RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/REG147/M/2 
6 October 2005 
 (05-4498) 
Committee on Regional Trade Agreements 
Fortieth Session  
 
 
 
EXAMINATION OF THE FREE TRADE AGREEMENT  
BETWEEN CANADA AND COSTA RICA 
 
Note on the Meeting of 28 July 2005  
 
Chairman:  Mr. A. Egger (Switzerland) 
  
1. The meeting was convened in document WTO/AIR/2624. 
2. Under Agenda Item C.XII of its Fortie th Session, the Committee on Regional Trade 
Agreements (hereinafter CRTA or the Committee)  took up the examination of the Free Trade 
Agreement (FTA) between Canada and Costa Rica.  
3. The Chairman
 said that this was the second round of examination of the FTA between Canada 
and Costa Rica.  The proceedings of the first round, which had taken place in the 37th Session of the 
Committee in October 2004, could be found in doc ument WT/REG147/M/1.  Since then the Parties 
had provided responses to written questi ons circulated as document WT/REG147/4. 
4. The representative of the United States  commended the Parties for the information provided 
in the Standard Format and said her delegation a ppreciated the data on trade flows and tariff line 
coverage as that information helped the Committe e understand the breadth of this Agreement.  
However, she said that the official Canadian website  did not include links to the Canadian and Costa 
Rican tariff schedules and the link to the Costa Ri can site which was provided at the end of the 
Standard Format appeared to be invalid.  This was perhaps an issue whic h needed to be discussed 
further in the Negotiating Group on Rules (NGR), as  those sites were very helpful to delegations 
working their way through the details of regional trade agreements (RTAs). 
5. The representative of the European Communities  thanked the Parties for the data provided 
which was quite extensive and for the clarification of data incompatibilities.  He understood that the 
statistical problem was caused by the fact that a lot of goods passed through the United States.  As a 
follow-up question, he asked how trade coverage had been calculated, since according to his 
calculations it was 65 per cent or, using Costa Rica' s statistics, 90 per cent.  He wondered if the 
Parties could guide Members through the calculations  in the light of the statistical problems that 
existed.  The representative of Canada  acknowledged that it was difficult to assess coverage in the 
absence of fully reliable statistics.  This might  explain why some Parties in RTA negotiations 
preferred to rely on tariff line information;  it expl ained, at least from his delegation's point of view, 
why the Parties had provided tariff line information in the Standard Format, as this information was very relevant. 
6. The representative of th e European Communities
 agreed that tariff-line information was an 
interesting complementary measure but the question remained as to how trade coverage was 
calculated in terms of existing trade between the Parties, and how the figure of 90 per cent was reached.  He asked the Parties to  provide additional information to guide Members through the WT/REG147/M/2 
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 assessment.  The representative of Costa Rica
 said that in his view the Costa Rican data was 
sufficiently detailed to enable an analysis on tariff coverage, but he agreed to send the question back 
to capital in order to provide a more detailed reply. 
7. Noting that Article 3.3.4 permitted the Partie s to accelerate tariff elimination, the 
representative of the United States  asked if any acceleration had occurred and if the Parties could 
provide an update of the changes.  The representative of Canada  replied that there had been no 
acceleration of tariff elimination.  He said that the Agreement had entered into force on 1 November 2002, and so the first tariff reductions and elim inations had taken place upon implementation.  
Subsequent tariff reductions had taken place on 1 Ja nuary of each year and were done on a calendar 
based year, not on the anniversary date of the entry into force of the Agreement. 
8. Following up on question II.1.2, which explored  the reasons behind using a 15-year transition 
period for some products, the representative of the European Communities
 said that the Parties had 
not provided the rationale on a product-by-product basi s and that he would resubmit the question.  He 
added that his delegation had difficulty accepting the rationale of Costa Rica being "a smaller economy" as a generic explanation for granting a trans ition period longer than ten years.  In response, 
the representative of Costa Rica
 said that at the previous meeting the Parties had indicated that the 
longer transition period granted to Costa Rica was related to the asymmetry between the two countries.  This was something that had been  discussed in the NGR as one important aspect of 
special and differential treatment for developing count ries.  In his opinion, what was important was to 
look at the final outcome because in the end there would be significant trade liberalization under the Agreement, and only a small number of tariff lines would be subject to a longer transition period due 
to the sensitivities inherent to the Parties.  He aske d for clarification of the EC representative's request 
for a product-by-product analysis which he agreed to  send on to capital, thus enabling the Parties to 
give a more accurate reply. The repr esentative of the European Communities
 said that his delegation 
was looking for an explanation of the sectors or produc ts that had been granted a liberalization period 
beyond ten years and what the motivation for this w as.  In his view, the explanation of "smaller 
economy", if it referred to size, was probably true fo r most RTAs, while if it referred to developing 
countries, then that was true and Members were aw are of his delegation's position on that.  However, 
he asked the Parties to identify wh at concerns or considerations guided their choice of 15 instead of 
14 or 13 years to the extent that there were cert ain vulnerabilities.  He added that his delegation 
looked favourably on FTAs concl uded by developing countries, but was unhappy with the response 
that longer transition periods were necessary for sm aller economies, as in his delegation's view that 
was an open-ended response, and there was no li mitation to how much it could be used.   
9. Noting that Annex III.3.2.1, Special Safeguards, provided that the trigger levels for goods in 
Appendix III.3.2.1 would be increased by five per cent every year for ten years, the representative of 
the United States  asked what would happen at the end of ten years:  would the trigger mechanism be 
eliminated;  would they be stopped; and could the lis t of goods and trigger le vels be amended or was 
it fixed? As a general point, the representative of Costa Rica  informed the Committee that as a general 
point no safeguard actions had been taken under th e Agreement.  On the specific question regarding 
the special safeguard and the trigger levels, he said that the provisions of the Agreement could 
undergo variation, particularly regarding the five per cent annual increase.  The Agreement 
established the relationship between the applicati on of special safeguard measures and the tariff 
reduction periods.  It would seem that once the tariff  reduction or elimination period had expired, the 
application of the special safeguard would have a different effect.  He agreed to send the question 
back to capital for a more accurate reply. 
10. The representative of the European Communities  thanked the Parties for providing the 
response to his question on the status of the commitm ent to review developments in investments and 
services within three years of the date of entry into force.  Given that the review was due in November 
2005, he wondered what the state of play was vis-à-vis  this review with respect to both services and  WT/REG147/M/2 
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 investments.  The representative of Canada  replied that as far as he knew there were no new 
developments to report, but that he would provide  more details if the question was furnished in 
writing.   
11. The Chairman  said that the second round of examination of the Free Trade Agreement 
between Canada and Costa Rica had allowed the Co mmittee to clarify certain points though others 
remained.  He requested delegations wishing to ask questions to forward them to the Secretariat by 
23 September, and the Parties to submit replies in writing by not later than 31 October.  The 
Committee could consider the factual examination as complete.  Once the replies had been circulated 
to Members, any request for additional information could be dealt with without holding another round 
of formal examination and the Secretariat coul d begin drafting the examination report for this 
Agreement.  
12. The Committee took note  of the comments made.   
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