WORLD TRADE  
ORGANIZATION  WT/REG218/M/1 
8 October 2010 
 (10-5171) 
Committee on Regional Trade Agreements 
Fifty-eighth Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN  
COSTA RICA AND MEXICO, GOODS AND SERVICES 
 
Note on the Meeting of 27-28 September 2010  
 
Chairman:  Mr A. Suescum (Panama) 
 
 1. The meeting was convened in document WT O/AIR/3598/Rev.1, dated 17 September 2010. 
2. Under Agenda Item C.VII of its 58
th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) considered the Free Trade Agreement between Costa Rica and 
Mexico (hereinafter the 'Agreement'), goods and services.  
3. The Chairman  said that the Agreement had entered in to force on 1 January 1995 and had been 
notified by the Parties to the WTO on 17 July 2006 under Article XXIV:7(a) of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of GATT 1994 as an Agreement establishing 
a free trade area (document WT/REG218/N/1 and Rev.1 (English only)) and under 
GATS Article V:7(a) as an Agreement providing for the liberalization of trade in services within the 
meaning of GATS Article V (document S/C/N/374).  The text of the Agreement was available, 
together with its Annexes, on the Parties' official  websites.  The Factual Presentation on the goods and 
services aspects (document WT/REG218/2, dated 19 July  2010) had been prepared by the Secretariat 
on its own responsibility in full consul tation with the Parties, in accorda nce with paragraph 7(b) of the 
Transparency Mechanism (TM) for Regional Trad e Agreements (document WT/L/671).  Since the 
distribution of the Factual Presentation, a few cha nges concerning the liberali zation of 18 tariff lines 
by Costa Rica had been made and this had slightly  modified some of the tables and charts of the 
Factual Presentation.  These changes had been in corporated in an informal document that was 
available in the room in English only and would be incorporated in a revised version of the Factual 
Presentation.  He said that no questions on the Agreement had been submitted by Members.  He 
proposed to organize the consideration of the Agre ement by first asking the Parties and then other 
Members for general comments.  The Committee woul d then turn to the specifics of the Agreement 
using the Factual Presentation to guide the de bate.  He proposed to go through the Factual 
Presentation section by section, and then look at the questions and replies document.  
4. The representative of Costa Rica
 said that the governments of Mexico and Costa Rica 
welcomed the opportunity to present the Agreement and its goods and services related aspects.  The 
rules of the Agreement were based on the fundament al principles of the multilateral trading system, 
which were national and MFN treatment and transpar ency.  From the very outset, the Agreement had 
sought as an objective to strengthen trade relations between the Parties, by creating opportunities to 
increase their levels of development.  These objectiv es had been amply met since the entry into force 
of the Agreement and were proven by a considerable increase in bilateral trade flows over the past 
decade.  Mexican imports by Costa Rica amounted  to US$393 million in 2000 and had increased to 
US$746 million in 2009, an annual average growth rate  of 8.6%.  At present, Mexico was one of the 
most important suppliers to Costa Rica of goods such as medicine, colour televisions, paper and WT/REG218/M/1 
Page 2  
 
  paperboard, sanitary napkins and tampons, nappies or diapers, food preparations, avocados and 
cereal-based products obtained through puffing or to asting, among others.  Costa Rica's exports to the 
Mexican market had almost doubled from US$98 milli on in 2000 to US$195 m illion in 2009, with an 
average growth rate of 9.5% per year.  Amongst the main exports were:  crude  and other palm oils;  
lids and covers;  other covers and accessories for pa ckaging in ordinary metal;  medicines in doses or 
prepared for retail sale;  and parts and accessories.  There had also been a considerable increase in 
investment opportunities in the territories of both Parties.  Throughout the first ten years of 
implementation of the Agreement, annual Mexican investment inflows to Costa Rica were over 
US$20 million, only exceeded by investment from the United States, and Costa Rica's investment in 
Mexico was the largest in the central American region.  Through the Agreement, the Parties had 
managed to obtain substantial im provements in market access conditions;  different categories of 
products had been negotiated with timeframes fo r tariff reduction or elimination, thus enabling 
duty-free access in Mexico for 98.9% of tariff lines and 97.9% of tariff lines for Costa Rica.  The 
Agreement had helped eliminate obstacles to trade;  to facilitate cross-border trade in goods;  to 
promote the necessary conditions for fair competition w ithin the free trade area;  to establish effective 
procedures for the application of, and compliance with  its rules, for joint administration and dispute 
resolution.  It had also established guidelines fo r subsequent bilateral,  regional and multilateral 
cooperation.   
5. She said that the Agreement was compatible with Article XXIV of GATT and Article V of 
GATS.  For goods, more than one third of total bila teral trade had been liberalized upon entry into 
force of the Agreement;  the lines exempted from liberalization represented some 1% of bilateral 
trade.  The Parties had also committed, apart from th e exceptions indicated in the Agreement, to adopt 
or maintain only those restrictions on exports or im ports that were consistent with GATT Article XI.  
On rules, the Parties had confirmed the rights and obligations contained in the WTO Agreements.  On 
technical barriers to trade, specific provisions had been established regarding, among others, rights 
and obligations, harmonization, risk assessment and conformity assessment.  On sanitary and 
phytosanitary measures, the Parties had agreed  to establish harmonized systems for sampling 
methods, diagnosis, inspection and cer tification and to mutually recognize (after objective proof) pest- 
or disease-free areas.  Throughout the transition pe riod, bilateral and global safeguard measures could 
be applied with the obligation of providing for co mpensation.  On subsidies, the WTO rules would 
apply and the Parties had committed to eliminate all subsidies as from January 1999.  Furthermore, 
provisions to liberalize and guarantee reciprocal ac cess to government procurement had been set out.  
Liberalization of trade in services was governed  by the principles of national treatment, MFN 
treatment and local presence.  They followed the "negative-list" approach, without any a priori  
exclusion of any sector, which permitted a high level of transparency and predictability since all restrictions applicable by the Parties to services ha d been listed in the Annexe s of Reservations.  The 
Parties remained fully committed to the multilateral trading system and to the Agreement that built 
upon WTO's disciplines and promoted both economic grow th and the Parties' effective participation 
in multilateral trade liberalization.  She welcomed  the opportunity to present the Agreement and said 
that the Factual Presentation showed in more details  the provisions applicable to trade in goods and 
services.   
6. The representative of Mexico
 thanked the Secretariat for the Factual Presentation and the 
delegation of Costa Rica for its close collaborati on in the consideration process that had become a 
tradition in the WTO.  One of the main objectives of Mexico's foreign policy was to have a 
rapprochement  with Latin American and Caribbean nations in a number of areas.  In this context, the 
Parties had stood out by placing their bilateral rela tionship at the highest level of priority and 
importance.  At present, the Parties had signed mo re than 20 bilateral ec onomic agreements, four 
agreements on trade and investment promotion,  six on financial cooperation, three on debt 
negotiations, one each on customs cooperation, air tr ansportation, road transportation, and business 
cooperation, three on energy cooperation, and the Fr ee Trade Agreement, which had come at the end 
of the long list of bilateral agreements and was subject to consideration by the Committee.  The  WT/REG218/M/1 
 Page 3 
 
 
  Agreement provided a framework of rules for tran sparency and security for the productive sector;  
promoted trade in goods and services;  protected industrial secrets, trademarks and copyright;  and 
facilitated investments between the Parties.  Th rough the Agreement, Mexico was seeking new and 
better opportunities for its exports, better availability  of inputs and services for its domestic industry, 
as well as to attract new investment and create stra tegic alliances between the Parties' businesses.  In 
her delegation's view, this cont ributed to economic growth, an increase in productivity and 
competitiveness of products, to the creation of mo re and better employment and the promotion of 
industrial and regional developmen t.  The Agreement had been be neficial for trade between the 
Parties by:  facilitating customs procedures;  creating effective procedures for its implementation and administration, for example, the creation of th e Committee on Trade in Goods and the code of 
conduct for dispute settlement resolution;  and in creasing investment opportunities in both countries, 
thus making it possible to expand and diversify trade.  In this context, Mexico's exports to Costa Rica in 2008 had grown sevenfold as compared to 1994, th e year prior to the entry into force of the 
Agreement.  The main Mexican exports to Costa Rica in 2008 were:  televisions;  medicines;  and 
leather skins and hides.  Unfortunately, in 2009, when the world crisis was at its peak, Mexican 
exports to Costa Rica decreased by 37% compared to 2008.  In general terms, 90% of Mexican 
exports to Costa Rica were manufactures, principally products derived from iron and steel, televisions, telephone equipment and accessories, paper, paperboard and pharmaceuticals.  
Furthermore, in 2008 Mexican imports from Costa Rica had increased 30 times compared to 1994.  In 
2009, due to the crisis, imports from Costa Rica ha d dropped by 11% compared with the previous 
year.  In general, 80% of Mexican imports from Costa Rica were manufactured products, such as 
integrated circuits and micro structures, articles of  leather, vegetable fats and oils and centrifuges, 
among others.   
7. Subsequent to the entry into force of the Agreement, the Parties had undertaken further 
obligations that permitted trade in goods and services in a more predic table legal framework.  To this 
end, some provisions of the Agreement had been im proved, such as:  tariff elimination;  rules of 
origin;  dispute settlement;  services and investme nt;  administration of the Agreement with the 
establishment of a secretariat and the administrative sub-committee;  entry of natural persons for the 
supply of services;  and customs procedures.  All the se provisions agreed subsequent to the entry into 
force of the Agreement had been issued as Deci sions of the Administrative Commission.  In 
investment, the Agreement established a clear and tr ansparent set of reciprocal rules that provided 
certainty and legal security to investors from the Parties and their investments.  This framework 
established stable and predictabl e conditions to attract investment.  The chapter on investment 
included disciplines on national and MFN treatment, minimal standards of treatment, and expropriation, as well as a specific mechanism for th e settlement of investment disputes between an 
investor and the State.  It was important to mention that the Agreement had provided certainty to investors of the Parties and that, since the entry in to force of the Agreement, Costa Rica had become 
Mexico's sixth largest source of foreign direct i nvestment from the Latin Am erican region.  As of 
September 2009, Costa Rica had equity investment s in 118 businesses registered and established in 
Mexico;  70% of Costa Rica's investments had b een channelled into the manufacturing industry, 
followed by financial services, communal and social services, hotels and restaurants, which represented 25% of the total, and finally the trad e sector, which represented 5%.  Implementation of 
the Agreement had provided positive results for b ilateral relations and Costa Rica had become 
Mexico's largest trading partner in Central Ameri ca.  She concluded that the Agreement was one of 
the fundamental mandates of the Tuxtla Mechanis m for Dialogue and Concertation which, together 
with other agreements signed by Mexico and Nicar agua and with the Northern Triangle countries 
(Guatemala, Honduras and El Salvado r), represented one of the last steps towards a free trade area 
between Mexico and Central America. 
 
 WT/REG218/M/1 
Page 4  
 
  8. The representative of the United States
 thanked and recognized the Parties and the Secretariat 
for their work in having put together the Fact ual Presentation.  She welcomed and commended the 
relatively high level of tariff elimination by the Pa rties to the Agreement and appreciated the inclusion 
of helpful and interesting information on the evolution of trade between the Parties from 1994 to 2003-2005.  She asked the Parties to update the Co mmittee on when they intended to notify those 
RTAs listed in Table V.2 of the Factual Presenta tion as "not notified".  She then pointed out that 
Table AI.3 on market access opportunities for Mexico 's 25 top exports in 1992-1994 in Costa Rica 
included, on the right-hand side, a column entitled "remain dutiable", whereas in Table AI.4, which 
looked at Mexico's top 25 exports during the later period of 2003-2005, the column "remain dutiable" 
was not there.  She asked the Parties to clarif y whether this meant that no duties remained.  
9. The representative of the European Union
 asked the Parties to confirm whether the 
Agreement had been fully implemented, given th at it allowed for a transition period which had 
terminated in 2009, and if all liberalization commitme nts had been applied.  She also asked the Parties 
to confirm whether any additional liberalization commitments had been agreed, if the list of 
exclusions had been subsequently reduced, and to  indicate how much bilateral trade was currently 
liberalized under the Agreement.  She asked the Parties to clarify whether the Agreement covered 
export duties and, if so, to what extent.  Like the United States, she pointed out that, as shown in Table V.2, both Parties still had some RTAs to notif y and asked for an update on how the notification 
process was proceeding. 
10. The representative of Mexico
 asked the European Union to submit its questions in writing so 
that the Parties could respond to them as soon as po ssible.  With respect to non-notified RTAs, he said 
that, according to Table V.2, Mexico had three RT As pending.  The agreement with Colombia, which 
was originally called G3 and included Venezuela,  had been abrogated by Venezuela on 23 May 2006 
and its effects for Venezuela had terminated as fro m 19 November 2006.  As a result, the bilateral 
agreement with Colombia had been notifie d to the WTO on 14 September 2010 (document 
WT/REG289/N/1, for trade in goods, and document S/C/N/563, for trade in services).  As regards the 
agreement between Mexico and Bolivia, Bolivia withdrew on 7 December 2009 and it was no longer 
in force as from 7 June 2010.  With respect to the agreement between Mexico and Uruguay, the 
parties were consulting on the notification which w ould be made soon.  With regard to the EU's 
questions on coverage, more than  99% of bilateral trade, which took into account Mexico's imports 
from Costa Rica and Costa Rica's imports from Mexico, were covered by the Agreement and thus enjoyed at present duty-free treatment.  On export duties, he confirmed that Article 3.10 of the 
Agreement stated that neither Party should adop t or maintain any duties or charges on exports 
destined for consumption in the territory of the other Party.  
11. In response to the question from the United States and the European Union on the non-
notified RTAs in Table V.2, the representative of Costa Rica
 said that her delegation was consulting 
with the parties to the agreements with CARICOM and the Dominican Republic to finalize the details 
and notify them soon.  The agreement with CACM had not been notified because it was not in force 
for Costa Rica and, at present, was under ratificati on.  Additionally, she informed the Committee that 
Costa Rica was working on the notification of ear ly announcements of the agreements recently 
negotiated with China, Singapore and the European Union.  With respect to the questions by the 
European Union on product exclusions and the impl ementation of the Agreement, she said that the 
Agreement had been fully implemented, as established therein, and that the liberalization of certain 
products had been accelerated in 1999.  According to the Decision of the Administrative Commission 
in 1999, tariffs had been reduced to zero for so me products, accelerated tariff reductions had been 
agreed with respect to others, and tariff rate quotas, with duty-free in-quota quantities, had been 
established for the following products:  cuts of b ovine meat, for which a quota of 4,000 metric tonnes 
(MT) had been opened;  some types of milk, w ith a quota of 15 million litres;  evaporated milk;  
condensed milk;  some palm oils and other oils;  cocoa powder, not containing added sugar, with a 
quota of 1,500 MT;  modified milk;  cereal-based pr oducts derived from puffing or toasting;  powders  WT/REG218/M/1 
 Page 5 
 
 
  for drink preparation, with a quota of 22,000 MT;  and soya sauce.  In response to the United States' 
question on Tables AI.3 and AI.4, she clarified that  Mexico's top 25 exports to Costa Rica enjoyed 
duty-free market access and gave the floor to the Secretariat to further clarify the issue.   
12. The representative of the Secretariat  explained that the total number of lines that were 
dutiable in 1995 was 56 and if the tariff lines at th e bottom of Table AI.4 were added up, it would 
appear from the result that no tariff lines remained dutiable in 2005.  
13. The Chairman  said that the consideration of the goods and services aspects of the Free Trade 
Agreement between Costa Rica and Mexico had allowed the Committee to clarify a number of 
questions and oral discussion of the Agreement coul d be concluded in accordance with paragraph 11 
of the Transparency Mechanism.  If any delegations  wished to ask follow-up  questions they were 
invited to forward submissions in writing to the Secretariat by 5 October 2010  and the Parties were 
asked to submit replies  in writing by no later than 19 October 2010.  In accordance with paragraph 13 
of the Transparency Mechanism all written submis sions, as well as minutes of this meeting would be 
circulated promptly, in all WTO official la nguages, and would be made available on the 
WTO website. 
14. The Committee took note  of the comments made. 
__________