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EU Statement at the 5th Trade Policy Review of Costa Rica, 18 September 2019

Geneva, 18/09/2019 - 00:00, UNIQUE ID: 190918_12
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On behalf of the European Union I would like to welcome the Delegation from Costa Rica, led by Mr. Duayner SALAS, Vice-Minister for External Trade, and thank the Discussant, H.E. Mr Mikael Anzén (Sweden), for his introductory words.

We appreciate the opportunity to discuss the trade policy developments of one of the founding Members of the WTO. Costa Rica is a country that is well integrated into its region and the world economy and attaches great importance to the rules-based multilateral trading system. Let me here express appreciation to the excellent cooperation we have with the Costa Rican mission in Geneva.

The Discussant has already noted the positive achievements in the economy of Costa Rica: an average growth rate of 3.5% in the period under review, which resulted in a 13.9% increase in a nominal GDP since the last review in 2013. This is in particular due to the strong role of foreign direct investment in the country and foreign trade, which accounted for over 70% of the GDP.  With a GDP per capita based on purchasing power parity of around USD 17 600 in 2018, Costa Rica is one of the wealthiest countries in the Latin America region.

We commend the fact that Costa Rica is developing high-tech manufactures, mainly destined for export, which have achieved a high level of competitiveness. The share of medical instruments and devices in total exports has increased up to 37% in 2018. They also account for an equally large share of Costa Rica’s exports to the European Union. As it appears, the success of these high-tech instruments can be ascribed to the fiscal incentives enjoyed by manufacturing companies in the Free Zone Regimes and foreign investment in the sector.

We are encouraged by not only the good economic performance, but also Costa Rica’s support to the multilateral trading system and its active participation in the WTO work. Costa Rica supports the same values as the European Union, in particular, in the area of gender equality and environment, including commitments to the Paris Climate Change Agreement. Costa Rica is the leader in pursuing environmental policy goals in Latin America as demonstrated by its top ranking position in the region according to the Environmental Performance index.

The EU and the Central America Association Agreement, signed in 2012, remains the cornerstone of the EU-Costa Rica relationship and bilateral trade continues increasing. The EU remains the second Costa Rica’s exports destination after the United States and the third source of Costa Rica imports. At the same time, over the period of 2013-2017 investments in general increased, more specifically EU investments to Costa Rica increased by 87% in terms of investment stocks and by 32% in terms of investment flows.

Yet, despite an overall good economic performance, a number of challenges remain for Costa Rica’s government to keep the country on a path of sustained and inclusive growth. As the Discussant, we note the increase in the recent years of the unemployment rate to 10% (in 2018), high fiscal deficit resulting in a high debt to GDP ratio (47.7%) and insufficient investment in the country’s infrastructure. It requires a significant reform that we know the government is currently undertaking.

As major deficiencies that should be addressed, the WTO Secretariat has identified a lack of competition in the banking sector, deteriorating condition of the transport system through a lack of investment, a substantial part of the economy exempt from the competition rules, including the electricity sector. Restrictions in the latter are perceived by businesses as major factors contributing to increasing production costs. 

Mr. Chairman, as highlighted by a number of detailed questions that the EU submitted for the purposes of Costa Rica’s TPR, there are also some other areas where we believe there is scope for improvement, or where we believe Costa Rica should pay special attention: in particular regarding competition policy, taxation, tariffs and customs procedures as well as services and investment.

We appreciate Costa Rica’s commitment and on-going efforts to facilitate trade and investment and we are hopeful that it will address our concerns in this regard. At the same time, we would like to reiterate our interest and importance to a better protection and effective enforcement of Geographical Indications on the international scene, both on the multilateral and on the bilateral level.

Despite these concerns, the EU would like to underline that we are equally positive about Costa Rica’s trade policy and our bilateral trade relationship. We would thus simply encourage Costa Rica to continue on this path.

On behalf of the EU, I look forward to a constructive exchange of views during this review and I wish the delegation of Costa Rica a very successful review.

 

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