Costa Rica's third Trade Policy Review has offered a better understanding of the evolution of its trade policies over the last six years together with the challenges that it currently faces. I thank Ms. Castro, Ambassador Saborío and the rest of the Costa Rican delegation, as well as the discussant, Ambassador Glenne, and the Members that took part in this exercise for contributing to a fruitful exchange of views.
Members commended Costa Rica for the overall direction of its economic policies, solid growth record and efforts to control inflation, but noted that the fiscal deficit remains a challenge. Members warmly praised Costa Rica’s commitment to the WTO, including its staunch support for the principle of non-discrimination and its active and constructive participation in the DDA. Indeed, Costa Rica was described as a model for how small economies can take advantage of trade liberalization and the multilateral trading system to support growth and development. Costa Rica mentioned the steps it had recently taken to bring up to date its notifications to the WTO.
Members noted Costa Rica’s involvement in regional trade agreements, and in particular its participation in the CACM and possible membership in the CAFTA-DR. Costa Rica noted that the decision on whether to approve the CAFTA-DR would be taken to a referendum this year. If approved, Costa Rica would need to make significant legislative changes to comply with the CAFTA-DR. To ensure that this process helps to strengthen the WTO, Members considered it important that any liberalization be bound at the multilateral level, and invited Costa Rica to take this into account in its revised services offer.
Members greatly appreciated Costa Rica's progress with the modernization and simplification of its trade regime but considered that the predictability of the regime would be enhanced by narrowing the gap between bound and applied tariffs. Costa Rica gave detailed information about its new system for the administration of tariff quotas, and its policies and practices regarding SPS measures and technical regulations.
Concerning the differences in the application of internal taxes to imports and local products, Costa Rica indicated that domestic discussions were underway to address the issue. It also pointed out that new IPR legislation was expected to enter into force this year. Improvements to the competition policy legislation were also under consideration.
Members noted that the impact of the free zone regime and other fiscal concessions was not clear: while these measures may foster investment and exports, they also distort resource allocation and hinder efforts to consolidate the fiscal situation. Members thus welcomed Costa Rica's possible rationalization of its incentive schemes, and the legislative reforms now under active consideration to bring the free zone regime into line with multilateral rules.
On services, Members encouraged Costa Rica to continue taking steps to foster private investment in order to improve infrastructure, in particular in maritime ports. Several Members considered that Costa Rica's state monopolies in telecommunications and insurance were hindering growth, and thus encouraged it to liberalized these sectors. Costa Rica indicated that with this aim and, if approved, as part of the parallel agenda to implement the CAFTA-DR, draft legislation was currently under discussion at the National Assembly. The authorities were also studying possible amendments to the banking regulations to reduce existing asymmetries and allow the establishment of bank branches.
In conclusion, it is my clear impression that this Body greatly appreciated Costa Rica's commitment to the multilateral trading system. Members assessed its trade and investment regime as generally open but were also aware of the costs that remaining barriers, particularly in services, impose on the economy as a whole. Members thus expressed unequivocal support for the Government's ambitious reform agenda. The actual course of implementation will be decided later this year but I trust that Costa Rica will in any case carry out the reforms necessary to buttress economic growth and living standards. I also invite Costa Rica to demonstrate once more its support for a strong multilateral trading system by binding recent and future liberalization in the WTO.
I would like to close this meeting by thanking once again the Costa Rican delegation, the Discussant, and the Members that took part in this meeting for contributing to an informative and engaging review. I would also like to express my appreciation to the Cost Rican delegation for the comprehensive responses provided during the meeting.
