WORLD TRADE  
ORGANIZATION  WT/REG147/5 
13 March 2006 
 (06-1107) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN CANADA AND COSTA RICA 
 
Questions and Replies
 
 
 The following communication, dated 1 March 2006, is being circulated at the request of the 
Delegations of Canada and Costa Rica. 
  This document reproduces the questions addressed  to the Parties and the responses submitted. 
The questions and replies set out below are or ganized in accordance with document WT/REG147/3. 
 
_______________ 
  
I. BACKGROUND INFORMATION ON THE AGREEMENT  
3. Scope 
 
1. Under Article VIII.1.2, the Parties agree to “review developments related to trade in 
services and investment.”  Has such review oc curred?  Have the Parties developed plans for 
“further disciplines” in services and investment?   
 While developments related to trade in services  and investments have been reviewed, Parties 
are still considering the need for further disciplines. 
 
 
II. TRADE-RELATED PROVISIONS 
1. Import Restrictions 
 1.1 Duties and Charges 
 2. Could the Parties please explain what is meant by “this is a temporary tariff item 
subject to expiry at any time” as provided in Category A2?   Does the tariff item itself expire, or does the tariff on the item ex pire?  Has the tariff expired? 
 Tariff items with staging category A2 were te mporary tariff items with an MFN free rate of 
duty, subject to review by the Canadian Internati onal Trade Tribunal.  What would expire is the MFN 
duty-free status for product described in the tari ff item, as the tariff item would expire and the 
classification of the products would revert back to the parent item (i.e. the products would be dutiable 
again).  However, all of the items in staging cate gory A2 have now been made indeterminate, i.e., 
they are and will remain MFN duty-free.  
 
3. Could the Parties please provide additional  information on the TRQs created under the 
Agreement.   For example: WT/REG147/5 
Page 2  
 
  − What tariff lines are subject to TRQs?   
− Is there a schedule for liberalization?   
− Will the quota amounts be expanded and/or over quota tariff be reduced over 
time?   
− What have been the fill rates since implementation? 
− How do these preferential TRQs impact on third parties? 
− Is there a process for re-allo cation of unused quotas? 
 The only Tariff Rate Quota (TRQ ) that Canada has in place is for refined sugar. Costa Rica 
has TRQ for sugar, honey, frozen potatoes-french fri es and pork. For sugar the exact tariff lines are 
found in Canada’s and Costa Rica’s Tariff Schedule in  Chapter 17, noted with Staging Category D1 
with the footnote, for the case of the Canadian schedule, at the end of the document spelling out the 
TRQ volume for each year (see www.dfait-maeci.gc.ca/tna-nac/documents/canada_schedule-e.pdf
) 
and Category C for the Costa Rican Schedule (see www.comex.go.cr/acuerdos/comerciales /TLC%20Canada/espanol/Anexo%20III-3-
1%20programa.PDF  ). 
 
 Canada and Costa Rica agreed to eliminate thei r respective tariffs on originating refined sugar 
over an 8-year period, during which time Costa Ri ca's tariff will be reduced from 50 % to 0% and 
Canada's tariff will be reduced from $30.86/tonne to zero.    Canada provided Costa Rica with duty free acce ss within a TRQ for up to 20,000 metric 
tonnes (MT) of originating refined sugar beginni ng in year 2 of the Agreement increasing to 40,000 
MT in year 9 (for 2005 the TRQ volume is 26,680 MT).  Costa Rica provided Canada with up to 3,528 MT of duty free access within a TRQ for origina ting refined sugar in year 2 of the Agreement 
rising to 6,990 MT in year 9. The TRQ volumes  are based on an estimated 1.6% share of the 
respective parties' domestic markets in year 2 of th e Agreement rising to 3% in year 9. In Year 10 of 
the Agreement there will be no duties applied on or iginating Costa Rican refined sugar entering 
Canada and no duties applied on originating Ca nadian refined sugar entering Costa Rica. 
  Preferential access for Canadian refined sugar e xports to Costa Rica is limited by the Rule of 
Origin provisions of the Agreement.  Specifically  the only refined sugar eligible for preferential 
access to the Costa Rican domestic market will be that which: 1) meets the Rule of Origin 
requirement, i.e. either a) sugar refined from raw be et sugar produced in Canada ); or b) sugar refined 
from raw sugar imported from Costa Rica or; 2) ente rs under the negotiated exception to the Rule of 
Origin.   The negotiated limited preferential access to  the Costa Rican domestic market for non-
originating Canadian refined sugar allows prefer ential access up to 2,000 MT in year 2 of the 
Agreement increasing to 4,000 MT in year 9. Ther eafter, the upper limit on non-originating refined 
sugar exports to Costa Rica will rise beyond 4,000 MT according to a formula approach (i.e. 10% of 
Costa Rican refined sugar exports to Cana da over 40,000 MT in the previous year). 
 
 The amounts covered under the negotiated excep tion to the Rule of Origin represent upper 
limits on the quantity of non-originating refined suga r that Canada can export to Costa Rica.  The 
amount of non-originating Canadi an refined sugar exports to Costa Rica in any one year cannot 
exceed an amount equal to the previous year’s e xports of Costa Rican refined sugar to Canada.   WT/REG147/5 
 Page 3 
 
 
   Consequently, in Year 10 of the Agre ement, originating Canadian refined 
sugar [manufactured from Canadian raw beet suga r, plus sugar manufactured from imported Costa 
Rican raw sugar], plus up to 4000 tonnes or more of  non-originating Canadian refined sugar can be 
exported from Canada to Costa Rica duty free. Cost a Rican originating refine d sugar will be eligible 
for duty free access to the Canadian market. 
  
 Costa Rica has in place TRQs for the importation of pork beef. The tariff lines are 0203.11.00, 0203.12.00, 0203.19.00, 0203.21.00; 0203.22.00, 0203.29.00, 0206.30.90, 0206.49.90, noted with staging Category B.  Costa Rica agreed to eliminate its tariffs on originating pork over a 8-
year period, during which time Costa Rica's tari ff will be reduced from 46%  and 50% depending on 
the tariff line to 0%.  
  Costa Rica provided Canada with duty fr ee access within a TRQ for up to 525 MT 
of originating pork beef beginning in year 2 of the Agreement increasing to 738,7 MT in year 8 (for 
2005 the TRQ volume is 607,8 MT). The following table shows the situation of the TRQ on this 
product from 2004. 
 
Year Q’ MT Tariff inside TRQ 
0203.11/0203.21 Tariff inside TRQ 
0203.12/0203.19/0203.22 
/0203.29/0206.30.90/ 
0206.49.90 Tariff outside 
TRQ 
2004 578.8 28,75% 31,25% MFN (46%) 
2005 607,8 23% 25% NMF 
2006 638,1 17,25% 18,75% NMF 
2007 670,0 11,5% 12,5% NMF 
2008 703,6 5,75% 6,25% NMF 
2009 738,7 0% 0% NMF 
 
 Costa Rica has in place TRQs for the im portation of natural honey. The tariff line is 
0409.00.00 noted with staging Category A (inside) C ( outside).  Costa Rica agreed to eliminate its 
tariffs on originating honey over a 15 year period,  during which time Costa Rica's tariff will be 
reduced from day one for imports inside the TRQ and from 15% to 0% outside the TRQ.  
 
 Costa Rica provided Canada with duty fr ee access within a TRQ for up to 60 MT 
of originating natural honey for all the period. The following table shows the situation of the TRQ on 
this product from 2004. 
 
Year Q’ MT Tariff inside 
TRQ Tariff outside 
TRQ 
2004 60 0% 12% 
2005 60 0% 11% 
2006 60 0% 10% 
2007 60 0% 9% 
2008 60 0% 8% 
2009 60 0% 7% 
2010 60 0% 6% 
2011 60 0% 5% 
2012 60 0% 4% 
2013 60 0% 3% 
2014 60 0% 2% 
2015 60 0% 1% 
2016 n.a. n.a. 0% 
 WT/REG147/5 
Page 4  
 
   Costa Rica has in place TRQs for the importati on of frozen potatoes – french fries. The tariff 
line is 20041000, noted with staging Category A (inside)  B (outside).  Costa Rica agreed to eliminate 
its tariffs on originating frozen potatoes – french fri es over a 8-year period, during which time Costa 
Rica's tariff will be reduced from 41% to 0%.   
 Costa Rica provided Canada with duty fr ee access within a TRQ for up to 2.273 MT 
of originating natural honey beginning in year 2 of the Agreement increasing to 3.046 MT in year 8 
(for 2005 the TRQ volume is 2.631.3 MT). The following table shows the situation of the TRQ on this product from 2004. 
 
Year Q’ MT Tariff inside 
TRQ Tariff outside 
TRQ 
2004 2.506,0 0,0% 25,63% 
2005 2.631,3 0,0% 20,50% 
2006 2.762,8 0,0% 15,38% 
2007 2.901,0 0,0% 10,25% 
2008 3.046,0 0,0% 5,13% 
2009 n.a. n.a. 0,00% 
 
4. Article III.3.4 permits the Parties to accel erate tariff elimination.  Have tariff 
reductions/eliminations occurred?   
 The Canada–Costa Rica FTA entered into for ce on November 1, 2002.  The first tariff 
reductions/eliminations took place upo n implementation of the Agreem ent, on November 1, 2002.  
Subsequent tariff reductions take place on January 1 of each year.  The Parties have not accelerated 
tariff elimination under Article III.3.4.  
5. Where the Parties have retained quantitative rest rictions on imports, are the affected 
tariff lines otherwise “liberalized”?  In other words, in the end analysis, are those lines 
considered duty free in the Parties trade coverage data?  
 It is important to note that within access a nd over access tariff lines are separate entries in the 
Tariff Schedules.  Canada’s tariff elimination prov isions apply only to w ithin access tariff lines; only 
these are counted as "liberalized" in the trade cove rage data.  Tariff elimination provisions do not 
apply to over access tariff lines; these lines are not c ounted as liberalized in our trade coverage data. 
 3. Rules Of Origin 
 
6. Will importers/exporters of other WTO Memb ers be able to obtain advance written 
rulings, created in Article V.9?   
 The disciplines contained in Article V.9 regard ing advance rulings apply on the trade between 
the Parties to the Agreement. Impor ters/exporters of non-Par ties are not able to obtain advance rulings 
through Article V.9. The advance rulings are related to the granting of the preferential tariff in the 
context of the Agreement, as such this discipline will not be of interest to any other party that is not 
part of the Agreement.  4. Standards  
 4.1 Technical Barriers To Trade  WT/REG147/5 
 Page 5 
 
 
   
7. Do the TBT provisions of this Agreement provide preferential access for goods only 
from Parties to the Agreement or do they intend to raise the bar for all WTO Members? 
 The Free Trade Agreement between Costa Rica and Canada has only one article regarding 
TBT. Article IX.6 talks about “Standards includi ng Metrology” Parties reaffirm the rights and 
obligations established in the Agreement on Technical  Barriers to Trade of the WTO. This instrument 
will continue to be the legal reference to the appli cation of measures in this matter. The parties to the 
Agreement did not negotiate disciplines regardi ng TBT different from the ones established in the 
WTO. The Parties to the Agreement did not give  any preferential access to the goods from the other 
party in connection with the application of techni cal regulations or conformity assessment procedures. 
 
5. Safeguards 
 
8. Have any safeguard actions been taken under any of the safeguard mechanisms created 
in the Agreement -- Annex III.1, Section 4; Annex III.1, Section 5; Annex 3.2; or Chapter VI.  
 No safeguard action has been taken pursuant to any of the safeguard mechanisms created 
under the Agreement.  
9. Paragraph 2 of Annex III.3.2, concerning sp ecial safeguards, provides that the trigger 
levels in Appendix III.3.2.1 will be increased by 5 percent very year for ten years.  What will 
happen at the end of ten years?  Will the in creases cease?  Will the trigger mechanism be 
eliminated? 
 As provided in Paragraph 2 of A nnex III.3.2, the trigger levels will increase in 5 percent each 
year for ten years after the entry in to force of the Agreement.  At the end of the ten-year period, the 
trigger levels will remain constant at the amount r eached in the tenth year, until the end of the phase-
out period for each good.   
 
 Paragraph 8 of Annex III.3.2 pr ovides that the provisions of this Annex only apply for the 
phase-out period of each good. Therefore, the trigger will be eliminated, but the timing is linked to the applicable phase-out for each product.  
10. Can the list included in Appendix III.3.2.1. be amended?   
 Appendix III.3.2.1. could be am ended by mutual agreement of the Parties, as could any other 
element of the Agreement, as Article XV.2 (Amendm ents) provides that any modification or addition 
to the Agreement may be agreed between the Parti es and, after being approved in accordance with the 
legal procedures of each Party, shall constitu te an integral part of the Agreement. 
 9. Other Provisions  Trade Facilitation 
 
11. Under Article IX.2.7, the Parties agree to “i ntroduce or maintain simplified clearance 
procedures” for imports of low-value goods.  Will those simplified procedures be extended to 
imports of low-value products from all countries?   
 Given that procedures to facilitate trade are pr ovided for all goods traded between the Parties, 
those simplified procedures, including those related to low value, will be extended to imports of low-
value products from all countries.  WT/REG147/5 
Page 6  
 
  Goods Produced Under Free Zones Regime 
  
12. Could the Parties please explain what is meant by “the Government of Costa Rica 
satisfies the Government of Canada that Costa Ri ca has eliminated all tax exemptions and other 
export subsidies  offered to companies in Co sta Rica’s Free Zone regime”, as provided in 
Categories A1, B, C and D of Canada’s tariff e limination schedule?  Has the Government of 
Costa Rica demonstrated that such tax exemptions  and export subsidies have been eliminated?   
Have any of these tariff lines been liberalized?   
 For goods produced inside Costa Rican Free Trad e Zones (FTZs), Canada will defer the start 
of tariff reductions until such time as Costa Rica e liminates all tax exemptions and export subsidies 
provided in FTZs. Therefore, until this is done, goods produced in Costa Rica’s FTZs are not entitled 
to tariff preferences under the Canada–Costa Ri ca FTA.  According to the Doha decision on the 
extension under Article 27.4 of the WTO Agreem ent on Subsidies and Countervailing Measures, 
Costa Rica has until 2009 to eliminate expor t subsidies for non-agricultural products. 
 
 
III. GENERAL PROVISIONS OF THE AGREEMENT 
5. Institutional Framework 
 
13. Has a Customs Sub-Committee, est ablished pursuant to Article V.13, been appointed?  
If so, what actions has it taken?  What items are on its agenda?  
 To date, it has not been deemed necessary fo r such a Committee to meet.  As a result, a 
Customs Sub-Committee has yet to be established.  
14. Article III.14.4 provides for the establishmen t of a Sub-Committee on Agriculture.   Has 
this Sub-Committee been established, and if so, what actions has it taken? 
 To date, it has not been deemed necessary for such a Sub-Committee to be established. 
 
__________