to perform an important social function, namely tomaintain macroeconomic stability.
RECOPE has the exclusive right to manage  the State monopoly on the importation, refining
and wholesale distribution of crude oil and derivatives, including fuels, asphalt and naphtha, in order
to satisfy domestic demand.
This right is derived from Law No. 5508 of 8 April 1974 and Law No. 7356 of
24 August 1993 (ratification of the above-menti oned State monopoly administered by RECOPE).
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE
The monopoly held by RECOPE consists firstly in the exclusive right to import and refine all
crude oil and oil by-products, and secondly in exclusive wholesale distribution rights for oil and oil
by-products.  In this connection, in accordance with Executive Decree No. 24943-MINAE of
13 January 1996, wholesale sales are defined, for purposes of establishing the distribution monopoly,
in terms of the following minimum volumes:
Product Minimum volume (litres)
Regular gasoline 1,900
Premium gasoline 1,900
Diesel 1,900
Kerosene 1,900
Bunker oil 1,900
Heavy diesel 1,900
Asphalt 1,900
Asphaltic emulsion 1,900
LPG 757
Aviation gas 1,900
Jet fuel 1,900
Light naphtha 1,900
Heavy naphtha 1,900
IF-380 25,000
IF-180 25,000
Article 4 of the Regulation under Law No. 6588 (law regulating the activity, objectives and
other aspects of RECOPE), provides that RECOPE  may sell oil and oil derivatives abroad, provided
that domestic market requirements are guaranteed.  In addition to what was said above, it should be
pointed out that, with regard to hydrocarbon exploration and production (national oilfields), Article 36
of the Law on Hydrocarbons provides that such production shall be used as a matter of priority toG/STR/N/4/CRI
Page 3
cover domestic requirements and the national reserve.  These requirements are determined by the
Executive, through the Ministry of Natural Resour ces, Energy and Mining, and every contractor is
obliged to sell to the State the amount of outp ut required to satisfy domestic market needs.
Accordingly and in view of the monopoly managed by  RECOPE, the output of national oilfields must
be sold to RECOPE on a priority basis.
Furthermore, Article 6 of Law No. 6588 of 30 June 1981 provides that RECOPE may
participate individually or jointly in tendering procedures organized by the Directorate-General of
Hydrocarbons for the exploration and production of hydrocarbons, in accordance with the provisions
of the Hydrocarbon Law.
RECOPE imports, processes and markets all the crude oil and derivatives consumed
domestically in Costa Rica and exported (this country does not produce oil).  On the basis of its yearlydemand estimates, RECOPE buys crude oil and finish ed products on the international market.  Import
quantities are determined on the basis of local demand and the refining and storage capacity of
RECOPE's plants.  Export levels are set principally in the light of storage capacity and the size of
shipments.
With regard to import prices and resale prices for imported products, RECOPE purchases
crude oil and oil by-products on the international market on the basis of strict  market criteria. These
are determined by reference to international market prices in the Caribbean and on the United Sates
Gulf Coast.
RECOPE does not negotiate long-term contracts;  import contracts usually have a one-year
limit and prices and certain other conditions are negotiated each year in the light of price fluctuations
in the international oil market.
Article 4 of Law No. 5508 provides that, given RECOPE's public enterprise status (carrying
with it certain general prerogatives or privileges wh ich it enjoys exclusively or in conjunction with all
other public entities) the Ministry of Finance is authorized, on the State's behalf and under its
responsibility, to give RECOPE the guarantee(s) it  needs to obtain financing for its working capital,
provided that the total amount does not exceed US$5 million.  To that end, Central Bank approval
must be obtained and loans must be negoti ated with leading banks and institutions.
Lastly, RECOPE has an obligation, which also ta kes the form of a right, to engage in an
activity related to its principal, statutory and routine corporate activity, when situations arise requiring
the efficient and effective supply of fuels in the national interest.  This obligation and right is derived
directly from Article 5, first paragraph of Law No. 5598, which in turn comes within the framework
of the strictly public tasks assigned to RECOPE.  For example, RECOPE would be required to engage
in wholesale distribution activity when there is a need for an effective supply at that level and
development of the activity is affected by serious or unexpected problems.
In conclusion, as regards market structure, RECOPE - as was said earlier - has a monopoly on
the importation and domestic distribution of petroleum products, since it has the exclusive right to
import and private traders are not legally authorized to import any of these products.  The situation isdifferent with regard to exports, since any natural or legal person who buys the product from
RECOPE can resell it for export to another country.  However, this type of transaction is not at all
common.G/STR/N/4/CRI
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IV. STATISTICAL INFORMATION
The Annex to this notification contains three statistical tables with comparative figures on
imports, exports and domestic activities, respectively, set out in terms of quantity and value.
Information is provided for individual products.
V. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE
There has been foreign trade, as described above.G/STR/N/4/CRI
Page 5ANNEX
TABLE I
State Trading:  RECOPE
Statistical Information:  Imports
Product description Tariff headingQuantity imported
by the state trading
enterprise
(MT)Average import
price
($/MT)Representative
average sales price
on the domestic
market
($/MT)Increase in import
prices compared
with 1996
($/MT)Domestic production
(MT)
Caño Limón 27.09.00.10.00 174,742 138.45 - -9.89 -
Lagotreco 27.09.00.10.00 294,869 140.28 - -14.08 -
Tiajuana 27.09.00.10.00 53,829 93.41 - -8.64 -
Vasconia/Cusiana 27.09.00.10.00 74,922 128.59 - - -
Guafita 27.09.00.10.00 41,233 127.05 - - -
Av Gas 27.10.00.52.90 2,728 409.41 463.32 -6.21 -
Diesel 27.10.00.73.20 423,308 167.97 213.78 -16.77 177,962
Regular gasoline 27.10.00.55.10 40,316 240.26 319.06 +42.48 -
Gasoline Ron 95 27.10.00.55.20 326,770 234.40 - +10.96 -
Gasoline Ron 95 Ox. 27.10.00.55.20 14,827 237.68 330.48 +3.04 -
Jet fuel 27.10.00.59.10 74,445 202.24 242.56 -18.32 28,409
LPG 27.11.11.00.00 49,083 271.92 297.60 -22.80 1,621
Fuel oil 27.10.00.72.00 33,221 109.28 108.46 -12.64 302,396
MTBE 29.09.49.00.90 13,400 312.48 - -8.32 -G/STR/N/4/CRI
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TABLE II
State Trading:  RECOPE
Statistical Information:  Exports
Product description Tariff headingQuantity exported by the
state trading enterprise
(MT)Average representative
price on the domestic
market
($/MT)Average export price
($/MT)Domestic production
(MT)
Av Gas 27.10.00.52.90 236 463.32 526.95 -
Diesel 27.10.00.73.20 10,681 213.78 216.93 177,962
Regular gasoline 27.10.00.55.10 15 319.06 387.34 -
Gasoline Ron 95 27.10.00.55.20 46 - 431.23 -
Jet fuel 27.10.00.59.10 20,651 242.56 301.20 28,409
LPG 27.11.11.00.00 52 297.60 330.96 1,621
IFO-380 27.10.00.72.00 86,441 - 109.09 86,441
IFO-180 27.10.00.72.00 1,543 - 118.24 1,543
Source for Tables I and II:  International Programming Department, RECOPE, October 1998.G/STR/N/4/CRI
Page 7TABLE III
State Trading:  RECOPE
Statistical Information:  Domestic Activities
Product
descriptionTariff headingPurchases on the
domestic market (in
cubic metres)Domestic production
(in cubic metres)Sales on the domestic
market
(in cubic metres)Domestic consumption
(in cubic metres)
Regular gasoline 27.10.00.55.10 - - 323,240 No data available
Diesel 27.10.00.73.20 - 198,056 680,598 No data available
Kerosene 27.10.00.61.00 - 7,654 11,194 No data available
Búnker oil 27.10.00.72.00 - 305,290 208,705 No data available
Asphalt 27.14.90.00.10 - 30,810 23,333 No data available
Heavy diesel 27.10.00.71.00 - - 3,312 No data available
Emulsion 27.15.00.00.12 - 242.56 6,901 No data available
LPG 27.11.11.00.00 - 3,092 90,776 No data available
Jet fuel A-1 27.10.00.59.10 - 36,133 96,997 No data available
AV Gas 27.10.00.52.90 - - 4,571 No data available
Heavy naphtha 27.10.00.63.00 -            7,292 (MT) 2,591 No data available
Premium gasoline 27.10.00.55.20 - - 282,006 No data available
Light naphtha 27.10.00.64.00 - - No data available
Source for Table III:  Customer Service Director ate, Marketing Department, RECOPE, October 1998.
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