China-Costa Rica FTA Takes Effect

The bilateral free trade agreement (FTA) between China and Costa Rica, the negotiations for which began in January 2009 and which was signed in April last year, came into effect on August 1, 2011.

Under the agreement, Costa Rica will cancel within 15 years more than 90% of tariffs on goods originating in China, of which 60% will be implemented from the effective date of the agreement, while China will eliminate the import duties on over 95% of goods originating from Costa Rica, 65% of which will be effective immediately.

The first step in China’s tariff reductions involves 7,000 products, and includes Costa Rica’s agricultural and seafood exports, particularly coffee, beef, pork and fruit juices. Costa Rica’s initial tariff reductions, covering some 6,000 products, will favour Chinese exports of, for example, clothing and shoes, refrigeration and electrical products, and frozen vegetables.

The FTA also involves the selective opening up of each country’s services sector, while further clauses in the agreement involve such topics as rules of origin, technical barriers to trade and custom procedures.

Bilateral trade has been going from strength-to-strength since the two countries established diplomatic ties in June 2007, when Costa Rica reversed its longstanding allegiance with Taiwan to establish trade ties with mainland China.

In fact, China is already Costa Rica's second largest trading partner, and total trade between the two countries has reached significant amounts – reportedly increasing by over 19% on an annual basis to the equivalent of USD3.8bn last year, with Costa Rica exporting almost USD1.3bn of that total.

August 2, 2011

Source: Tax News