Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Costa Rica RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/180 
12 March 2007  
 
(07-1009) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
COSTA RICA 
 
  
 
This report, prepared for the third Trad e Policy Review of Costa Rica, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Costa Rica on its trade policies and 
practices. 
 
Any technical questions arising from this report may be addressed to 
Mr Mario Berrios (tel. 022 739 63 97), Ms Ulla Kask (tel. 022 739 56 27) or 
Mr Raymundo Valdés (tel. 022 739 53 46). 
 
Document WT/TPR/G/180 contains the policy statement submitted by 
Costa Rica. 
 
 
 Costa Rica WT/TPR/S/180 
 Page iii 
 
 
 
CONTENTS 
 
  Page 
SUMMARY OBSERVATIONS vii 
 (1) I NTRODUCTION  vii 
 (2) E CONOMIC ENVIRONMENT  vii 
 (3) T RADE AND INVESTMENT POLICY FRAMEWORK  vii 
 (4) M ARKET ACCESS FOR GOODS  viii 
 (5) E XPORT MEASURES  viii 
 (6) O THER MEASURES AFFECTING TRADE  ix 
 (7) S ECTORAL POLICIES  ix 
I. ECONOMIC ENVIRONMENT 1 
 (1) O VERVIEW  1 
 (2) M ACROECONOMIC TRENDS  1 
 (i) Structure of the economy, production and employment 1 
 (ii) Fiscal policy 4  (iii) Money and exchange rate policy 5 
 (iv) Balance of payments 8 
 (3) T
RADE AND INVESTMENT FLOWS  10 
 (i) Trade in goods 10 
 (ii) Trade in Services 11  (iii) Foreign investment 11 
 (4) O
UTLOOK  12 
II. TRADE AND INVESTMENT REGIME 13 
 (1) O VERVIEW  13 
 (2) G ENERAL LEGAL AND INSTITUTIONAL FRAMEWORK  13 
 (3) T RADE POLICY OBJECTIVES AND FORMULATION  14 
 (4) F OREIGN INVESTMENT REGIME  15 
 (5) I NTERNATIONAL RELATIONS  16 
 (i) World Trade Organization 16  (ii) Preferential ag reements in force 17 
 (6) O
THER AGREEMENTS AND ARRANGEMENTS  22 
 WT/TPR/S/180 Trade Policy Review 
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  Page 
III. TRADE POLICIES BY MEASURE 23 
 (1) O VERVIEW  23 
 (2) M EASURES AFFECTING IMPORTS  24 
 (i) Customs procedures 24 
 (ii) Customs valuation 26 
 (iii) Rules of origin 27  (iv) Tariffs 28 
 (v) Other charges affecting imports 34 
 (vi) Import licensing, restrictions and prohibitions 35  (vii) Anti-dumping, countervailing and safeguard measures 40 
 (viii) Technical regulations and standards 43 
 (ix) Sanitary and phytosanitary measures 46 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  49 
 (i) Registration, documentation and export licences 49 
 (ii) Export charges and minimum prices 50  (iii) Export prohibitions and other restrictions 50 
 (iv) Subsidies and other export-related tax benefits 52 
 (v) Financing, insurance, promotion and other measures 57 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  58 
 (i) Incorporation of companies and their tax regime 58  (ii) Price controls and competition policy 59 
 (iii) Incentives 62 
 (iv) State-trading enterprises, Stat e-owned enterprises and privatization 66 
 (v) Government procurement 67 
 (vi) Protection of intellectual property 70 
IV. TRADE POLICIES BY SECTOR 74 
 (1) O
VERVIEW  74 
 (2) A GRICULTURE  76 
 (i) Overview 76 
 (3) M ANUFACTURING  83 
 (4) E LECTRIC POWER  85 
 (5) S ERVICES  87 
 (i) Principal characteristics 87 
 (ii) Telecommunications 89 
 (iii) Postal services 91  (iv) Audiovisual services 92 
 (v) Financial services 92 
 (vi) Air transport 97 
 (vii) Maritime transport 100 
 (viii) Professional services 102 
 
REFERENCES 107 
 APPENDIX TABLES 111 Costa Rica WT/TPR/S/180 
 Page v 
 
 
TABLES 
 
  Page 
 
I. ECONOMIC ENVIRONMENT  
I.1 Sectoral structure of GDP and employment, 2001-2005 2 
I.2 Basic economic indicators, 2001-2005 3 I.3 Non-financial public sector (N FPS) financial acco unts, 2001-2006 5 
I.4 Main monetary indicators, 2001-2006 7 
I.5 Balance of payments, 2001-2006 9 I.6 Trade in services, 2001-2006 11 
I.7 Foreign investment position, 2001-2006 12 
 III. TRADE POLICIES BY MEASURE 
 
III.1 Summary of MFN tariff, 2006 29 III.2 MFN tariff structure, 2006 30 
III.3 Tariff reduction programmes in FTAs signed by Costa Rica 31 
III.4 Tariff concessions granted under special customs regimes, 2006 33 
III.5 Import requirements for certain goods 36 
III.6 Anti-dumping procedures, 2001-2006 42 III.7 Export prohibitions and restrictions 51 
III.8 Free Zone Regime incentives 54 
III.9 Main taxes on companies 59 III.10 Penalties relating to competition, 2001-2005 61 
III.11 Some tax incentives included in Law No. 7293 63 
III.12 Other tax incentives 64 
III.13 Principal financial incentives applicable to production and investment 66 
III.14 Intellectual property treaties ratified by Costa Rica 70 
 IV. TRADE POLICIES BY SECTOR 
 
IV.1 Imports by Costa Rica under tariff quotas, 2001-2005 78 IV.2 Value added by activities in the manufacturing sector, 2001-2005 84 
IV.3 Share of service activities in GDP and employment, 2001 and 2005 88 WT/TPR/S/180 Trade Policy Review 
Page vi 
 
 
APPENDIX TABLES 
 
  Page 
 
I. ECONOMIC ENVIRONMENT  
AI.1 Merchandise exports by product, 2001-2005 113 
AI.2 Merchandise imports by product, 2001-2005 115 AI.3 Merchandise exports by trading partner, 2001-2005 116 
AI.4 Merchandise imports by trading partner, 2001-2005 117 
 II. TRADE AND INVESTMENT REGIME 
 
AII.1 Notifications to the WTO, January 2001 to December 2006 118 
 
III. TRADE POLICIES BY MEASURE 
 III.1 Overview of Costa Rica's domestic legislation pertaining to 
 intellectual property rights, 2006 120 
 
IV. TRADE POLICIES BY SECTOR 
 AIV.1 Products subject to access commitments  with tariff quotas, 2005-2006 123 
AIV.2 Summary of Costa Rica's specif ic commitments under the GATS 127 
 
 Costa Rica WT/TPR/S/180 
 Page vii 
 
 
 SUMMARY OBSERVATIONS 
 (1) I
NTRODUCTION  
1. Since its last Trade Policy Review in 
2001, Costa Rica has continue to modernize 
and simplify its generally liberal trade and investment regime.  Applied tariffs have remained largely unchanged, averaging 6.9 per cent in 2006, and the use of non-tariff 
trade barriers has continued to be limited.  As 
in earlier years, Costa Rica has carried on an export-oriented strategy, based on tariff and other fiscal concessions.  This may well have been an element in Costa Rica's solid economic growth of recent years, especially by 
encouraging investment, but linkages between 
domestic- and export-oriented activities remain weak, and existing incentives both alter resource allocation and hinder efforts to consolidate the fiscal situation.   
2. Long-standing restrictions remain in 
place in a few service sectors, with state monopolies present in a number of key services, in which some inefficiencies have arisen over time.  A number of these restrictions would be eliminated in the context 
of the implementation of the Central America-
Dominican Republic Free Trade Agreement with the United States (CAFTA-DR), signed but not yet ratified by Costa Rica.  It would be important for Costa Rica also to bind such 
liberalization at the multilateral level to 
prevent distortions in investment incentives and flows, and to give its trade and investment regime greater predictability. 
(2) E
CONOMIC ENVIRONMENT  
3. Costa Rica's annual economic growth 
averaged around 4.9 per cent during 2001-05, and is estimated to have been almost 6 per cent in 2006.  Growth has been particularly strong since 2003, reflecting mostly the strong performance of investment and exports.  GDP 
per capita was slightly above US$4,600 in 
2005.  The fiscal deficit has been decreasing since 2003, but achieving and maintaining a balanced fiscal position remains a challenge, especially considering high pension and other 
specific payments mandated by law as well as the relatively heavy public debt (55 per cent of GDP).  Monetary and exchange rate policies 
have undergone major changes, with a 
crawling peg regime having been replaced by a crawling band in October 2006.  The change is aimed at better controlling inflation, which reached 14.1 per cent in 2005 but is estimated 
to have fallen below 10 per cent by late 2006.   
4. The current account of the balance of 
payments has been in deficit, equivalent to some 3.5 per cent of GDP during the first three quarters of 2006, caused mainly by a worsening trade balance despite expanding 
exports.  The services balance has been in 
surplus due principally to tourism receipts.  The main trading partner of Costa Rica is the United States, which accounts for some 40 per cent of Costa Rica's total trade.  Main 
merchandise exports are manufactured 
products, the biggest single export item being microprocessors.  Among agricultural products, bananas are the main export item.  About 80 per cent of imports are manufactured goods,  integrated circuits and electronic 
components, chemicals and fuels.  Costa Rica 
is a net recipient of foreign direct investment, which has made an important contribution to GDP and export growth. 
(3) T
RADE AND INVESTMENT POLICY 
FRAMEWORK  
5. Costa Rica considers that the trade 
liberalizing initiatives it pursues at the unilateral, regional and multilateral levels complement each other.  Costa Rica is an 
original Member of the WTO;  it participates 
in the Information Technology Agreement and adopted the Fifth Protocol on Financial Services.  During the period under review, Costa Rica made several notifications under different WTO Agreements but as at end 2006 
some were still pending.   
6. Although Cost Rica formulates its 
trade policy mostly at a national level, it takes into consideration its participation in the WT/TPR/S/180 Trade Policy Review 
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Central American Common Market.  At the 
end of 2006, Costa Rica had in force five other free-trade agreements:  with Canada, CARICOM, Chile, Dominican Republic and 
Mexico;  the first three entered in force during 
the period under review.  Costa Rica has signed the CAFTA-DR whose ratification was under consideration in the Legislative Assembly as at end 2006. 
7. Costa Rica has an open investment 
regime but with certain important exceptions.  The State has exclusive rights in the importation, refining and distribution of crude oil and related refined products;  insurance services;  railways;  maritime ports and 
airports;  and some postal services.  The State 
also maintains the only concessions to provide certain key electricity and telecommunications services.  
(4) M
ARKET ACCESS FOR GOODS  
8. Since its last Review, Costa Rica has 
taken measures to modernize its trade regime including by simplifying and computerizing customs procedures and adopting new regulations on customs procedures and valuation.  The tariff is Costa Rica's main 
trade instrument.  All tariffs are ad valorem;  
at 6.9 per cent, the average applied MFN tariff remained almost unchanged during the period under review.  The average tariff for agricultural products (14.2 per cent, WTO 
definition) is considerably higher than for 
other products (5.6 per cent).  The tariff structure shows signs of escalation.  Costa Rica has bound all tariff lines, thus providing greater predictability to its trade regime 
although this is reduced by the substantial gap 
between applied and bound tariffs (the average bound tariff is 44.1 per cent). 
9. In the context of the Central American 
Common Market, Costa Rica grants duty-free treatment to almost all imports originating 
from Guatemala, Honduras, El Salvador and  
Nicaragua.  Costa Rica also grants preferential treatment to imports from other countries as provided in the  free-trade agreements it has in force. 10. Imports receive national treatment in 
the application of domestic taxes except in certain cases such as the tax of the Institute for Municipal Development, which is levied at 10 
per cent on imported beer and at 3 per cent on 
domestic beer.  The tax of the Institute for Agrarian Development is applied at a rate of 5 per cent on carbonated soft drinks from national brands and at 10 per cent on similar 
products produced in Costa Rica by 
subsidiaries of international brands or imported drinks. 
11. During the period under review, Costa 
Rica adopted only a few contingency measures.  Three anti-dumping measures were 
initiated but final duties were imposed in only 
one case.  Costa Rica notified the WTO of the initiation and application of a provisional safeguard measure on imported rice.  Concerning countervailing measures, Costa 
Rica reached an agreement for the elimination 
of subsidies on certain products exported to the Costa Rican market. 
12. Costa Rica has been active in 
adopting sanitary and phytosanitary (SPS) measures and technical regulations.  From 
2001 to 2006, Costa Rica made 36 SPS 
notifications and 68  notifications in 
connection with the Agreement on Technical Barriers to Trade, the majority related to technical characteristics of products including 
unprocessed agricultural products.  Costa 
Rica is carrying out a programme to rationalize the number of technical regulations, which off ers an opportunity to 
ensure that technical regulations do not 
become unjustified obstacles to trade. 
(5) E
XPORT MEASURES  
13. Costa Rica notified the WTO that its 
free zone regime and the inward processing regime include export subsidies.  Costa Rica engaged to phase-out by 2007 the export 
subsidies granted under both regimes.  The 
Government is considering changes to the free zone regime to bring it into line with WTO rules.  Costa Rica WT/TPR/S/180 
 Page ix 
 
 
 14. Costa Rica maintains export 
prohibitions on unprocessed logs of certain tree species from natural forests.  Costa Rica imposes export taxes on coffee and bananas, 
and minimum prices are set for banana 
exports.  The Central Bank maintains a requirement for the registration of foreign exchange earnings.  It would be desirable to re-examine the rational for those charges and 
requirements to minimize their impact on 
export competitiveness. 
(6) O
THER MEASURES AFFECTING 
TRADE  
15. Costa Rica maintains numerous 
incentive schemes in addition to exports 
subsidies, with fiscal incentives and tax 
exemptions granted under around 200 different laws.  At end 2006, the Ministry of Finance was working on a draft law on transparency and rationalization of incentive 
regimes.  A comprehensive evaluation of 
incentives would lead to greater transparency into their use and help ensure that benefits outweigh costs, which is a crucial consideration in the light of Costa Rica's chronic fiscal deficit.  
16. Costa Rica's privatization process has 
been at a standstill and no plans exist to reinitiate it.  The state-owned refinery enjoys a monopoly on the importation, refining and wholesale distribution of crude oil and refined 
oil products, and has been notified to WTO as 
Costa Rica's only state-trading enterprise.  At the end of 2006, rice and essential public services were subject to official price controls. 
17. The legal framework for competition 
policy in Costa Rica prohibits all monopolistic 
practices, but excludes from its scope providers of public services under concession and state monopolies established by law.  As noted, services such as insurance, alcohol distillation, fuels supply, certain 
telecommunication services, and electricity 
transmission, are provided exclusively by state owned enterprises.  The exclusion of those services from the scope of competition legislation undermines the efforts to promote 
competition in the Costa Rican market, which due to its relatively small size tends to foster market concentration.  At the end of 2006, the 
Legislative Assembly was considering draft 
laws to liberalize the insurance and telecommunication markets. 
18. Procurement of goods and services by 
the public sector in Costa Rica was equivalent 
to 18.3 per cent of GDP in 2005.  Costa Rica 
is neither a signatory nor observer to the WTO Plurilateral Agreement on Government Procurement.  Since 2001, there have been no major changes to the legislation governing government procurement, though measures 
have been taken to promote transparency and 
the participation of small and medium-size enterprises.  Preferences may be granted to local producers and, in principle, the participation of foreign bidders may be subject 
to reciprocity.   
19. There have been no major 
modifications to the legislation regarding the protection of intellectual property rights, with the adoption of complete regulations on enforcement procedures still pending.  Costa 
Rica grants no protection to new plant 
varieties but, at end 2006, the Legislative Assembly was discussing a draft law as part of the parallel agenda to the CAFTA-DR. 
(7) S
ECTORAL POLICIES  
20. The agriculture, forestry and fishing 
sector contributed just under 8 per cent of Costa Rica's GDP but generated approximately 34 per cent of total exports in 2005.  Overall government support in 
agriculture appears low, although it is difficult 
to be precise given that Costa Rica has made no notifications of dom estic support for 2001-
06.  A small number of products destined for domestic consumption (meat and parts of poultry, dairy products, onions, potatoes, rice, 
meat products) receive well above average 
tariff protection.  A new method to administer tariff quotas was introduced in 2003 but has not been notified to the WTO.  Imports were WT/TPR/S/180 Trade Policy Review 
Page x 
 
 
low for all the products for which Costa Rica 
administered tariff quota s during 2001-06,   
21. The manufacturing sector contributes 
about 20 per cent to Costa Rica's GDP and 65 
per cent to its exports.  Manufacturing 
activities carried out under special trade regimes are of great importance for Costa Rica. Free trade zones in particular have become important generators of exports and a 
magnet for foreign investment.  However, due 
to their high import needs, net exports from those zones are much less significant than gross exports, and the zones' linkages with the rest of the economy remain limited.  In addition, the promotion of activities through 
special regimes has continued to create 
implicit disadvantages for activities that do not enjoy similar incentives but have to compete for the same factors of production.  It would also be important to reconsider the 
rationale for the different incentives in place 
in view of Costa Rica's fragile fiscal situation. 
22. The services sector accounts for about 
60 per cent of GDP and 62 per cent of employment.  As noted, the State continues to maintain monopolies on a number of service 
activities.  The efficiency and cost of the 
services provided by a number of state monopolies is questionable and, thus, the authorities have been taking steps to allow for greater participation by the private sector in 
some of these services.   
23. Costa Rica's list of specific 
commitments under the GATS is limited, including only 5 of the 12 sectors specified in this Agreement.  Costa Rica undertook no 
commitments in telecommunications but has 
ratified the Fifth Protocol on financial services.  In April 2004, Costa Rica presented an initial offer in the context of the Doha Development Agenda (DDA) but as at end 2006 it had not presented a revised offer.   
24. Costa Rica allows the presence of 
foreign banks via subsidiaries but not branches.  Once established, foreign banks benefit from national treatment.  Nevertheless, in practice, the banking regime continues to discriminate against private banks (Costa 
Rican and foreign) through a number of regulatory and fiscal asymmetries.  In part as a result, the banking sector continues to be 
dominated by state owned banks.  Although 
increasingly diversified, the financial sector remains centred on traditional banking intermediation.  The regulatory framework has also continued to encourage financial 
activities through Costa Rican banks legally 
established abroad, although their importance has been decreasing.  There have been reforms to improve the supervision of the sector but practical problems remain. 
25. Costa Rican legislation grants the 
state-owned National Insurance Institute the 
monopoly over almost all types of insurance.  This has hindered the development of the national insurance market, creating inefficiencies and limitin g consumer choice.  
Costa Rica undertook no specific GATS 
commitments on insurance. 
26. The state-owned Costa Rican 
Electricity Institute (ICE) and its subsidiaries maintain the only concessions to operate basic local telephony, long distance calls (national 
and international), and mobile telephone 
services as well as value added services, Internet connection and satellite communications.  The ICE also holds the only concession for the transmission of electricity 
and controls most generation, distribution and 
commercialization of electricity.  Costa Rica limits foreign participation in audio visual services;  only nationals are allowed to establish or operate these services.    
27. As part of the parallel agenda for the 
ratification of the CAFTA-DR, the Legislative Assembly is considering draft legislation to liberalize investment restrictions in insurance and telecommunications.  To increase the predictability of Costa Rica's investment 
regime, and prevent any distortions to 
investment incentives, it would be desirable for Costa Rica to translate its engagements under the CAFTA-DR into additional multilateral commitments under the GATS. Costa Rica WT/TPR/S/180 
 Page xi 
 
 
 28. In recent decades, maritime port 
services have faced problems related to the cost of operations and insufficient investment in infrastructure.  The ownership of maritime 
ports must be in the public domain but 
concessions may be granted to private operators to provide services.  In practice, due to the slow pace of granting of concessions, significant delays have occurred in the 
modernization of port infrastructure.  
Concessions for coastal shipping are only granted to Costa Rican citizens or to companies established in Costa Rica and controlled by Costa Ricans, who must hold at least 60 per cent of the shares.   
29. Costa Rica's airports must also be 
under public ownership but services and infrastructure construction may be provided by the private sector through concessions.  A number of concessions have been granted but 
  there have been difficulties in implementing 
them.  Only Costa Rican nationals may undertake local air transportation services.   
30. With the exception of commitments on 
medical and dental services, Costa Rica has 
no GATS specific commitments in professionals services.  In general, the right to exercise almost all professions is reserved to members of professional associations.  
Foreigners may register in  such associations 
but generally must comply with additional requirements.  Residence requirements are applied in a different manner depending on each profession and could represent a significant barrier to the provision of 
professional services by foreigners.  At end 
2006, proposals were under preparation to allow greater participation by foreigners in accounting services.