Note: Advance written questions by WTO Member s and the replies provided by Costa Rica are 
reproduced in document WT/TPR/M/180/Add.1 and will be available online at:  
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.  WORLD TRADE  
ORGANIZATION  WT/TPR/M/180 
24 July 2007 
 (07-3158) 
Trade Policy Review Body 
7 and 9 May 2007  
 
 
 
 
TRADE POLICY REVIEW 
 
COSTA RICA 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mr. Vesa Himanen (Finland) 
 
    Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 
 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF COSTA RICA 4 
 III. STATEMENT BY THE DISCUSSANT 8 
 
IV. STATEMENTS BY MEMBERS 11  
V. REPLIES BY THE REPRESENTATIVE OF COSTA RICA AND 
 ADDITIONAL COMMENTS 22  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 27 
  WT/TPR/M/180 
Page 3 
 
 
 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The third Trade Policy Review of Costa Rica was held on 7 and 9 May 2007.  The 
Chairperson H.E. Mr. Vesa Himanen (Finland), welc omed the delegation of Costa Rica, headed by 
Ms. Gabriela Castro, Director General for Trade at the Ministry of Foreign Trade;  H.E. Mr. Ronald 
Saborío, Permanent Representative of Costa Rica to  the WTO, and the discussant H.E. Mr. Eirik 
Glenne (Norway).  As usual, the discussant would speak in his personal capacity and, in accordance 
with established procedures, had made available in advance a broad outline of the themes he intended 
to raise (WT/TPR/D/156). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of the meeting.  The report by Costa Rica was contained in document WT/TPR/G/180 
and that of the Secretariat in document WT/TPR/S /180.  As indicated in document WT/TPR/6/Rev.1, 
the Member under review should provide written answers,  by the beginning of the review meeting, to 
questions submitted at least two weeks before the m eeting.  Questions posed subsequently should be 
answered, to the extent possible, be fore the start of the second session of the meeting.  Questions left 
unanswered at the end of the second session should be  answered in writing no later than one month 
after the meeting.  Questions by the following dele gations had been submitted in writing at least two 
weeks in advance of the meeting and had been transmitted to the delegation of Costa Rica:  
Singapore;  the United States;  Mexico;  Colombia;  Chile;  Australia;  Japan;  Hong Kong, China;  
Canada;  the European Communities;  and Argentina.   Trinidad and Tobago;  India; and Brazil had 
submitted written questions after the two-week deadlin e.  Copies of all advance questions, as well as 
the responses received from the delegation of Costa Rica, were available in the meeting room. 
3. The Chairperson noted Costa Rica's solid econom ic performance and its efforts to continue 
with the modernization and simplification of its trad e regime.  Although restric tions remained in place 
in a few sectors, the Government was seeki ng to introduce reforms in areas such as 
telecommunications, insurance, and the free zone regime.  His overall perc eption was thus that 
Costa Rica was ready to move further to open its tr ade regime and allow international trade to exert 
fully its efficiency-enhancing role.  In this cont ext, he believed Members would be interested in 
hearing about the priority areas for reform and thei r expected timing.  He was also interested in 
hearing Costa Rica's views on the Secretariat's obs ervation that binding reforms at the multilateral 
level would give the trade regime greater predictability. WT/TPR/M/180 
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 II. OPENING STATEMENT BY THE RE PRESENTATIVE OF COSTA RICA 
4. The representative of Costa Rica  stated that since its last review in 2001 Costa Rica had 
accelerated its trade policy strategy, intended to deepen trade integration and to give further 
opportunities for growth needed due to the small si ze of the domestic market.  The success of this 
policy was reflected in the growth of exports, divers ification of products and markets, and increase in 
foreign investment and employment generation. 
5. Costa Rica assigned the greatest importance to its trade agenda over the next few years, which 
would be focused on active and constructive partic ipation in multilateral trade negotiations and on 
regional and bilateral efforts. 
6. She focused her presentation on three areas:  th e economic and trade environment in 2001-06;  
the main actions and results of Costa Rica's trad e policy;  and the guidelines that Costa Rica would 
follow in the next few years. 
7. From the second half of the 1990s, Costa Rica ha d taken an important turn in its strategy, 
giving a more aggressive foreign trade policy focussed  on two parallel elements:  trade opening, and 
the attraction of foreign investment.  As a result Costa Rica had accelerated its process of integrating 
in the international economy, eliminated barriers to  foreign trade and established closer trade links 
with its partners.   
8. These factors helped to explain the central im portance of foreign trade for the economy, as 
trade has been a key engine of economic growth.  While in 2001 imports and exports of goods represented 71% of total production, six years later th is figure had reached almost 89%.  Total exports 
rose from US$1,925 million in 2001 to more than US$2,535 million in 2006, a 25% increase.  The 
services sector accounted for about 60% of GDP and generated 64% of total employment.  Tourism 
was the main services activity followed by transpor tation, computer and information services, and 
other businesses. 
9. Between 2001-06 Costa Rican exports grew at an average of over 10%, rising from US$5,042 
million in 2001 to a record figure of US$ 8,198 million in 2006. 
10. The growth of exports was led by industrial  goods, which represented approximately 69% of 
total exports.  Agricultural exports represented 31% .  Despite the overall impor tance of the industrial 
sector, agricultural exports had grown at higher ra tes (7.2%) than manufacturing exports (6%) over 
the last five years.   
11. The dynamism of the export sector was also reflecte d in the diversification of destinations as 
well as the composition of export products.  In par ticular, exports were directed to over 140 markets 
and were composed of roughly 3,800 different products.  During 2006, more than 2,000 firms 
reported that their individual export sales were worth over US$12,000;  80% of those firms were micro small and medium size enterprises. 
12. The principal industrial exports were:  integrated  circuits and parts for computers, medicines, 
textiles and medical devises;  and for agricultura l goods:  banana, pineapple, melon and coffee.  
Historically, Costa Rica had a trade account deficit,  and despite sustained e xports growth, imports are 
still higher than exports. 
13. During the review period, the average MFN tariff ha d remained stable with an average of 6%.  
The weighted tariff average went from 4.4% in 2001 to 4.1% in 2006.  Over 48% of tariff lines (at WT/TPR/M/180 
Page 5 
 
 
 eight digits) had an applied MFN tariff of 0%, and most of the tariff had applied tariff levels lower 
than 15%. 
14. In 2001-06, the policy to attract FDI focused on four specific areas:  the electronics industry, 
medical equipment, information technology servi ces and tourism.  This strategy had helped 
employment creation and transfer of technology, which in turn had made possible to increase 
productivity and income generation over the last few years. 
15. The dynamism of the foreign investment flows had continued since the end of the 1990s.  
Over the last six years, it had grown at an annual average rate of 4.5%, and growth reached 7.9% in 
2006.  In 2006, FDI reached its highest recorded le vel in Costa Rica, at US$1,410 million, double the 
annual average of the previous five y ears, and representing 6.4% of the GDP. 
16. The implementation of the trade strategy, in  the context of economic reforms and the 
attraction of foreign investment had allowed Costa Rica to reach an average annual growth rate of 
over 6% in last six years.  Also, in 2006 GDP per capita exceeded US$5,000.  The unemployment rate 
had changed little, fluctuating between a peak of 6. 7% in 2003 to its lowest  level of 6% in 2006. 
17. Despite its successful policies, Costa Rica had not yet achieved fiscal balance which it had 
been seeking. 
18. Over recent years, significant efforts had been  undertaken to restructure public finances.  
Costa Rica had used expenditure control measure s and improved tax collection.  These measures had 
resulted in decreasing the public sector deficit from 2.3% of GDP in 2005 to  around 0.5% in 2006. 
19. Fiscal balance had not been achieved due to the fi nancial situation of the public sector and the 
increase in international oil prices.  In October 2006 , with the aim of reducing inflation, the exchange 
rate system of mini-devaluations was replaced by a floating system within a band.  As a result, the 
rate of increase of consumer prices was reduced from 14.6% in 2005 to 10.6% in 2006;  this decrease 
was expected to continue in 2007. 
20. The main objective of Costa Rica's foreign trade policy was to promote, facilitate, and 
consolidate its insertion into the international ec onomy in accordance with the economic and social 
welfare goals of the country. 
21. Between 2001 and 2006 various c onsiderations have guided national policy with a view to 
achieving greater participation in global markets.  The main policy considerations have been:  to 
improve access for Costa Rican products in foreign markets;  to protect the trade interests of 
Costa Rica against protectionist measures of other coun tries;   to establish rules and procedures for the 
appropriate management of trade relations;  to ensure compliance with obligations under trade 
agreements or investments agreed by Costa Rica;  to involve all sectors in export activities;  to promote Costa Rican exports abroad;  to promot e domestic reforms to develop a more efficient 
economy, which would facilitate foreign trade and th e attraction of national and foreign investment. 
22. Trade policy objectives were promoted in three mutually complementary areas:  the 
multilateral trade system, the process of regional in tegration, and the negotiation of bilateral or 
plurilateral trade and investment agreements. 
23. Costa Rica had placed its trust in the multilatera l system, its rules, its dispute settlement 
system, and its role as a forum for negotiations to ac hieve greater liberalization at the global level. 
Costa Rica supported the strengthening of the multil ateral system:  it wished to see the Doha Round 
complete agricultural reform, through ambitious resu lts, likewise in NAMA, and to have the system's WT/TPR/M/180 
Page 6 
 
 
 rules strengthened.  As a small developing coun try highly dependant on international trade, 
Costa Rica needed a strong multilateral system that pr omoted greater trade, with clear and transparent 
rules. 
24. Costa Rica believed that the best way for the Doha Round to contribute to the development of 
developing countries was by improving substant ially market access for agricultural and non-
agricultural goods on an MFN basis, as well as by eliminating export subsid ies, making substantial 
reductions in domestic support, which caused distortion, and strengthening rules in areas such as dispute settlement, trade facilitation, anti-dumping and regional agreements.  These results would 
contribute to greater insertion of Costa Rica and of other developing countries in international trade.   
25. Costa Rica believed that the flexibilities for deve loping countries that would enable them to 
comply with the commitments resulting from the Round, which had been presented as low 
development objectives could be achieved, would no t contribute significantly towards development. 
26. The Central American region was the third largest market for Costa Rica's exports, preceded 
only by the United States and the European Union.   In 2006, 14% of exports went to the Central 
American region, for a total value of around US$1 billion. 
27. During the review period, Costa Rica continued to participate in the process of the Central 
American Customs Union.  This programme had ha rmonized 94.9% of the tariff lines and significant 
progress had been made in the harmonization of san itary and phytosanitary registration, rules of 
origin, safeguards, unfair practices, and customs procedures. 
28. Two important instruments that had been strengthened in recent years were the Central 
American Dispute Settlement Mechanism and a Central American treaty on investment and trade in 
services. 
29. Costa Rica was actively and constructive particip ating in all areas involved in the negotiation 
of the Customs Union and was focussing its efforts on specific and achievable goals that would take 
into account the needs of the region's countries. 
30. Between 2001 and 2006, Costa Rica negotiated an d implemented free-trade agreements with 
Canada, Chile, the Dominican Republic, and the c ountries of the Caribbean Community.  It had free-
trade agreements with Mexico (in force since 1995), and partial scope agreements with Panama 
(1973).  Furthermore, in 2004 Costa Rica signed a free-trade agreement w ith the United States, 
together with the Dominican Republic and the other Central American countries, and this was in the 
process of approval in Costa Rica. 
31. In 2006, 24% of Costa Rica's total exports were to countries with which it maintained 
preferential trade agreements, reflecting growth of  17% over 2005;  14% of Costa Rica imports came 
from those markets.  In 2006, Costa Rica recorded  a positive trade balance with these partners of 
US$371 million. 
32. Costa Rica continued to negotiate, sign and adopt agreements to promote and protect 
investment.  These agreements were designed to pr otect and stimulate foreign investment through a 
series of procedural and substantive guarantees for in vestors.  Agreements had been concluded with 
Germany, Argentina, Canada, Chile, Chinese Ta ipei, Korea, Spain, France, Kingdom of the 
Netherlands, Paraguay, the Czech Republic, Switzer land, and Venezuela.  Agreements negotiated 
with Ecuador, Bolivia, Finland, Belgium, and Luxe mburg were before Costa Rica's legislative body. WT/TPR/M/180 
Page 7 
 
 
 33. Costa Rica's policies would be geared toward s:  creating better and higher paying jobs;  
improving the involvement of local manufacturers in foreign trade by promoting supply linkages 
among firms;  attracting higher le vels of high quality foreign investment; defending sustainable 
development;  and increasing the value added in exports.  Costa Rica would continue to promote a 
short, medium, and long term foreign trade polic y strategy based on:  trade negotiations, export 
promotion, investment promotion, the effective a pplication of trade agreem ents, and the relationship 
with civil society. 
34. Costa Rica would continue to strive for bette r market access conditions for its products and 
services, through trade negotiations with its key part ners.  In this regard, it was highlighted the 
negotiations in the Doha Round, with the European  Union and the strengtheni ng of regional economic 
integration. 
35. Export promotion was a key factor in Costa Rica 's insertion into the international economy.  
Costa Rica's goal was to sustain export growth ra tes with a view to exporting US$18 billion in 2010. 
36. With regard to investment promotion, Cost a Rica's objective would be to promote the 
establishment of national and foreign companies of high value added, which would promote the 
diversification of production, technology transfer , and supply linkages among firms.  The medium 
term goal was for annual investment of US$ 1.5 billion. 
37. As negotiations with other trading partners pr oceeded, the issue of applying and effectively 
managing trade agreements would b ecome more important.  One of the overriding goals would be to 
ensure effective compliance with a ll the obligations of the treaties, agreements and other trade and 
investment instruments whether bilateral, regional or multilateral. 
38. The promotion and maintenance of consultations  with civil societies was also essential. WT/TPR/M/180 
Page 8 
 
 
 III. STATEMENT BY THE DISCUSSANT 
39. The discussant (H.E. Mr. Eirik Glenne), stat ed that Costa Rica's Trade Policy Review 
provided an opportunity to reflect on lessons learned. 
Macroeconomic environment 
40. Since Costa Rica's last TPR, its economic performance at the ma cro level, was impressive on 
the one hand but not on the other.  Costa Rica wa s not pursuing a policy of isolation, thus it was 
exposed to, rather than influencing the course of, ev ents in the world economy.  Some events had had 
a marked influence on the economy, such as the rise in oil prices, and, like in most other countries 
with an open economy, developments  in export markets were also influencing the performance of the 
economy.  The growth rate of the GDP and the incre ase in FDI seemed to indicate that the challenges 
had been met.  However, other economic indicat ors showed some were still to be faced.   
41. The Secretariat Report noted, inter alia,  the fairly heavy burden of public debt, the challenges 
facing monetary policy, the inflation rate, the cu rrent account deficit, the weak linkages between 
domestic and export-oriented activities, and the incentive structure for resource allocation.   
42. Costa Rica's economic policy was aimed at enha ncing economic growth and thus the welfare 
of its citizens.  Since its last TPR, the track record  had been convincing, with impressive rates in real 
terms.  He asked whether there were possibilities fo r even better performance that had not been used 
so far, for both the short term and the long term. 
43. In the short term, resource allocation in an  economy was influenced first and foremost by 
financial and monetary policies and by external factor s, in particular if shocks occurred.  Costa Rica 
was making use of fiscal incentives in its free zones:   free zones had been quite instrumental in 
attracting foreign investments.  FDI was help ful in maintaining employment, attracting new 
technologies, and adding to domestic savings and enhancing exports.  FDI also helped to alleviate 
problems that would stem from current account defic its.  Industrial zones could be very beneficial for 
economic growth, as illustrated by th e experience in Asia.  The verdict on free zones was not so 
unconditional:  incentives in free zones were often rela ted to fiscal instruments in the form of forgone 
revenues or even subsidization, directly or indir ectly.  Where there was a deficit both on the current 
account and on the state budget, it was good policy to examine the net effect of such a policy.  In addition, free zones were often aimed at facilita ting processing of imported intermediary products, 
and at times, were not much integrated with local suppliers. 
44. Industrial zones were seen by most as a good tool for economic growth.  They were 
particularly successful when closely connected with  the rest of the economy, and established as fully 
serviced zones with sufficient infrastructure and ser vices links, including provision of non-tradable 
services inputs, a pool of sufficiently skilled workers,  and the necessary links to foreign customers.  
This had often resulted in a variety of firms form ing a competitive supplier base and attracting FDI.  
The dynamism of an economy was often taken to m ean its fertility in producing technologically 
feasible and profitable innovative ideas or in s hort commercially successful innovation.  The main 
benefit of an innovative economy was commonly said  to be higher productivity and thus higher 
hourly wages and higher welfare.  He asked whethe r Costa Rica had any plans to change the free 
zones concept so as to optimize its effects. 
45. Costa Rica's monetary policy had undergone a fu ndamental change since its last TPR.  Since 
October, monetary and exchange ra te policies had been aimed at be tter controlling inflation, and the 
crawling peg system had been changed to a crawli ng band system.  The most important task of WT/TPR/M/180 
Page 9 
 
 
 monetary policy was to provide the economy with an  anchor for inflation expectations - a nominal 
anchor.  The key to success was for the Central Bank to  be able to influence these expectations.  The 
challenge was to convince the public that the in terest rate set by the Central Bank provided a 
reasonable trade-off between stabilizing inflati on and stabilizing developments in output and 
employment.  
46. The change in the exchange rate system was a step in the right direction;  eventually the 
BCCR should be in a position to better control inflation.   However, difficult steps remained before it 
was possible to move towards a system of inflation targeting.  The main obstacles were probably the 
fiscal deficit and the BCCR operating deficit, but the authorities were taking action to alleviate these 
problems.  A predictable and stable inflation rate, in terest rate, and exchange rate would greatly assist 
economic actors and thus  be conducive to economic growth.  He commended Costa Rica for its 
efforts in this regard and hoped for early success.  
47. The goal of reducing the growth in public debt was very sensible and necessary.  The ratio of 
debt to GDP was relatively high, and risked havi ng crowding-out effects on the economy.  Costa Rica 
had contemplated increasing the tax base, by intro ducing the VAT system in the near future.  He 
asked about Costa Rica's plans to increase the efficiency of revenue collection and to achieve greater 
control on public spending.   
48. This policy stand was welcome and encouraged, since it would lessen the burden on monetary 
policy and thus help to achieve an optimal mix be tween fiscal and monetary policy.  However, the 
measures were not easy to implement.   
49. Costa Rica's overall macroeconomic goals were  single-digit inflation, foreign exchange 
market stability, containment of the growth of pu blic debt, lower interest rates, and promoting 
economic growth.  There were positive signs in th e economic development, which would hopefully 
also result in reducing the level of unemployment.  
Trade policy regime 
50. The discussant believed that Costa Rica shoul d be commended for its trade policy based on a 
very open economy and strong support for the mul tilateral system.  Costa Rica was an original 
Member of the WTO, and WTO Agreements took precedence over domestic law, with the exception 
of the Constitution.  Costa Rica was a very ac tive Member, and its commitments clearly showed 
its seriousness in integrating into the interna tional trade environment for goods and for services.  
Costa Rica had adopted the Fifth Protocol to the GATS on financial services, and had signed the 
Information Technology Agreement.  He asked  whether there were any possible additional 
developments in this regard. 
51. Costa Rica had played and was playing an active and constructive role in the ongoing 
negotiations.  
52. A striking feature of Costa Rica's trade policy was its involvement in regional trade 
integration projects and preferential agreements.  The most far-reaching end eavour was the formation 
of the Central American Common Market.  Only 0. 2 % of tariff lines had not been abolished by the 
end of 2006, which fulfilled the requirement of Article  XXIV:8.  In the five free-trade agreements in 
force, the level of product coverage met the requi rement of Article XXIV:8.  He wondered whether 
the free-trade agreements that were in the pipelin e were likely to be concluded soon and whether 
Costa Rica was contemplating further developments in  this direction both for FTAs and for FDI.    WT/TPR/M/180 
Page 10 
 
 
 53. Costa Rica enjoyed benefits from the GSP system  of Canada, the United States, the European 
Union, and from Norway. 
54. According to the Secretariat Report, the averag e applied tariff rate was 6.9%, well below the 
average bound rate of 44.1%.  For one tariff line, th e applied rate of 66% was considerably higher 
than the bound rate, due to a mistake during the transposition to HS 96, and he hoped that this would 
be rectified.   
55. Intensive work on customs matters, taken through the CACM, was aimed at facilitating trade.  
Since its last TPR, Cost a Rica had introduced the Information Technology for Customs Control 
Scheme, to better control customs procedures.  The approach used was called the risk method, and he 
asked the delegation to explain what the method actually implied and he asked whether any cost-
benefit analyses had been done in order to subs tantiate the effects of the new system.   
56. Regarding trade facilitation, all empirical st udies reviewed found significant gains from 
reducing trade costs due to international trade proced ures, and those gains were larger for developing 
countries.  He noted that customs procedures were one of the determining factors as one extra day in 
transit corresponded to a tariff rate of 0.8%.  He commended Costa Rica for its efforts in streamlining 
customs procedures. 
Sectoral policies 
57. There was a state monopoly for the production and distribution of electricity.  If the 
conditions were not in place for a "natural monopol y", it might be worth considering a different 
market-situation.  Reduced costs for both produ cers and consumers would have a positive impact on 
Costa Rica's competitiveness. 
58. The Costa Rican Electricity Institute also enjoye d exclusive concessions in the telecom sector, 
including internet.  The telecom sector was seen in  many countries as an important factor determining 
competitiveness and, thus, this sector needed to be  as efficient as possible. Costa Rica had submitted 
to parliament policy proposals that would open up the telecom market and that suggested its 
reorganization.  WT/TPR/M/180 
Page 11 
 
 
 IV. STATEMENTS BY MEMBERS 
59. Members welcomed the delegation of Costa Rica led by Ms. Gabriela Castro , and 
appreciated the active role of Costa Rica's Perm anent Representative to the WTO.  Members also 
appreciated Costa Rica's active role in the DDA negotiations.   
60. The representative of Singapore  noted the growing bilatera l economic relationship with 
Costa Rica, which had been Singapor e’s sixth-largest Latin American trading partner in 2006.  Total 
bilateral trade was US$374.9 million in 2006, represen ting an overall increase of 15.2% over 2005.  
Singapore and Costa Rica also shared strong investment relations, particularly in container transportation services and airport management.   
61. The bilateral economic relati onship stemmed from a similar economic outlook, and Singapore 
commended and supported Costa Rica's pursuit of an export-oriented strategy, based on tariff and 
other fiscal concessions.  Costa Rica’s solid economic growth in recent years and its continued strong 
performance in investments and exports had resulte d in average economic growth of 4.9% during 
2001-05, and this figure was estimated to be higher in 2006.   
62. Costa Rica’s open economic regime had clearly yi elded positive results.  In this regard, Costa 
Rica was encouraged to undertake further liberaliza tion efforts, such as reducing the gap between its 
applied and bound tariffs and furt her liberalizing its insurance a nd telecommunications markets.  
Although Costa Rica was not a signatory to th e WTO plurilateral agreement on government 
procurement, it had domestic legislation aimed at fostering transparency in the government procurement system, establishing transparent and competitive procedures for awarding public 
contracts.  Since its previous review, Costa Rica had adopted the "Compra RED" on-line system aimed at computerizing the dissemination of informa tion to tenderers.  As its legislation was already 
in place, Costa Rica was encouraged to consider  becoming a party to the Government Procurement 
Agreement.  
63. The representative of the United States
 noted Costa Rica's long demonstrated commitment to 
and confidence in the multilateral trading system.  The United States shared Costa Rica’s high hopes 
for a successful Doha outcome that promoted eco nomic growth and development by opening new 
opportunities for trade in agricu lture, NAMA, and services.  
64. Costa Rica’s strong economic growth and relate d structural reforms, together with its 
unilateral and regional liberaliza tion policies, had put it in a strong position as an advocate for the 
power of well-structured trade and domestic reforms to lift incomes. 
65. Costa Rican's economic growth reflected various  steps taken to integrate its economy further 
into the global trading system.  There had been accomplishments in foreign direct investment, 
simplification and computerization of customs proc edures, and reforms to ensure that any resulting 
regulations did not become barriers to trade.   
66. As Costa Rica’s number one trading partner, th e United States’ commercial relationship with 
it was strong, positive, and growing.  The tota l two-way goods trade during 2006 was almost 
US$8 billion.  Costa Rica had identified attracting fo reign direct investment as a key element of its 
overall economic growth and trade policy strate gy. The United States commended Costa Rica for its 
record US$1.41 billion inflow of FDI in 2006, whic h was a sign of foreign investors' confidence in 
the economic potential and stability of the Costa Rican market.  The United States had long been 
Costa Rica’s largest source of FDI.  It believe d that full implementation of the CAFTA-DR would WT/TPR/M/180 
Page 12 
 
 
 encourage a stable and favourable investment envi ronment that would result in increasing multilateral 
trade opportunities.  
67. The United States also commended Costa Rica for its persistence and commitment to taking 
the difficult internal steps to achieve economic refo rm, including trade liberalization.  It especially 
appreciated the Costa Rican government’s commit ment to ratify the Dominican Republic-Central 
America-United States Free Trade Agreement, an d to implement the commitments under that 
agreement.  The comprehensive free-trade agreemen t covered trade in goods and services, intellectual 
property rights, investment, telecommunications, labour and environment, and promoted economic 
integration within Central America and with th e Dominican Republic.  A number of the reforms 
Costa Rica was expected to undertake to implem ent the FTA, involving significant legislative and 
regulatory measures, would also benefit Costa Rica’s other trading partners, contribute widely to the 
multilateral trading system, and expand world trade.  In order for Costa Rica to continue on this 
productive path toward improving its economic co mpetitiveness, the United States urged Costa Rica 
to strengthen its policies and practices regarding st andards and safety to avoid impeding global trade 
in food, pharmaceuticals, agricultural goods, and chemicals and cosmetics.  The United States 
anticipated deepening further the trade and ec onomic partnership with Costa Rica and supported 
Costa Rica’s progress along the path of global economi c integration that it has so strongly pursued. 
68. The representative of Mexico  noted that since its previous Review, Costa Rica had taken 
measures to modernize its trade regime, simplifying and computerizing customs procedures, and that 
average tariff protection, at 6.9%, had not changed.   He thought that it would be useful to make a 
detailed analyses to see if the modernization of Co sta Rican industry, in terms of competitiveness, was 
not being hampered by current tariff policy.  He highlighted the export procedures for certain 
products, such as timber logs, coffee and bana nas, and wondered whether these procedures and 
charges had had an impact on their competitiveness. 
69. There had been no changes in the state monopo lies in insurance, cer tain telecommunication 
services, and electricity.  He was interested to know  whether there had been any advances on the draft 
laws designed to open up these markets, which,  according to the Secretariat, had been under 
discussion since December 2006 by the Legislative Assembly.  He thought it would be worth undertaking a cost-benefit analyses for maintain ing these policies in an increasingly competitive 
international environment.  Costa Rica needed to ma ke an additional effort to review its procedures 
for granting concessions, in particular those that a llowed individuals to carry out activities related to 
basic infrastructure, such as  port and airport operations. 
70. Costa Rica's economic performance had been pos itive of during the period under review, with 
annual average growth of 4.9%, boosted mainly by the exports and investments.  An economically 
healthy region was an attractive market for Mexican exports and i nvestments, and he welcomed the 
decisions taken to achieve greater fiscal discipline.  He believed that it would be useful to evaluate the 
effectiveness of tax incentives and financing programmes associated with Costa Rican exports. 
71. Mexico had a free-trade agreement with Costa Rica in force since 1995, and over the period 
bilateral trade had grown enormously.  Imports fro m Mexico in 2005 constituted 4.5% of all goods 
imported by Costa Rica and Costa Rica's exports to  Mexico had grown at an annual rate of 15% 
in 2003-05.  The dynamism of this trade relationship w as reflected in the fact that bilateral trade at the 
end of 2006 amounted to US$1.268 million, an in crease of almost 143% during the period under 
review.  Currently Mexico was, together with Ireland,  the third provider of goods to Costa Rica, after 
the United States and Japan. WT/TPR/M/180 
Page 13 
 
 
 72. Since the entry in force of the free trade agre ement, Costa Rican investment in Mexico had 
increased 13-fold, totalling US$10.7 million in 2006, though it accounted for less than 1% of total 
FDI in Mexico.  On the other hand, Mexico was th e second source of foreign capital for Costa Rica in 
2005.   
73. Costa Rica granted special importance to trade of and investment in high-tech goods.  Trade 
in services played an essential role in this developm ent strategy.  Like Costa Rica, Mexico believed 
that a modern and efficient services sector had a multiplying effect on economic growth, and through 
technology transfer and strengthening su pply chains, on economic development. 
74. Mexico was particularly interested in the advances made in telecommunication services due 
to their importance in facilitating trade in g oods and other services, and compatibility with 
Costa Rica's policies of promoting trade and investme nt.  Mexico was also interested in Costa Rica’s 
plans to submit a revised offer that would contain these advances. 
75. Mexico shared Costa Rica’s belief that there was synergy between unilateral, bilateral, and 
multilateral initiatives for trade liberalization.  Theref ore, Mexico encouraged Costa Rica to continue 
to participe actively in the Doha Round, by pr esenting greater commitments for market access of 
goods and services. 
76. The representative of Colombia  noted that Costa Rica was a successful example of a small 
economy that had taken advantage of  the benefits of trade liberalization and capital flows to promote 
its economic and social development.   
77. She noted that due to its political stability, so und institutions, macroeconomic stability, highly 
skilled work force, and a liberalized economy, Costa Rica had been one of the most stable, growth-
oriented economies in Latin America. 
78. Costa Rica's concept of development was differe nt from that of other developing countries 
and small economies.  Costa Rica had shown a high level of ambition in the main areas of the Doha 
Round, being a supporter of an ambitious formula fo r reduction of industrial tariffs.  In addition, 
Costa Rica considered that trade contributed to development through the principle of non-
discrimination.   
79. Boarder measures had not constituted an obstacle to Costa Rica's the economic development.  
The Secretariat Report and World Bank studies showed  however, that shortcomings in infrastructure 
had resulted in a bottleneck for the production an d the transport of goods.  A decrease in public 
investment in infrastructure, due to fiscal limi tations, had had a negative effect on the quality of 
services.  Ports had also been identified by en terprises as a significant bottleneck, as had roads 
providing access to ports.  As a result, 60,000 c ontainers had gone thr ough ports in Panama. 
80. A striking element of Costa Rica's economic po licy was the numerous subsidies, including for 
exports and production.  During 2001-06, the Mini stry of Economy had approved more than 24,000 
applications for tax exemption each year.  These su bsidies were a source of economic inefficiencies 
and budgetary deficits.   The proposed reform of  the Free Zones Law to eliminate export subsidies 
should be welcomed, as well as the draft law on teleco mmunications market liberalization.  The latter, 
once applied, would transfer responsibility for inv estment in the industry to the private sector, 
relieving the government of a significant financial burden. 
81. Colombia and Costa Rica enjoyed excellent bila teral trade relations.  Overall bilateral trade 
was around US$279 million, foreign investment was grow ing in both directions as was the flows of 
tourists.  Colombia hoped that these relations would benefit in the future from a free-trade agreement. WT/TPR/M/180 
Page 14 
 
 
 82. The representative of Chile  noted that, since the signature of the Bilateral Protocol within the 
framework of the Free Trade Agreement between Ch ile and Central America in 2005, trade between 
Chile and Costa Rica had quadrupled from US$55 milli on in 2001 to almost US$200 million in 2006.  
This agreement, in addition to improving mark et access for goods, encompassed commitments on 
investment protection, the temporary entry of business people, government procurement, cross-border 
services, and air transport.   
83. Costa Rica and Chile had adopted common positi ons in multilateral fora and had defended 
broad, genuine, and thorough trade liberalization.  This was reflected in their similar negotiating 
positions and in their membership of fora that prom oted free trade, such as the Cairns Group and, he 
hoped in the near future, in APEC. 
84. Fifteen Chilean enterprises had established busin esses in Costa Rica with total investment of 
US$15 million. 
85. Costa Rica had continued to modernize and simplif y its trade and investment regimes.  It had 
adopted an export-oriented approach but, as shown in the Secretariat Report, there was a dissociation 
of activities on the domestic market and exports.   
86. The services sector represented 60% of Costa Rica’s GDP and 62% of employment, and the 
State maintained a monopoly in various services.   
87. The representative of Australia  noted that his country shared Co sta Rica's view on the goal of 
supporting the multilateral trading system, and as embodied in the WTO, and global trade 
liberalization, through a successful outcome to th e Doha Round, as a key driver for world economic 
growth and development.  Costa Rica was an ac tive member of the Cairns Group, and shared the 
Group's objective of achieving comprehensive agri cultural trade reform.  In the Doha Round, 
Australia and Costa Rica were working together to realize the far-reaching ambitions envisaged in the 
mandate for all three pillars of the agriculture negot iations.  Costa Rica's contributions to the Doha 
negotiations in the area of tropical products and in the market access p illar of the agriculture 
negotiation were especially recognized, as well as it s active and constructive contributions in NAMA 
and trade facilitation.   
88. Costa Rica had been a staunch advocate of MFN liberalization and of the fundamental 
importance of the principle of non-discrimination.  While Costa Rica participated in and benefited 
from some preferential arrangements, it had not wa ivered in its position that improvements in MFN 
market access would be the Doha Round's most  important contribution to development.   
89. Australia welcomed Costa Rica’s solid economic performance and the contribution of exports 
and FDI to its growth over the period, and obser ved that microprocessors, which had benefited from 
MFN liberalization under the Information Technology  Agreement, were Costa Rica’s single biggest 
export item.  Costa Rica needed to find the right  balance between domestic  - and export-oriented 
activities, and to structure incentives in a way that did not distort resource allocation.   
90. The representative of Japan  appreciated Costa Rica's stable and democratic political regime, 
sound economic growth and labour market, as well as increasing of the trade volumes.  Japan and 
Costa Rica maintained amicable economic relationship.   Japan continued to be a main trade partner 
and supported Costa Rica by ODA;  it hoped that Costa Rica would expand the knowledge and technology from Japan to the surrounding countries in Central America.  WT/TPR/M/180 
Page 15 
 
 
 91. Japan encouraged Costa Rica broaden the benef its of FTAs by considering eliminating the 
wide gap between the rates at the multilateral level.   
92. Costa Rica was studying the costs and benefits of  its tax regime, as part of the review to 
amend the free zone regime.  He requested info rmation regarding the current situation of the 
amendments in terms of predictability.  In a ddition, foreign capital companies in Costa Rica had 
reported that the income tax tended to be imposed differently, depending on the tax official.  These 
tax regimes were regarded as significant for forei gn investors in deciding whether to start and 
maintain their business in Costa Rica.  In this rega rd, he asked Costa Rica to clarify the transparency 
of criteria.   
93. In relation to infrastructure to support Co sta Rica’s trade and economy, he asked for 
Costa Rica's views on how to overcome this issue and to make ports an engine to promote trade.   
94. Concerning the draft legislation to open up the telecommunications and insurance sectors, 
which was currently being introduced in the Legisl ative Assembly, he requested information on the 
schedule to liberalize these sectors. 
95. The representative of Hong Kong, China  indicated that bilateral trade relations with 
Costa Rica were very good.  The volume of trade was not huge but was far from insignificant and, there was clear potential for future growth:  from 2005 to 2006, it grew more than 30% year on year.   
96. Hong Kong, China and Costa Rica were also wo rking closely together in the WTO.  In 
particular, they shared the goal of clarif ying and improving the rules on anti-dumping.   
97. Costa Rica had bound all its ta riff lines and had maintained ad valorem  rates.  However, the 
large gap (nearly 40% on average) between applied and bound rates could undermine the 
predictability of Costa Rica's tariff regime.  He en couraged Costa Rica to make improvements in this 
regard.  
98. Services accounted for about 60% of Costa Rica’s GDP and 62% of its employment and 
continued efforts to liberalize trade in services woul d be crucial for its further economic development.  
Costa Rica’s recent initiative to liberalize certain long-standing restrictions in a number of services 
sectors, including in infrastructure, such as fina ncial services and telecommunications.  In this 
connection, he noted that Costa Rica’s recent liberali zation efforts were driven mainly by the need to 
prepare for the ratification of a FTA with its nei ghbours.  Hong Kong, China hoped that such efforts 
could be reflected in improvements to Costa Rica’ s offers for the current round of WTO services 
negotiations, and called for Costa Ri ca’s more active participation in  the negotiations and encouraged 
it to table its revised offers as soon as possible, w ith more substantive impr ovements both in terms of 
the number of sectors to be committed and th e extent of provision of market access. 
99. The representative of Canada
 noted that Canada’s trading relationship with Costa Rica was 
cordial and long-standing:  2006 had marked the 50 th anniversary of the bilateral relations.  The 
Canada-Costa Rica Free Trade Agreement, which entered into force on 1 November 2002, was the 
cornerstone of their trade and investment relati onship.  Evidence showed that the agreement had 
benefited both partners.  Since 2002, bilateral me rchandise trade had increased by nearly 94%, from 
US$206 million to US$400 million in 2006.  Trade in services had also grown from US$57 million in 2002 to US$81 million in 2004.   
100. Canada and Costa Rica also worked together closely in the WTO, with the common high 
level of ambition for the Doha round and coopera tion in agriculture, where both countries were 
members of the Cairns Group, as well as non-agricu ltural market access and trade facilitation.  WT/TPR/M/180 
Page 16 
 
 
 101. Canada commended Costa Rica for improving its record in recent years by increasing the 
number of regulatory measures notified under the TBT Agreement.    
102. Canada followed with interest Costa Rica’s progr ess in streamlining its customs procedures 
and in adopting new regulations.  Canada had supported these refo rms through technical assistance 
provided to the Costa Rican customs agency.  More over, Canada had supported Costa Rica’s efforts 
to institutionalize its trade capacity , as evidenced by the recent workshop that Costa Rica delivered to 
its Central American counterparts on trade remedies  and unfair trading practices.  Canada was aware 
that Costa Rica would continue to spend significant energy on the national debate concerning the ratification of the U.S.–Central American–Domin ican Republic FTA.  While this was clearly a 
domestic issue, regional players were watching with interest as the debate unfolded.  The start of 
discussions on an EU-Central American associati on agreement represented an important opportunity 
to further Central American integration, a process that Canada had long supported.  Costa Rica’s 
decision regarding the ratification of DR-CAFTA a nd, eventually, the associa tion agreement with the 
EU would send a clear signal that Costa Rica wish ed to further and deepen the opening of its 
economy with the rest of the world. 
103. The representative of the European Communities
 noted that the EC and Costa Rica 
maintained good trade relations.  Costa Rica accounte d for 60% of Central American exports to the 
EC and it was the second largest recipient of EC inv estment in Central America.  Costa Rica and the 
EC were building a strong alliance, through deve lopment programmes and commercial agreements, 
the latter within the framework of an integrated association agreement with the Central American 
region, on which the delegate hoped ne gotiations would begin very shortly. 
104. The EC congratulated Costa Rica for the good functioning of its economy and its political, 
economic, and social stability.  The full insertion of Costa Rica in the world economy and the satisfactory policy to attract investments had incr eased economic growth, which should be sustainable 
given social and environmental policies implemente d.  Costa Rica needed to continue work to 
improve public finances, and specially to reduce the le vel of public debt, and control the inflation rate. 
105. Costa Rica had satisfactorily inserted itself in  the international economy, through its active 
participation in the WTO and through regional integra tion.  He encouraged Costa Rica to continue the 
process of consolidation of the Central American Common Market.  The EC encouraged Costa Rica 
to maintain a high level of transparency and therefor e to notify its trade and investment agreements to 
the WTO.   
106. It was important to achieve a correct ba lance between economic growth and social 
development, while respecting the environment and ensuring conditions for sustainable development.  
The Costa Rican authorities had cho sen an economic growth model that respected and ensured high 
international labour standards:  while  this firm decision in favour of  high social standards might imply 
higher costs in the short term, it would have very positive repercussions on sustained economic 
growth in the long term. 
107. Costa Rica had made efforts to adapt its sanitary  and phytosanitary legislation to international 
standards and to comply with its notification obliga tions to the WTO.  He encouraged Costa Rica to 
continue to ensure the application of strict  hea lth and security norms, based on international scientific 
principles. 
108. He noted that more transparency in gove rnment procurement contributed to better 
competition.  Costa Rica's participated in the WT O Working Group on Transparency and Government 
Procurement, and he encouraged Costa Rica to join the Government Procurement Agreement. WT/TPR/M/180 
Page 17 
 
 
 109. In connection with trade in services, he underlin ed the difficulties encountered in the proper 
implementation of a competition policy in telecomm unications, transport, insurance, and energy 
distribution.  The existence of a state monopoly in these sectors was slowing down the potential for 
development.  Furthermore, improvement of airpor t, road, and port infrastructures was essential to 
ensure competitiveness, and should not be delaye d.  Gradual liberalization of these sectors would 
fully benefit all the economic actors, and enhance th e benefits of the policy to attract investment. 
110. The representative of Argentina  underlined Costa Rica's sustai ned economic growth since its 
last Review in 2001, which continued to be b ased on a policy to attract FDI in technologically 
advance sectors.  One result had been the growth of exports of industrial goods, together with the 
transfer and assimilation of technology, strengthe ning of chains of production, and local business 
development. 
111. Tourism constituted another pillar of its grow th.  The emphasis on this and other sectors 
through a planned economic strategy showed clearly the importance of having active state policies in order to ensure greater development. 
112. Costa Rica had bound 100% of its tariff lines multilaterally.  However there was a large gap 
between the applied and bound rates.  Likewise, ta riff protection was much higher than the average 
for some agricultural products such as milk  products, processed meat, beef, and poultry. 
113. It was important to note that Costa Rica's tec hnical regulations were based on internationally 
accepted standards.  However, Argentina was conc erned about the implementation of sanitary and 
phytosanitary measures. 
114. Argentina had a special interest in deep ening bilateral commercial bonds since their 
economies had the necessary complementarity to have mo re diversified trade, particularly in products 
such as agri-chemicals, au tomobiles, auto parts, medicines, clothing, leather, paper, and cardboard. 
115. The representative of Brazil
 congratulated Costa Rica for the average economic growth of 
4.5% in 2001-05, and the estimated growth of 6% in 2006.  The satisfactory reduction of inflation in 
2006 resulted from more flexible administration of the exchange rate, particularly the move away 
from the crawling peg regime towards a crawling band regime. 
116. Costa Rica's economy is highly open, with exte rnal trade representing 80% of GDP.  In 2005 
exports were equivalent to 40% of GDP and generated 400,000 jobs.  These figures made Costa Rica 
the major per capita exporter in Latin America.  Cost a Rica was Brazil's main trade partner in Central 
America, with bilateral trade reaching US$545.5 in 2006.  The bilateral trade involved steel, 
automobiles, microprocessors, and ethanol;  however,  it could be developed further with an increase 
of productive investment. 
117. Costa Rica had made progress in modernizing its trade regime.  It had bound all its tariffs, 
giving greater predictability to its trade regime.  All import duties were ad valorem , and in the last 
few years, important initiatives had been introduced to simplify foreign trade formalities.  This was 
accompanied by the great dynamism of Costa Rica n exports.  The tariff for agricultural products, 
however, remained high. 
118. Although concentrated, the geographical distributio n of Costa Rican external trade was less 
unbalanced than might be deduced from the size of its economy and its geographical location.  Brazil 
hoped that new commitments in bilateral and regi onal trade agreements would lead to greater a 
balance of the geographical distribution of Costa Ri can trade partners.  These agreements had to be 
compatible with the multilateral trading system. WT/TPR/M/180 
Page 18 
 
 
 119. Costa Rica had accepted a proposal for a referendu m on the CAFTA-DR.  Whatever its result, 
it underlined the importance of the internal debate  on the integration in the world economy, and the 
strength of the Costa Rican democracy. 
120. Costa Rica was convinced that the DDA was a unique opportunity to strengthen the 
multilateral trading system, which could benefit all nations.  Brazil agreed that it was a priority to 
reduce domestic aid and subsidies that dist orted agricultural production and trade. 
121. Under the Central American Customs Union, 94.9% of the tariff was harmonized.  He asked 
about the Common External Tariff of this Customs Union.  He also asked about the compatibility 
between the Customs Union and the numerous bila teral agreements signed with third countries. 
122. Great power had been granted to the Agroi ndustrial Sugarcane League (LAICA), and he 
asked Costa Rica to explain the role of LAICA in the importation and distribution of ethanol. 
123. He asked about the rationale for the discriminat ory application of the tax collected for the 
Municipal Institute of Consultanc y and Promotion (IFAM).  Imported beer was subject to a tax of 
10%, while locally the product was subject to a 3% tax.  He asked Costa Rica to clarify how this tax discrimination was consistent with  its obligations under GATT 1994, in  particular with Article III. 
124. The representative of the Chinese Taipei
 noted Costa Rica's substantial efforts since its last 
Review to modernize and simplify its trade and inve stment regime.  This had resulted in a regulatory 
environment for trade that was more export-orient ed and more in conformity with WTO rules.  
125. Chinese Taipei applauded Costa Rica’s continuing efforts at trade-opening, in particular, its 
approach of negotiating free-trade agreement in al l regions.  It had been remarked that lasting 
programmes dedicated to further liberalizing the ma rkets were the best way to fulfil the long-term 
goal of sustained economic growth.  Chinese Taipei encouraged Costa Rica to continue its market-
opening efforts, including further liberalization of its service market and narrowing the gap between 
its applied and bound rates.  
126. The representative of Uruguay  noted Costa Rica's active role as defender of Members 
dedicated to fair trade in agriculture, through the Cairns Group.  This was a coalition representing 
both developing and develope d countries, whose objective was to achi eve a reform of agriculture that 
would place it on the same basis as other sectors, in  order to achieve a more equitable multilateral 
trading system.  Costa Rica and Uruguay worked together in the Cairns Group to defend the legitimate interests of exporting count ries of agricultural products in or der to counter the effects of the 
subsidies granted by several developed countries and to gain better market access for agricultural 
products.   
127. Since its last Review in 2001, Costa Rica had c ontinued to modernize and simplify its trade 
and investment regimes.  Its export-oriented stra tegy, based on tariff and fiscal concessions, was a 
factor in its solid economic growth in recent y ears, mainly because it encouraged investment, 
especially FDI. 
128. Uruguay supported Costa Rica's efforts to integrate developing countries into the international 
economy by adopting an approach that was in th e negotiations for mark et access based on the 
importance of the export dimension of special and different treatment.   
129. The representative of Ecuador
 noted that Costa Rica and Ecuador shared a common interest in 
achieving substantial and binding progress for genuine market access in the agricultural sector.  WT/TPR/M/180 
Page 19 
 
 
 Costa Rica was a co-author of the proposal on tropica l and alternative products, which has been tabled 
in the negotiations on market access for agri cultural products in the current Round. 
130. She took note of the modernization and simplif ication of Costa Rican trade and investment 
regimes.  Although bilateral trade was still low, w ith a trade deficit accumulated by Ecuador over the 
past ten years, she believed that these trade relati ons could be encouraged by the negotiation of new 
bilateral trade instruments and through the opening of markets in the Doha Round. 
131. Ecuador and Costa Rica signed a Convention on mutual promotion and protection of 
investments in 2001;  this had unfortunately not been  ratified by Costa Rica.  The finalization of this 
international instrument would boost the trade relations between the two countries. 
132. The representative of Guatemala  noted that Costa Rica was an important trade partner for 
Guatemala.  He was pleased that, since its last  Review in 2001, Costa Rica had continued on the 
growth path based on a free market, and modern izing and simplifying its trade and investment 
regimes. 
133. In the process of opening markets, Costa Ri can trade policy was considering unilateral, 
regional, and multilateral aspects.  Guatemala, lik e Costa Rica, placed great importance on regional 
opening through free-trade agreements.  Through th e Central American Common Market, they were 
aiming to achieve a customs union betw een the Central American countries. 
134. In agricultural negotiations, Costa Rica was an  active member of the Cairns Group, which 
was seeking the removal of subsidies and domestic support, and free access to markets. 
135. The representative of El Salvador  noted Costa Rica's efforts towards integration into the 
world economy through active participation in ne gotiations, including on the multilateral front, as 
well as measures aimed at attracting FDI, especially in services and technology, and diversification of 
exports and trade facilitation. 
136. El Salvador had strong trade flows of goods and services with Costa Rica, that included 
drugs, paper and cardboard, iron a nd steel products, plastics, food, and banking and air transport 
services.  They were highly integrated through th eir membership of the Central American Common 
Market. 
137. In modernizing the State, Costa Rica had adopt ed measures that would provide major benefits 
and improve the investment climate and the living conditions for its population. 
138. El Salvador and Costa Rica were participating in shaping the customs union which would be a 
valuable tool to boost competitive development on the region, and which had the objective of 
equitable and sustainable economic and social deve lopment of the Central American countries.   
139. The representative of Nicaragua  congratulated Costa Rica for its economic achievements 
since its last Review in 2001, and noted their close bilateral ties. 
140. Costa Rica's 4.9% growth could be partly expl ained by the investment and export results.  She 
underlined the importance of Costa Rica's export-or ientated strategy, which had been implemented 
since well before the period unde r review, and had been accompan ied by incentives to increase the 
value added of exports, with excellent results.  Manufactured products were Costa Rica's main 
exports;  the sector contributed to 20% of GDP, and to up to 65% of exports.  Costa Rica had been able to change its trade structure, decreasing the importance of agricultural exports, as a result of the 
same export-oriented strategy.  WT/TPR/M/180 
Page 20 
 
 
 141. Costa Rica was a net recipient of FDI, which was an important contribution to its economic 
growth.  She welcomed Costa Rica's initiatives to rationalize and make more transparent its incentive 
regimes.   
142. This review underlined important challenges that  Costa Rica needed to overcome in order to 
better distribute economic benefits throughout the economy.  These challenges included strengthening  
links between domestically oriented and export ac tivities, fiscal deficit, improving ties between 
government procurement and SMEs, improving the effi ciency in sectors where the State participated, 
and some restrictions on the supply of services by foreign providers. 
143. She asked about Costa Rica's plans to deal with  the inefficiencies in the market and improve 
competition.  She enquired about the objective of the export taxes on coffee and banana and about 
their benefits. 
144. Although GDP per capita in Costa Rica had reached some US$4,600 in 2005, which was 
above the average in Central America, poverty reduc tion remained a challenge.  She asked about the 
type of social policies or measures that had been adopted in Costa Rica to fight poverty and ensure 
distribution of the wealth generated by inv estment, tourism, and trade liberalization. 
145. The representative of Honduras  noted that Costa Rica's exports and imports continued to 
grow.  Nevertheless, the trade deficit also continued to grow due to the increase of petrol prices.  On 
the other hand, there was a positive sign in the cont inued growth of the tourism sector as well as  
computer services, which favoured the balance of serv ices.  The change in the structure of exports 
was positive, as these were now more concentrated on industrial goods. 
146. Costa Rica and Honduras, as well as the other Central American countries, had signed the 
Central American Economic Integration Treaty, named the Central American Common Market, 
creating a free-trade zone and a common external tariff, and setting up the bases for the establishment 
of the customs union and the Central American Economic Union. 
147. On 16 August 1995, with the entry in force of  the Guatemala Protocol, the Subsystem of 
Economic Integration was establishe d and consolidated, adapting it to a new institutional framework 
of the Central American Integration System (SIC A), and to the new needs of the countries in the 
region.  Costa Rica and Honduras were part of the S ubsystem, together with El Salvador, Guatemala, 
and Nicaragua.  The basic objective of this Subsys tem was to achieve fair and sustainable economic 
and social development of Central American count ries, which would provide well-being for its people 
and growth for all the parties.  This was to be  achieved through a process that enabled them to 
transform and modernize their productive and soci al structures, and technology, and increase  
competitiveness and achieve an efficient and dyna mic insertion of the Central America into the 
international economy.  Through this instrument , states had committed to establishing the Central 
American Economic Union, which should respond to the needs of the countries in the region. 
148. Costa Rica was an important partner;  their tr ade relationship registered a trade balance that 
favoured Costa Rica.  Honduras' exports were concentr ated in vitamins and their derivatives, cables, 
iron or steel bars, and soles and heels made of plasti cs or rubber.  Its main imports were preparations 
for the soft drink industry and sauces, threads, ca bles of copper or aluminium, and medications 
containing vitamins, which had registered sustained growth. 
149. The representative of Panama  noted that Costa Rica and Panama traditionally had ties of 
cooperation, friendship, and trade.  Costa Rica was on e of Panama's most impor tant trade partners and 
the principal destination of its exports in Central America.  Bilateral trade had increased significantly WT/TPR/M/180 
Page 21 
 
 
 through a free trade and preferential exchange agre ement, which had been in force since 1973.  She 
hoped that negotiations for a free trade agreement would conclude during 2007, covering the services 
sector, investments, a more important agricultura l and industrial exchange, as well as transparent 
sanitary and phytosanitary measures. 
150. She congratulated Costa Rica for its progress since its last Review in further liberalizing its 
industries and promoting foreign investment.  She encouraged Costa Rica to continue efforts to 
consolidate the financial system, telecommunications, and other sectors.  
151. The representative of Pakistan  noted that Costa Rica had been very clear and categorical 
that the process of liberalization could not be im peded under pretext of maintaining preferences.  
Costa Rica was one of the first developing countri es to support negotiations on the Dispute Settlement 
Understanding. 
152. The representative of Nigeria  noted that Costa Rica had continued to modernize and simplify 
its generally liberal trade and investment regime , which had resulted in solid economic growth.  
Costa Rica had also simplified a nd computerized customs procedures,  and adopted new regulations on 
customs procedures and new valuation.  These me asures had provided predictability to the trade 
regime.   WT/TPR/M/180 
Page 22 
 
 
 V. REPLIES BY THE REPRESENTATIVE OF COSTA RICA AND ADDITIONAL 
 COMMENTS 
153. The representative of Costa Rica  thanked Members for their comments and questions. 
(i) Economic and institutional environment 
154. She noted that Japan asked about the criteria fo r levying income taxes.  These criteria were 
established in the Income Tax Law No. 7092 and its regulation.  The law also defined the taxable 
income, deductible expenses, net income, and tax rates were defined.  In addition, there were official 
forms to present the income tax declaration issued  by the General Directorate for Tax and Finance, 
which was authorized to review these declarations, and request clarifications from the tax payers.  It could also monitor and inspect the veracity of the data provided by the tax payers, as well as the 
accounts and supporting documents.  All this in line with the Law and the General Regulations for the 
Management, Verification and Collection of Taxes.   
155. Nicaragua had asked about social policies esta blished to combat poverty and to ensure the 
distribution of wealth generated through investment , tourism and trade liberalization.  Costa Rica had 
chosen a model of development in which trade held  a major role as a basic tool to achieve higher 
development and a better quality of life for its citizens.  Costa Rica defended a productive policy 
aimed at sustained improvement of competitiveness , the gradual opening of the productive structure, 
insertion in the global economy, and the creation of more and better jobs.   
156. The reduction of fiscal deficit and inflation had had a positive effect on fighting poverty, 
which in 2006 was the lowest in 13 years.  In 2006, an 8% rate of growth of the economy was recorded, the highest over the past six years, and th is was reflected in greater job opportunities.  Costa 
Rica had the second lowest unemployment rate in La tin America.  The combination of these policies 
with social programmes to eradicate poverty had ma de it possible to achieve a literacy rate of 95%, 
and life expectancy of 78 years.  Costa Rica was one of the ten developing countries with the highest 
indices of human development;  however, there was still poverty, and the fight against this was the 
Government's priority.  
157. Some Members had asked about investment legi slation in Costa Rica.  Costa Rica did not 
have a specific law on foreign investment.  Ne vertheless, foreign investors benefited from a 
constitutional guarantee of equality.  In some specific sectors, such as financial services, the provider was required to take a certain lega l form.  However, Costa Rica's pub lic order laws applied to foreign 
enterprises:  legal security lay precisely in the non-discriminatory implementation of national legislation.   
158. Disputes between individuals, nationals or fo reign, and enterprises c ould be settled before 
national courts of law, or by appealing to alte rnative dispute solving mechanisms.  Domestically, 
Costa Rica's legal system provided mechanisms for a lternative solution of conflicts.  Internationally, 
Costa Rica was part of the ICSID and, through inte rnational trade agreements, Costa Rica guaranteed 
that the investor had access to the mechanisms established by this Centre.   
159. Several delegations had referred to the issue of notifications on some of Costa Rica's free-
trade agreements, which had not been presented to the WTO.  Costa Rica was making its best efforts 
to present these notifications in the near future.   
160. Regarding the common external tariff in the Central American region and its compatibility 
with Costa Rica's free-trade agreements negotiate d individually.  Equalization of treatment for WT/TPR/M/180 
Page 23 
 
 
 products under different treaties was being sought in the negotiations to establish a customs union.  
This was a long-term objective and, meanwhile, Costa Rica continued to administer individually the 
free-trade agreements it had already signed.  
(ii) Trade policies by measures 
161. With respect to customs issues,  the discussant and some delegati ons had shown interest in the 
methodology for risk management.  This involved effective use of the National Customs Service 
resources, focussing on inspection and verification of high-risk goods;  it also implied a simplification of the clearance and movement of low-risk goods.   
162. Some delegations had requested informati on on the Information Technology for Customs 
Control (TICA) system.  So far, no cost-benefit stud y had been undertaken, however, in its first year 
of implementation, the system had given results and valuable benefits to the administration, as well as 
to users.  It had substantially reduced the time for clearance of goods, which meant a monetary benefit 
for the Ministry of Finance, reflected in the lower costs of transactions.   
163. Before implementing the TICA, the Ministry of Finance paid a 0.25% commission to banks 
for trade transactions.  This constituted a consider able annual disbursement.  At present, TICA was 
working with the Central Bank platform, called SI NPE, which interconnected TICA, SINPE, and the 
banks, and a single tariff of US$0,60 per transac tion was paid.  This presented a saving of around 
US$1.7 million in one year of operation.  
164. Some Members had asked whether Costa Rica ha d considered reducing the gap between its 
bound and applied rates.  Costa Rica had maintained  its low applied rates, but was not considering 
reducing the gap between applie d and bound rates in a unilatera l manner.  Costa Rica actively 
supported the DDA and the objective of achieving amb itious results in market  access for agriculture 
and in NAMA. 
165. Special and differential treatment was important, but Costa Rica was not in favour of granting 
the excessive flexibilities requested by certain deve loping and developed countries, as these could 
impede the market access objectives under the Round.  Costa Rica considered that the gap between 
bound rates and applied rates should be reduced in th e Round, as should the applied rates, in order to 
create new trade flows. 
166. The discussant had noted an error regarding one tariff line where the applied rate was higher 
than the bound rate.  Costa Rica would work with the Secretariat to make the necessary correction to 
this error in transposing the harmonized system of 1992 to 1996.   
167. Various Members had raised questions about th e compatibility of the differentiated taxes of 
the Institute for Agricultural De velopment (IDA), and the Municipal Institute of Consultancy and 
Promotion (IFAM) with Article III of GATT 1994.  Sh e noted that the laws on IDA and IFAM dated 
back two decades, and had a mainly social objec tive.  Nevertheless, these laws had recently been 
discussed internally, and a legal opinion from th e Attorney's General Office had recommended 
adjusting the differential tax in both laws to th e principle of non-discrimination protected under the 
Constitution.  The Government was carrying out ch anges and discussions with various institutions 
involved, in order to allow the recommendations to be implemented. 
168. Regarding the purpose of the taxes applied to coffee and banana, Law No. 5515 of 1974 
imposed a levy of US$1 per box of bananas w ith the aim of financing the National Banana 
Corporation's social projects.  This entity was res ponsible for the banana i ndustry, for organizing the 
sector, and promoting the product on the internationa l market.  The tax on coffee was used to finance WT/TPR/M/180 
Page 24 
 
 
 the operation, maintenance, and administration of the Costa Rica Coffee Institute, which was 
responsible for protecting the interests of and guara nteeing an equitable regime between the industries 
involved in coffee production.   
169. Argentina had requested additional informati on on the procedures related to inspection and 
risk analysis of certain products in Costa Rica, and sanitary and phytosanitary measures, and technical 
regulations.  The system of sanitary and phytosanita ry measures in Costa Rica was organized by two 
Ministry of Agriculture entities:  the State Phyto sanitary Service, and the National Animal Health 
Service.  In addition, the Ministry of Health regulated everything connected with food safety.  
Sanitary and phytosanitary measures were granted le gal status in Costa Rica through various laws, 
decrees, and directives.  Costa Rica had taken due no te of Argentina's concern and hoped to deal with 
it soon. 
170. Regarding the discussant's question, on chang es in the free zone regime, Costa Rica was 
working on a proposal to modify this regime, in the framework of the national development plan, and 
within the national strategy to attract investment .  The objectives of the reform were to make the 
regime compatible with Costa Rica's commitments  within the WTO, and optimize its effects on the 
economy.  
171. Mexico had asked about the special export regi mes in force in Costa Rica.  Costa Rica's 
legislation established only three export promotion regimes, with the main objective of promoting 
Costa Rican competitiveness on international markets:   the drawback regime, which had had some 
deficiencies, was never used;  th e inward processing regime was used by a broad group of exporting 
companies, and reforms were being developed to simplify the regime;  the free zones regime was a 
combination of incentives and benefits provided by the State to companies that brought new 
investments into Costa Rica in accordance to Law No. 7210 and its modifications and regulations.  
172. Regarding Hong Kong, China's question on delays in notifications of state-trading companies, 
Costa Rica was working on a notification in acco rdance with a new calendar and the frequency for 
notifications agreed by the Council on Goods.   
173. Costa Rica was not considering signing th e Agreement on Government Procurement.  
Nevertheless, under Costa Rica's le gislation, government procurement was based on the principle of 
non-discrimination, free competition, transparency, a nd publicity.  Within the framework of National 
Development Plan, between 2007 and 2008 there were plans to extend the use of the electronic system 
of public procurement, Compr@Red, to all Cent ral Government entities and all institutions with 
considerable purchase volume.   
174. The government procurement system allowed P ublic Administration institutions to publish 
their requests for goods, works, and services on Intern et.  It also facilitated the participation of 
providers, through tools that allowed them to follow closely all stages of the government procurement 
procedures. 
175. The system had provided important results, a nd major progress in the standardization of 
procedures and tools, such as catalogues of goods, the register of suppliers, quality standards, and 
reference prices.  WT/TPR/M/180 
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 (iii) Sectoral policies 
176. The delegation of Brazil had asked about the functions of the Agroindustrial Sugarcane 
League, specifically in relation to the commercialization of ethanol.  The League was legally 
responsible for ensuring equitable relations be tween cane sugar producers and sugar mills, that 
guaranteed rational and fair partic ipation.  This institution was an additional player on the honey, 
sugar, and ethanol market but did not have ex clusive control of any of these activities.   
177. The discussant and some Members had asked whet her Costa Rica had considered reflecting in 
the WTO its commitments undertaken in recent bilate ral trade agreements.  Some Members had asked 
specifically about telecommunications services and insurance.  In this respect, Costa Rica's 
commitments in its bilateral or regional agreem ents were based on reciprocal commitments.  
Commitments in the framework of Doha Round woul d be considered in light of the results of 
Costa Rica's specific requests in different sectors, such as tourism, aircraft maintenance and repair, 
computing services, and others. 
178. Regarding telecommunications and insurance, the objective of the draft legislation was to 
grant access to the Costa Rican ma rket and ensure that it did not contain discrimination based on 
nationality or the public or private nature of th e supplier.  The draft legislation was under discussion 
in the Legislative Assembly.  The proposed opening of telecom services in Costa Rica covered 
wireless services, Internet, and private networks.  In addition, the project would allow the provision of 
new services that would arise as a result of new technological development.  The draft law on 
insurance sought to open up this market graduall y to competition, and established mechanisms that 
would allow access to the Costa Rican market.  This  would help to eliminate inefficiencies in the 
market and improve competition. 
179. In September 2007, there would be a referendum  on the approval of the free-trade agreement 
recently signed with the Dominican Republic, Central America, and the United States.   Costa Rica believed that this referendum would allow the civil society to  participate more directly in the 
definition of Costa Rica's trade policy. 
180. In the area of banking services, some Members had  questioned some asymmetries in favour 
of State banks, the guarantee by State and its full cooperation with state banks, the requirement for 
private banks to deposit (at interest rates below market rates), at leas t 17% of their short-term deposits 
in state banks in order to have access to pub lic deposits.  These measures did not discriminate 
between nationals and foreigners, a nd in addition, state banks had to comply with administrative and 
procurement provisions that applied to the public  sector, and therefore faced arduous government 
procurement procedures.  The Government was di scussing the possibility of modifying some existing 
asymmetries between the state and private banks.   
181. Costa Rica was aware that the Government urge ntly needed to acceler ate changes in port, 
airport, and road infrastructure.  The moderni zation processes had begun in priority areas in the 
Atlantic and the Pacific ports, such as specialized terminals, services to cruise ships, general cargo 
and container services.  Actions during 2006 had resulted in an increase in productivity of the 
Pacific ports by 60% over 2005.  Freight and cargo tr affic in the Atlantic ports had increased by 15% 
compared with the same period in 2005.  Studies ha d been initiated to try to ensure a multimillion 
investment in port installations on the Atlantic.  Costa Rica had improved the infrastructure, and an 
eventual concession for a private operator was be ing prepared for the Daniel Oduber Quiro's 
International Airport in Liberia.  WT/TPR/M/180 
Page 26 
 
 
 182. Regarding the requests by Chile and India for information on audiovisual services, she noted 
that the limits foreseen in the national legislation applied exclusively to wireless services that required 
the use of the radio frequency spectrum, and not audiovisual services in general.  These restrictions would be eliminated within the framework of draf t legislation that sought to open the Costa Rican 
telecom market.  
183. The discussant
 noted that the microprocessor industry accounted for 20% of total exports in 
2005.  Over the years this industry's performance ha d been rather volatile.  The combination of the 
relatively large dependency on one or a small numb er of products for export earnings, and relative 
volatility in demand for those products was a challengi ng situation.  He was interested in learning 
what stabilization measures, if any,  the Government was using to meet  this challenge, particularly in 
terms of the diversification policy. 
184. Costa Rica had concluded a number of bilateral investment agreements and he asked whether 
these also regulated arbitration.  Costa Rica had granted access to foreign professionals to work in 
Costa Rica (mode 4), and he asked whether there we re limits to this access, for example, through the 
use of time restrictions or quotas. 
185. The representative of Costa Rica  said that microprocessors were an important part of 
Costa Rica's exports.  The country had been working fo r many years to diversify its export supply.  In 
the mid 1980s, four agricultural products represen ted 75% exports;  at the beginning of the 1990s, 
coffee and bananas represented 50%;  and in th e mid 1990s textile products started to become 
important and totalled about 20% of Costa Rica's exports.  At the end of the 1990s, high technology 
products had become the prime export sector.  In  2007 bananas and coffee were still important export 
products, but hardly reached 1-2% of Costa Rica's total exports.  These examples demonstrated the 
efficiency and success of Costa Rica's export diversif ication policies in the last 15 years.  Costa Rica 
had more than 3,800 export products, more than 2, 000 different exporters (80% micro, small or 
medium sized), and more than 140  different export destinations.  
186. She noted that bilateral investment agreemen ts included the subject of arbitration.  
Furthermore, Cost Rica was part of the ICSID.  B ilateral agreements also included the possibility of 
recourse to arbitration regulations of the United Nations Commission on International Trade Law. 
187. Regarding professional services mode 4, the re quirement of nationalit y had been gradually 
eliminated for professional services.  There were no quotas, but there were requirements to join some 
professional colleges, where residence requirements would generally vary between three and five 
years.   WT/TPR/M/180 
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 VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
188. Costa Rica's third Trade Policy Review has offe red a better understanding of the evolution of 
its trade policies over the last six years together w ith the challenges that it currently faces.  I thank 
Ms. Castro, Ambassador Saborío, and the rest of the Costa Rican delegation, as well as the discussant, 
Ambassador Glenne, and the Members that took part in this exercise for contributing to a fruitful 
exchange of views. 
189. Members commended Costa Rica for the overall direction of its economic policies, solid 
growth record and efforts to control inflation, bu t noted that the fiscal deficit remains a challenge.  
Members warmly praised Costa Rica’s commitment to  the WTO, including its staunch support for the 
principle of non-discrimination and its active and constructive participation in the DDA.  Indeed, 
Costa Rica was described as a model for how sm all economies can take advantage of trade 
liberalization and the multilateral trading system to support growth and development.  Costa Rica 
mentioned the steps it had recently taken to bri ng up to date its notifications to the WTO.  
190. Members noted Costa Rica’s involvement in regi onal trade agreements, and in particular its 
participation in the CACM and possible membership  in the CAFTA-DR.  Costa Rica noted that the 
decision on whether to approve the CAFTA-DR w ould be taken to a referendum this year.  If 
approved, Costa Rica would need to make significan t legislative changes to comply with the CAFTA-
DR.  To ensure that this process helps to strengt hen the WTO, Members considered it important that 
any liberalization be bound at the multilateral level, and invited Costa Rica to take this into account in 
its revised services offer. 
191. Members greatly appreciated Costa Rica's progress with the modernization and simplification 
of its trade regime but considered that the pred ictability of the regime would be enhanced by 
narrowing the gap between bound and a pplied tariffs.  Costa Rica gave  detailed information about its 
new system for the administration of tariff quotas, and its policies and practices regarding SPS measures and technical regulations. 
192. Concerning the differences in the application of  internal taxes to imports and local products, 
Costa Rica indicated that domestic discussions are unde r way to address the issue.  It also pointed out 
that new IPR legislation is expected to enter into  force this year.  Improvements to the competition 
policy legislation are also under consideration. 
193. Members noted that the impact of the free zone regime and other fiscal concessions was not 
clear:  while these measures may foster investment a nd exports, they also distort resource allocation 
and hinder efforts to consolidate the fiscal situati on.  Members thus welcomed Costa Rica's possible 
rationalization of its incentive schemes, and the legi slative reforms now under active consideration to 
bring the free zone regime into line with multilateral rules. 
194. On services, Members encouraged Costa Rica to  continue taking steps to foster private 
investment in order to improve infrastructure, in  particular in maritime  ports.  Several Members 
considered that Costa Rica's state monopolies in telecommunications and insurance were hindering 
growth, and thus encouraged it to liberalized these s ectors.  Costa Rica indicated that with this aim 
and, if approved, as part of the parallel agenda to implement the CAFTA-DR, draft legislation was 
currently under discussion at the National Assembly .  The authorities were also studying possible 
amendments to the banking regulations to reduce existing asymmetries and allow the establishment of 
bank branches. WT/TPR/M/180 
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 195. In conclusion, it is my clear impression that this Body greatly appreciated Costa Rica's 
commitment to the multilateral trading system.  Memb ers assessed its trade and investment regime as 
generally open but were also aware of the costs that remaining barriers, particularly in services, impose on the economy as a whole.  Members thus expressed unequivocal support for the Government's ambitious reform agenda.  The actua l course of implementati on will be decided later 
this year but I trust that Costa Rica will in any case carry out the reforms necessary to buttress 
economic growth and living standards.  I also inv ite Costa Rica to demonstrate once more its support 
for a strong multilateral trading system by binding recent and future liberalization in the WTO. 
196. I would like to close this meeting by thanki ng once again the Costa Rican delegation, the 
discussant, and the Members that took part in this  meeting for contributing to an informative and 
engaging review.  I would also like to express my appreciation to the Costa Rican delegation for the 
comprehensive responses provided during the meeting. 
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