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WTO Completes Trade Policy Review Of Costa Rica

by Mike Godfrey,, Washington

09 May 2007

The World Trade Organisation (WTO) announced this week that it has completed its latest Trade Policy Review (TPR) of Costa Rica.

According to the WTO, since its last trade policy review in 2001, Costa Rica has experienced solid economic growth while continuing to modernize and simplify its generally liberal trade and investment regime.

Applied tariffs have remained largely unchanged and the use of non-tariff trade barriers has been limited.

Costa Rica has carried out an export promotion strategy which may well have encouraged investment but affected resource allocation. In this regard, reforms are planned in the free zone regime to bring it into line with WTO rules.

With regard to services, the WTO observed that the historical lack of competition in sectors such as insurance and telecommunications has hampered development and choice for consumers.

Reforms are planned in these sectors and it would be important to bind them multilaterally to give greater predictability to the trade and investment regime, according to the report.

Commenting on the country's economic environment, the WTO review observed that:

"Costa Rica's annual economic growth averaged around 4.9% during 2001-05, and is estimated to have been almost 6% in 2006. Growth has been particularly strong since 2003, reflecting mostly the strong performance of investment and exports."

"GDP per capita was slightly above US$4,600 in 2005. The fiscal deficit has been decreasing since 2003, but achieving and maintaining a balanced fiscal position remains a challenge especially considering high pension and other specific payments mandated by law as well as the relatively heavy public debt (55% of GDP)."

It continued:

"The main trading partner of Costa Rica is the United States, which accounts for some 40% of Costa Rica's total trade."

Commenting on the Costa Rican trade and investment policy framework, meanwhile, the WTO announced that:

"Costa Rica has an open investment regime but with certain important exceptions. The State has exclusive rights in the importation, refining and distribution of crude oil and related refined products; insurance services; railways; maritime ports and airports; and some postal services. The State also maintains the only concessions to provide certain key electricity and telecommunications services."

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