RESTRICTED
WORLD TRADE WT/TPR/M/1/Add.1
13September 1995
ORGANIZATION(95-2644)
Original: Spanish
TRADE POLICY REVIEW MECHANISM
REPLIES BYTHE REPRESENTATIVE OFCOSTA RICA
13July1995
I. Current situation andoutlook fortheCosta Rican economy
1. Therelative macroeconomic stability achieved byCosta Ricainrecent years suffered aserious
upheaval in1994, principally inthefiscal sector. Thepublic sector 'sconsolidated deficit, which
represented lessthan1percentofGDP in1993, roseto8percentin1994. Oneofthemainreasons
forthisincrease wasthegrowth intheGovernment 'sdeficit, which rosefrom 1.9percentofGDP
in1993 to7percentin1994. TheCosta Rican Government, withthesupport ofthepopulation as
awhole, decided thatadrastic reduction ofthefiscal deficit wasanindispensable prerequisite foran
economic strategy aimed atconsolidating economic stability andpromoting thegrowth notonlyof
theeconomy asawhole butespecially ofrealwages. Thegoalistoreduce thefiscal deficit bymore
than50percentin1995to3.5percentofGDP, andin1996itishoped thatitwillnotexceed 0.5per
centofGDP. TheGovernment expects that,asaresult, inflation willbebelow 10percentin1996
andtheborrowing ratewillfallfrom 32percentto18percent.
TheGovernment therefore sought theconsensus needed toadopt andimplement along-term,
socially andeconomically sustainable solution totheproblem ofpublic finance andthishasalready
started tobearfruit. Themeasures willofcourse havetoreceive legislative approval, which depends
onabranch ofgovernment distinct fromtheExecutive. Nevertheless, given themanner inwhich the
CostaRicansystemfunctions,itcanconfidentlybepredictedthatthenationalpoliticalagreementreached
inrecent weeks willbeimplemented, ashasalready begun withtheapproval ofaseries oflawsby
theLegislative Assembly.
2. TheGovernment 'smarked fiscal deficit istheresult ofthe54percentincrease incurrent
expenditure while revenue onlyroseby16.4percent(corresponding toareduction of3percentin
realterms). Theriseinexpenditure wasmainly duetofourfactors: (i)anexpansionist fiscal policy
reflected inpay,procurement ofgoods andservices, etc.linked tothepolitical-electoral cycle; (ii)an
increase intheGovernment 'sfixed current costs overwhich ithasnocontrol (payrolls, which are
sometimes indexed, afixed share ofthebudget forcertain institutions, etc.); (iii)theincreasingly
heavy burden ofservicing theinternal debt, amounting to21percentofGDP in1994, andthedebt
incurred bytheGovernment tofinance thepublic sector deficit; and(iv)thecollapse ofthethirdmost
important Statebank. Tothesecyclical andstructural trends mustbeadded anumber ofspecial factors
thathelptoexplain themarked deterioration thatoccurred in1994, forexample, expenditure related
totheelections andthechange ofGovernment, paying offoutstanding costs, increased interest rates
ontheinternal debt, etc.Taxreceipts fellby3percentinrealterms asaresult ofseveral factors:
(i)reduction ofthesalestaxfrom11percentto10percent; (ii)reduction inimport tariffs forraw
materials from10percentto5percent; (iii)reduced growth ofimports thereby diminishing therevenue
derived from tariffs; (iv)lower revenue from income tax.WT/TPR/M/1/Add.1
Page2
3. TheGovernment hasdrawn upastrategy toprovide along-term solution totheproblem of
public finance. Thishasanumber offacets, forexample:
- Consideration bytheLegislative Assembly ofataxpackage comprising proposals on
fiscal justice andtaxadjustment. Theformer proposes giving thetaxadministration
theauthority toverify thattaxpayers arefulfilling theirobligations, ensure efficient
collection oftaxesandpunish withseverity anyfailure tomeetobligations. Thesecond
proposal aimstoincrease taxrevenue directly bystandardizing profits taxat30per
cent,establishing newtaxbrackets forwages andpensions, increasing salestaxfrom
10to15percent,updating thevehicle taxandeliminating anumber ofminor taxes.
Thefirstofthese draftlawswillbeadopted during July1995, anditishoped thatthe
other, which ismore controversial butisalready thesubject ofagreement inprinciple
willbeadopted inAugust 1995;
- implementation ofprogrammes tomodernize thetaxandcustoms administrations with
theaimofsimplifying theprocedures tobefollowed andincreasing theefficiency of
bothorganizations. Ageneral customs lawhasbeensubmitted totheLegislative
Assembly forthispurpose, proposing astructural reform ofcustoms soastoallow
them tofunction efficiently andadapt totheexpanding needs ofCosta Rica'sforeign
trade. Thedraft lawisaimed atmeeting thefundamental objectives ofamodern
customs system; facilitation offoreign trade andappropriate andefficient collection
ofduties. Anumber ofchanges areintroduced attheoperational andregulatory levels.
These include computerized systems linking upallcustoms offices, ports ofentry,
factories,freezonesandotherauxiliarycustomsservices.Selectiveandrandomcontrols
areproposed andtheobligation tousetheservices ofacustoms agent isabolished
inpartsothatcustoms operations canbeeffected without theirparticipation. The
customsaregivenlegalpowerstoexercisecontroloverdocumentationrelatedtomodern
instruments oftrade policy; tariff quotas, rules oforigin, technical standardization,
preshipment inspection, etc.Specialized administrative andjudicial bodies aretobe
setuptodealwithappeals against administrative decisions related toforeign trade.
Lastly, several unlawful operations aretobepunished more effectively bysevere
penalties. Thedrafthasbeenapproved intherelevant committee anditishoped that
itwillbeadopted thismonth;
- elaboration ofaprogramme fortheinstitutional reform ofthepublic sector, covering
labour mobility, thereorganization, amalgamation oreven elimination ofpublic
institutions. Thesection onlabour mobility isalready being implemented andit
envisages areduction of8,000 posts in1995. Itisalsohoped tomake rapid progress
withtheplantoreform public institutions during 1995;
- creation ofaPresidential Commission onreduction ofexpenditure withtheobjective
ofdrawing upaprogramme toreduce public spending in1995 to2percentofGDP
inrelation tothenegative projections ofgrowth inpublic spending equivalent toone
thirdofthefiscal deficit ofthepreceding year. TheCommission hasalready presented
itsplan, which isbeing carried outscrupulously.
4. Inaddition, withaviewtopursuing thestructural reform oftheStateandfinding along-term
solution totheproblem ofpublic finance, thefollowing draftlawshavebeenputbefore theLegislative
Assembly. They areallthesubject ofconsensus onthepartofthetwomajor parties andwill
consequently beadopted during coming months:WT/TPR/M/1/Add.1
Page3
- Economic guarantees: twodraftlawsarecurrently before theLegislative Assembly
proposing thatanumber of"economic guarantees" should begiven constitutional status,
forexample specific affirmation oftherighttofreedom toconduct business operations,
import andexport; limitations onthepower oftheLegislative Assembly todelegate
itsauthority forthefixing ofdomestic taxes, surcharges andduties; making theState's
regular budget subject toaseries ofrules, e.g.current andcapital expenditure may
notexceed current income bymore than1percentofGDP, theincrease inpublic
credit maynotexceed theannual percentage ofnominal growth inGDP during the
preceding year, therateofgrowth ofdirect orindirect credit obtained bytheState
andState bodies asawhole from thenational banking system maynotbemore than
thepercentage ofgrowth intotalcredit granted totheprivate sector. After this
legislation hasbeen adopted, anybudget thatdoes notmeet theaforementioned
provisions willbenullandvoidandconsequently cannot beimplemented;
- reform ofthefinancial administration law(LeydeAdministración Financiera dela
República) :thisdraftcontains anumber ofprovisions establishing procedures and
measures togiveeffective andefficient support totheregulation andcontrol ofincome
andexpenditure bythePublic Treasury;
- lawharmonizing pension schemes paidoutoftheState'sbudget (LeydeNormalización
ySostenibilidad delosRegímenes dePensiones concargo alPresupeusto Nacional) :
thisdraftwasadopted bytheCosta Rican Legislative Assembly on9Julylast;
- lawending theState'sliquor monopoly (LeydeApertura delMonopolio Licorero del
Estado) :thisbasis ofthisdraft isthattheproduction ofethyl alcohol, aswellas
production andutilization ofallother types ofalcohol, should betheresponsibility
oftheprivate sector. Itaimstopromote anactivity thathasstagnated andgradually
toeliminate theState'smonopoly onalcohol. Statecontrol ofthequality ofalcohol
andliquor andtheprotection ofconsumer health willremain;
- lawontheregulatory authority forpublic services (LeydelaAutoridad Reguladora
delosServicios Públicos) ,transforming theNational Electricity Service: theaimis
totransform theNational Electricity Service intoaregulatory authority forpublic
services soastoestablish anefficient bodythatwillregulate andfixprices, ratesand
feesforpublic services paidbyprivate andState enterprises withahighdegree of
technicity andasaguarantee andprotection forconsumers andusers.
5. Despite itscleardetermination toreach along-term solution, which implies structural reform
ofpublic finance, theGovernment hastomeetshort-term obligations, mainly related toservicing the
external debtandpaying outallowances forlabour mobility, forwhich itwillneedimmediate resources.
Thisiswhy, eventhough theintention istoadopt theaforementioned legislative package asawhole,
especiallythedrafttaxadjustmentlaw(LeydeAjusteTributario)whichincreasessalestaxby50percent,
on29March lasttheGovernment increased themost-favoured-nation tariff by8percentage points.
Thismeasure applies tothemajority oftariffheadings withtheexception ofthose forwhich theincrease,
added totheprevailing tariff, would haveledtoatariffthatexceeded thebound rate.Thetariffincrease
istherefore consistent withthetariff bound byCosta RicaintheWTO. Consequently, Costa Rica
willnotmake useofArticle XXVIII ofGATT 1994, buthasnotified thismeasure under the1979
Understanding Regarding Notification, Consultation, Dispute Settlement andSurveillance. Adocument
bearing thesymbol WT/L/74 willsoonbecirculated. There isnoinformation ontheamount generated
bythismeasure, butitiscalculated thatitwillbearound ¢16billion ayear(about US$90million
atthepresent exchange rate).WT/TPR/M/1/Add.1
Page4
6. Inaddition tothelawsalready mentioned, theGovernment hasmade itapriority toamend
other lawsthatformanimportant partofCosta Rica's"legal infrastructure" because theyneedtobe
modernized andbrought intolinewiththechanges thathaveoccurred intheeconomy. Thecommon
goaloftheamendments proposed istoupdate thelegalframework inpursuance oftheGovernment 's
commitment tosupport further stages intheopening upandliberalization oftheeconomy. Anumber
ofdraft lawsarebeing discussed orhavebeenadopted bytheLegislative Assembly andthese are
mentioned inparagraph 44,pagexvii,oftheSummary Observations intheReport bytheSecretariat.
They include thefollowing:
- Lawcreating theNational Standardization Institute (LeydeCreación delInstituto
Nacional deNormalización ):thiswillcreate aspecialized public institute under the
Ministry ofEconomy, Industry andCommerce toreplace thepresent Standards Office
(Oficina Nacional deNormas yUnidades deMedida (ONNUM )).ThenewInstitute
willhavebetter-defined legalpowers adapted tothecurrent requirements oftechnical
standardization, aswellasanappropriate organizational infrastructure, budgetary and
procurement flexibility andgreater capacity fornational coordination intheareaof
technical standardization. Itishoped thatthelawwillbeadopted during thefirstquarter
of1996;
- lawonadministrative contracts (LeyGeneral deContratación Administrativa ):the
aimistoreform theprocess ofawarding administrative contracts inorder tobring
itintolinewithmodern economic requirements andmake itpartoftheprocess of
commercial opening taking place inCosta Rica, ensuring thatprocurement procedures
inthepublic sector aremore efficient, rapid andstraightforward. Inaddition,
administrative contracts willbeadapted totheinternational commitments assumed by
Costa Rica intheFree Trade Agreement with Mexico. Therelevant billis
LawNo.7494, adopted on2May1995 andpublished intheOfficial Journal (La
Gaceta )No.20of8June1995;
- radiocommunications law(LeydeRadiocomunicaciones deCosta Rica):theobjective
istomake radiocommunications, related services, radio publicity and
radiocommunication agents subject tomodern legislation inaccordance withtheprocess
ofopening upCosta Rica'seconomy. There isnoestimated dateforadoption ofthis
lawbytheLegislative Assembly;
- insurance laws: draftlawsontheadministrative restructuring andmodernization of
theinsurance market arecurrently being considered, discussed andadopted bythe
Legislative Assembly. Itishoped gradually toopenupthedomestic insurance market
andtheNational Insurance Institute (Instituto Nacional deSeguros )soastoprivatize
theselling ofinsurance andmodernize theInstitute.
- ParisConvention fortheProtection ofIndustrial Property: approved byLawNo.7484
of21March 1995;
- lawsonfinancial modernization: withtheaimofmodernizing andopening upthe
national banking system, twodraftlawshavebeenelaborated. Thefirstcontains a
number ofamendments tothelawgoverning theCentral Bank(LeyOrgánica delBanco
Central )inorder tomake more independent andgiveitwide-ranging responsibilities
forsupervising financial bodies operating inCosta Rica. Thesecond isanewlaw
regulating financial entities anditprovides forgreater participation bythelatter in
theCosta Rican banking market, allowing theminteralia,access totheCentral Bank's
rediscount facilities andtoseekcurrent account deposits, previously restricted toStateWT/TPR/M/1/Add.1
Page5
banks. Itishoped tomake theCosta Rican financial system more efficient asakey
element ineconomic development. Bothdrafts should beadopted during thesecond
halfof1995;
- lawonautonomous orparallel generation ofelectric power (LeydeReformas alaLey
queAutoriza laGeneración Eléctrica Autonóma oParalela ):thislawwaspublished
on9Maylastanditamends theterms forprivate sector participation inthejoint
generation ofelectric power, allowing theprivate sector toholdupto65percentof
thecapital ofCosta Rican enterprises jointly generating electricity, previously the
percentage was35percent.
Adraftlawonphytosanitary protection waswithdrawn from thecurrent legislative session.
Atpresent, there isnorelated draftbefore theLegislative Assembly.
7. InthecontextofCentralAmericansphere,CostaRicahasplayedanimportantroleindiscussions
onreforming thelegalinstruments relating tounfair tradepractices, safeguards andcustoms valuation
withthebasic objective ofbringing therulesintolinewiththeagreements under theUruguay Round.
Thediscussion onunfair trade practices isalready welladvanced, although thisisnotthecasefor
safeguards. Nevertheless, Costa Ricareserves therighttoapply theCustoms Valuation Code fora
maximum period ofuptofiveyears. Theadoption ofthese regulations doesnotrequire legislative
approval.
8. Among themeasures tobetaken inpursuance oftheprocess ofliberalizing andopening up
theeconomy, theGovernment hopes tocontinue thetariff reduction process, reducing thefloor and
ceiling levels ofthetariffs applied, oncethepublic finance situation hasbeennormalized intheway
mentioned above. Concerning those products which stillhavehightariffs asaresult ofthetariffication
undertaken inconformity withtheAgreement onAgriculture, thesewillbereduced inaccordance with
Costa Rica'sSchedule ofConcessions andCommitments toGATT 1994.
9. Lastly, along thesame lines, although thereisnooverall planfortherestructuring, reduction
orelimination ofState monopolies inthefuture, itshould bestressed thatthere areanumber of
measures, some ofthematanadvanced stage ofdiscussion, aimed atmoving forward inthisdirection
incertain special cases. Forexample, mention hasalready beenmade oftheproposal toeliminate
theState'sliquormonopoly,whichitishopedwillbeadoptedduringJuly1995,proposalsonthegradual
opening upoftheinsurance market andtheelimination oftheState monopoly inthisarea, aswell
asproposals foropening upfinancial services andabolishing theStatemonopoly ondemand deposits.
Itmust beemphasized thatthese political decisions havebeendifficult toadopt astheynecessitated
discussion atthehighest levelandtheconsensus ofCosta Rica'smajor political andcivilsectors. Costa
Ricaisnevertheless atthefirststage intheprocess ofopening upthese sectors andthisiswhyitis
notyetready toconsolidate thesteps being taken inthisdirection.
II. Costa Rica'strade policy aftertheUruguay Round
10. InDecember 1994, theCosta Rican Legislative Assembly approved theAgreement Establishing
theWTO intimeforittoenter intoforce on1January 1995. Atthesame time, theimplementing
legislation fortheUruguay Round wasadopted sothatmany oftheobligations assumed byCosta Rica
under theUruguay Round could befulfilled, except inthose areas inwhich Costa Ricaintends tomake
useofthetransitional periods provided forintheRound itself.
11. Costa Ricahasmetallitsobligations onnotification within thetime-limits laiddown inthe
relevant agreements andinaccordance withthedecisions ofthevarious committees orgroups. AlistWT/TPR/M/1/Add.1
Page6
ofnotifications submitted byCosta Ricaisattached. Costa Ricawill,asinthepast,continue tofulfil
itsnotification obligations within theperiods specified.
12. Inthecontext oftheUruguay Round, Costa Rica, together withotherLatin American countries,
negotiated better conditions foraccess ofitsbanana exports totheEuropean market within thecommon
regime fortheimport ofbananas adopted bytheEuropean Union. Theagreement reached iscovered
bytheprovisions oftheUruguay Round andisincluded intheEuropean Union 'sSchedule ofSpecific
Commitments toGATT 1994. Inthisconnection, Costa Ricaregrets thattheUnited States hasinitiated
unilateral action tocombat thisagreement despite thestrengthened system forthesettlement ofdisputes
agreed under theUruguay Round.
(i) Tariffication andopening upoftariff quotas
13. Domestic legislation oncommitments toeliminate import licences, tariffication andspecial
safeguards forproducts subject totariffs hasdulybeenimplemented inCosta Rica. Following the
entry intoforce oftheLawonImplementation oftheUruguay Round Agreements (LeydeEjecución
delosAcuerdos delaRonda Uruguay ),LawNo.7473of20December 1994, allimport licences were
abolished, including those fornon-agricultural products. Tariffs werealsomodified inorder tomeet
tariff commitments, including theopening upoftariff quotas. Thiswasdone intheregulations on
theallocation oftariffquotas (Reglamento deAdjudicación delosContingentes Arancelarios ),Executive
Decree No.23914-COMEX-MAG, published intheLaGaceta ,No.246of27December 1994. With
regard tospecial safeguard measures foragricultural products subject totariffs, theregulations onthe
application ofspecial safeguard measures (Reglamento sobre laAplicación deMedidas deSalvaguardia
Especial paraProductos Agropecuarios ),Executive Decree No.23912-COMEX-MAG-MEIC, were
adopted andpublished inLaGaceta No.246of27December 1994.
14. Theallocation ofquotas foractual access andminimum access iseffected bygranting stock
exchange certificates which givetheright toimport within thequota fixed. Theprocedure isa
transparent mechanism forallocating licences (certificaciones ),utilizing amarket system. These
certificates aregranted inastock exchange operation totheimporter orexporter whomakes theimport
offeratthelowest price andtheiracquisition doesnotimply anyoutlay thatdistorts theagreed price
(apart from thecommission dueonstock exchange operations). These operations arecarried outin
anystock exchange foragricultural products authorized tooperate inCosta Rica. Generally, theparties
totheoperation (foreign exporter ordomestic importer) establish theconditions ofthesalescontract,
firstofallfixing theamount, quantity andspecifications ofthegoods. Thispreliminary contract goes
topublic auction. Attheauction, thestock exchange foragricultural products awards thecertificate
towhichever thirdparty (exporter orimporter) improves onthepriceterms ofthepreliminary contract.
Ifnoproposal improves onthese terms, thepreliminary contract isfinally accepted. Thequantity
ofgoods traded isassigned tothetariffquota forthegoods inquestion. Thequantities arecross-checked
bythestockexchange andtheMinistry ofAgriculture andLivestock. Theperson awarded thecertificate
must import thegoods within themaximum period indicated bytheMinistry ofAgriculture and
Livestock. Themaximum quantitative limitforthese stock exchange operations -either individually
ortaken asawhole -isthemaximum amount tobeimported inconformity withthetariff quota. The
quotas areassigned every fourmonths. Thetransparency ofthisprocedure isassured: priorpublication
intheOfficial Bulletin (Diario Oficial )ofthedateandamount ofthequotas, regulation andpublication
oftheprocedure andoftheproducts subject totheprocedure. Thisinformation willshortly benotified
inthecontext oftheWTO 'sAgreement onAgriculture.
15. Thetariffs applied within andoutside thetariffquota areconsistent withthose bound byCosta
RicaintheWTO. Theattached tableshows thetariff headings subject toquotas, thetariff applicable
outside thequota atthebeginning andendoftheperiod ofapplicability.WT/TPR/M/1/Add.1
Page7
16. Costa Ricahasalready prepared itsreplies tothequestionnaire onimport licensing procedures
andwillsubmit itwithin thetime-limit.
(ii) Customs valuation
17. Since 1985, Costa Ricahasusedamixed customs valuation system, which isaCentral American
regulation (Annex BtotheConvention ontheCentral American Customs Tariff Regime) andisbased
onasystem combining methodologies provided under theBrussels Definition ofValue andArticle VII
oftheGATT. Although the"normal price" (Brussels Definition), isthebasis forcustoms valuation
purposes, theprice declared ontheinvoice orrelevant documentation isalsoaccepted. Thenormal
price canbe:thenormal commercial price under fully competitive conditions (precio usual de
competencia );theestimated transaction price(elprecio probable decompraventa );therealtransaction
price (elprecio efectivo decompraventa );ortheprice setonthebasis ofrental contracts (precio
determinado conbaseenelcontrato ocontratos dealquiler ).Apart from these methods, noother
instruments (e.g.reference orminimum import prices) areused.
Newlegislation oncustoms valuation hastobeadopted attheCentral American levelbecause
itisanintegral partoftheregulations oftheCentral American Common Market. Thissubject isat
present being discussed attheCentral American levelanditishoped thataconsensus willbereached
shortly. Itisdifficult toforecast exactly when. Inaddition, Costa Ricahasreserved itsrighttoapply
theCustoms Valuation Code foramaximum period ofuptofiveyears. TheGovernment hasmade
itclear thatcustoms valuation willconform strictly tothegeneral principles oftheAgreement on
Implementation ofArticle VIIoftheGeneral Agreement onTariffs andTrade 1994, andconsiders
thatessentially thetransaction value should beusedtovalue themajority ofimported goods. Regarding
theestimated impact ofadopting thiscriterion, itisexpected thatitwillhaveafavourable effect on
theopening upofimports. Because oftheimpalpable nature oftheproblem, itisnotpossible tomake
quantitative estimates oftheprobable effects ofthechange ofmethodology.
19. Thedatabase referred toinparagraph 63oftheReport oftheSecretariat isdeemed tobeof
great importance forthefollowing reasons; itwillprovide detailed statistics offoreign trade, help
tomonitor under-valuation without theneedtoapply minimum prices andexercise control overports
ofentry, departure, destination andorigin andcustoms agencies.
(iii) Activities ofState-trading enterprises
20. Costa Ricasubmitted anotification onState-trading enterprises inaccordance withtheDecision
oftheCouncil onTrade inGoods of20February 1995 (G/STR/N/CRI). Itshould beemphasized
inthisconnection thatasfarastrade ingoods isconcerned thecommercial responsibilities of
State-trading enterprises suchastheNational Production Council (CNP) havebeensubstantially reduced
andtheirfunctions havenowallbeentransferred totheprivate sector. TheonlyState-trading enterprise
thatretains itsexclusive import rights istheCosta Rican Petroleum Refinery (RECOPE S.A.), for
theimport ofpetrol andby-products. Itsoperations arehowever fully compatible with the
non-discrimination provisions inArticle XVII ofGATT 1994.
21. Costa Ricawishes toclarify thatduring itsaccession procedure itdidnotaffirm thatthere
were noState monopolies ingeneral, asindicated byonemember, itsimply stated thatthere were
noState monopolies intheenergy, fertilizers andcement sectors (paragraph 52oftheReport ofthe
WorkingPartyontheAccessionofCostaRica(documentL/6589of27October1989)),whichiscorrect.WT/TPR/M/1/Add.1
Page8
(iv) Intellectual property rights
22. Costa Ricahasundertaken athorough revision ofitscopyright, trademark andpatent laws,
aswellasotherrulesonintellectual property rights, soastodetermine theirconsistency withtheregime
established intheAgreement onTrade-Related Aspects ofIntellectual Property Rights (TRIPs). The
revision showed thatitwasnecessary toaccelerate ratification oftheParisConvention, make anumber
ofamendments totheLawonCopyright andRelated Rights andpromote theadoption ofspecial rules
ontrade secrets.
23. Costa Ricaisaware oftheimportance ofhaving regulations thatareconsistent withinternational
trademark rulesandon30November 1994Central American countries signed aProtocol totheCentral
American Convention fortheProtection ofIndustrial Property sothatprotection under theConvention
would becompatible withinternational rules. Among themainamendments introduced bytheProtocol
isthespecific recognition ofwell-known marks, although thesehavebeenprotected under Costa Rican
lawformore than30years.
24. Inaddition, therevision underlined theneedtochange thecurrent patent lawsoastoextend
itsscope andthetermofprotection. Inviewofthecomplex nature ofsuchamendments, however,
Costa Ricahasdecided tomake useofthetransitional periods provided forintheTRIPs.
25. Concerning theprovisions onrespect forintellectual property rights, Costa Rican legislation
includes anumber ofmeasures andmechanisms forthispurpose, including preventive measures, seizure
andconfiscation ofgoods infringing intellectual property rights, criminal andcivil penalties.
Nevertheless, some areas suchasborder measures andreversal oftheburden ofproof needtobe
strengthened further.
(a) General provisions
26. With regard toexceptions totheprinciples ofnational andmost-favoured-nation treatment,
Article 3oftheCentral American Convention fortheProtection ofIndustrial Property, which isthe
textapplicable totrademarks, states thatnatural orlegalpersons owning acommercial establishment,
anenterprise orindustrial establishment orservices intheterritory ofanyofthecontracting States,
shallenjoy national treatment intheterritory ofanyother contracting State.
27. Concerning therequirement onlocaluseasacriterion forobtaining theprotection ofintellectual
property rights, thePatent Law(LeydePatentes) establishes thatthegranting ofapatent involves the
obligation towork it-meaning theobligation tomanufacture thepatented product -inthecountry
orinanother Central American country andifthisobligation isnotfulfilled within theperiod specified,
thepatent isforfeited. Asimilar provision applies toindustrial designs. Nopatent hasyetbeenforfeited
forthisreason.
(b) Patents
28. Inorder toharmonize Costa Rican legislation andinternational patent regulations, drafttexts
arebeing elaborated toextend thescope ofthelawaswellastheterms ofprotection forcertain types
ofinvention. Inviewofthecomplexity andimportance ofthese changes, Costa Ricaintends toutilize
thetransitional periods provided forintheAgreement. After thesehaveexpired, Costa Rican legislation
willbefullyconsistent withtheAgreement. Acopyoftheprovisions ofthePatent Lawconcerning
therights ofthepatent owner isattached.WT/TPR/M/1/Add.1
Page9
(c) Semiconductors
29. InCosta Rica, there arenospecial regulations onsemiconductors. Theprotection provided
forintheAgreement willbegranted oncethetransitional period hasexpired.
(d) Copyright
30. TheCopyright Law(LeydeDerechos deAutor) wasrecently amended byLawNo.7397 of
3May1994inordertoincludecomputerprogrammes,theirsuccessiveversionsandprogrammesderived
therefrom within thecategory of"literary andartistic works".
31. Under theLaw, thetermofprotection forphonograms is50years from31December ofthe
yearofpublication ofthephonogram. TheLawalsogives producers ofphonograms theexclusive
righttoauthorize orprohibit direct orindirect reproduction oftheirphonograms.
32. Costa Rican legislation doesnotallow thegranting ofcompulsory licences forworks or
phonograms.Becauseitconsiderscopyrighttobeofadeclarativenature,CostaRicanlegislationprotects
itfromthetimeofitscreation orpublication, whichever isappropriate, independently ofregistration.
(e) Trademarks
33. Anysign, word orcombination ofwords, oranygraphic ormaterial medium whose special
characteristics mean thatitiscapable ofdistinguishing theproducts, goods orservices ofonenatural
orlegalperson fromtheproducts, goods orservices ofthesametypeorcategory belonging toadifferent
owner maybeprotected asatrademark.
34. Thefollowing maynotberegistered astrademarks norelements thereof; national flags, shields,
insignia ordistinctive signs ofthecontracting States, foreign countries orinternational organizations;
thenames, emblems anddistinctive signs oftheRedCross andreligious bodies; thedesign oflegal
tender orbanknotes, reproductions ofshare certificates andothercommercial documents, seals, stamps,
orrevenue stamps ingeneral; signs, words orexpressions contrary tomorality, public order orcustoms
orwhich ridiculize ortendtoridiculize persons, ideas, religions ornational symbols orinternational
bodies, names, signatures, patronymics andportraits ofpersons other thantheperson applying for
registration, technical orcommon names ofproducts, goods orservices, expressions, signs orphrases
ingeneral useandserving toindicate thenature ofproducts, goods orservices, shapes, appellations
ordescriptions ofproducts, goods orservices tobeprotected byatrademark ortheiringredients,
qualities, physical characteristics ortheusetowhich theyaretobeput,signs orindications usedto
describe thetype, quality, quantity, value orperiod ofelaboration ofproducts orgoods unless they
areaccompaniedbydrawingsorphraseswhichdistinguishthem,theusualandcommonformofproducts
andgoods, single colours considered inisolation, packaging which isinthepublic domain orhasfallen
intothepublic domain, simple indications ofsource orappellations oforigin, distinctive signs which,
because oftheirgraphical, phonetic orideological similarity, maycause mistakes orconfusion with
other trademarks, andmaps.
35. There isnospecial definition ofawell-known mark inCosta Rican legislation. Therecent
ratification oftheParis Convention, aswellasthelongtradition ofprotection bythelawcourts for
thistypeoftrademark, nevertheless ensure thattheCosta Rican regime iscompatible withtheprovisions
oftheAgreement. Inthisconnection, itmustbeemphasized that,eventhough theCosta Rican regime
isattributive,onmanyoccasionsovermorethan40yearsthelawcourtshaverecognizedthatwell-known
marks, eveniftheyarenotregistered, canbegiven fulllegalprotection. Itistherefore possible to
refuse toregister awell-known mark ortoorder theforfeiture ofamark thathasbeenregistered by
mistake inthename ofaperson other thantheowner ofthewell-known mark.WT/TPR/M/1/Add.1
Page10
(f) Industrial designs
36. Theprotection ofindustrial designs iscovered byLawNo.6867 of25April 1983, which
guarantees theowner therighttoexploit thedesign exclusively andtogrant licences tothirdparties
foritsexploitation. When thevalidity orownership ofadesign iscontested, thelawallows theowner
therighttodemand compensation, except from theState oritsinstitutions, forinfringement during
theproceedings, butnointerference whatsoever infreetradeintheindustrial design isallowed during
theproceedings.
37. Thelawstates thatanyperson mayimport products incorporating anindustrial design for
commercial purposes ifitisnotbeing exploited bytheowner. Theowner ofanindustrial design has
therighttotakeaction against anyperson whoexploits theindustrial design forindustrial orcommercial
purposes, except inthecaseofproducts which embody anindustrial design thathasalready beenlawfully
putonsalebyitsowner, alicensee oranyother authorized person.
(g) Trade secrets
38. Costa Ricadoesnothaveanyspecial legislation ontrade secrets. Nevertheless, theLabour
Code (Código deTrabajo) andtheCriminal Code (Código Penal) ,aswellascommon civillaw,regulate
thisarea.TheLabourCodemakesitanobligationforanemployeetorespectscrupulouslyanytechnical,
commercialormanufacturingsecretsrelatedtoproductsinwhoseelaborationhehasdirectlyorindirectly
participated orofwhich hehasknowledge because oftheworkhecarries out,aswellassecrets regarding
administrative matters whose disclosure would cause prejudice totheemployer. TheCriminal Code
provides forimprisonment foranyperson who,because ofhissituation, office, employment, profession
orart,isaware ofasecret whose disclosure would beprejudicial andreveals itwithout anyjustified
reason.
39. TheLegislative Assembly ispresently considering adraftlawontradesecrets inorder tobring
Costa Rican legislation intolinewiththerequirements oftheUruguay Round Agreement.
(h) Enforcement
40. Procedures fortheenforcement ofintellectual property rights arelaiddown intherelevant
laws, forexample, theCriminal andCivil Procedures Codes (Códigos deProcedimientos Penales y
Procesal Civil).LawNo.7274 of10December 1991 setuptheThird Chamber oftheHigh Court
forAdministrative Appeals, which actsasthespecialized body forintellectual property matters.
41. Inconnection withenforcement, Costa Rican legislation hasanumber ofrelevant measures
andmechanisms, including preventive measures, seizure andconfiscation ofgoods infringing rights,
criminal andcivilpenalties. Theprotection granted through civilprocedures mainly relates tothe
possibility ofobtaining compensation and,atthecriminal level, thelawlaysdown penalties ranging
from onemonth tothree years imprisonment depending onthegravity oftheoffence.
42. Costa Rican legislation doesnot,however, provide forthepossibility ofreversal oftheburden
ofproof nordoesitempower thecompetent authority toorder thedefendant topresent anyevidence
inhispossession. Such provisions arecontrary totheprocedural principles onburden ofproof laid
down inArticle 317oftheCode ofCivil Procedure. Thelegislation doesnotcontain anyprovision
either onthepossibility ofordering thedestruction ofgoods infringing rights. Onthecontrary,
Article 538oftheCode ofCriminal Procedure states thatthese goods should beauctioned off.The
practice followed bythejudicial authorities when atrademark hasbeeninfringed hasbeentoorder
theremoval ofthetrademark andthedonation orsalebyauction oftheproducts.WT/TPR/M/1/Add.1
Page11
43. With regard toborder measures thenecessary provisions regulating thisareawillhavetobe
included inthecustoms legislation andadraftlawwillbedrawn up.Forthepresent, there areonly
some provisions incivillegislation together withthespecific lawswhich allow judges toorder the
customs authority toadopt certain measures.
44. Judicial proceedings fortheinfringement ofcopyright havethesame duration asanyother
civilorcriminal proceedings, depending onthecaseandthecomplexity ofthematter, whether ornot
alltheremedies available inlawhavebeenused, etc.
(v) Services
45. Costa Ricasubmitted itsSchedule ofSpecific Commitments under theGeneral Agreement on
Trade inServices covering foursectors: tourism, computer services, health andeducation. Costa
Ricaconsiders thatitmade apositive contribution totheUruguay Round negotiations inthisarea,
consistent withitslevelofdevelopment andtheconsensus inCosta Ricaregarding theliberalization
ofcertain services sectors. Costa Ricahopes topursue itsconstructive participation inthefuture in
therelevant discussions according tothematters ofgreatest interest toit.
III. Costa Ricaandeconomic integration
(i) Overview
46. Costa Rica'strade policy isbased ontheprinciple thatparticipation ineconomic integration
systems should befullycomplementary andcompatible withthemultilateral trading system andwith
thecommitments ithasmade totrade liberalization. Through these integration systems, Costa Rica
hopes thatitwillbeabletopromote more rapid development ofinternational tradewithother countries
inthesystem, without inanywayharming foreign trade withtherestoftheworld. Thedemands
oftrade mean thatitisnecessary toseekadditional ways ofpromoting trade relations withcertain
countries under conditions ofreciprocity. These regional measures arenotintended todivert attention
from meeting thecommitments orpromoting theobjectives ofthemultilateral system. The
complementarity ofbothapproaches isshown bythefactthatthetrade policy instruments embodied
inbilateral orregional systems towhich Costa Ricaisparty arebased ontheWTO Agreements
themselves.
(ii) Central American Common Market (CACM)
47. CostaRicaiscommittedtotheCentralAmericanintegrationprocessandthisisofoverwhelming
importance foritsforeign trade since 15percentofCosta Rican exports gotothismarket andjust
under 10percentofitstotalimports come from theregion. Costa Ricahasplayed anactive rolein
promoting thedevelopment oftheCentral American FreeTrade Areaandinencouraging therenewal
andmodernization ofthelegalinstruments oftheCentral American system. Itsrolehasbeenparticularly
important inthedevelopment ofnewintra-Central American instruments onrules oforigin, unfair
trade practices, safeguard measures andthesettlement ofdisputes. Concerning thecommon external
tariff, Costa Ricabelieves that,asfarastariff policy isconcerned, tariff ceilings andfloors should
beharmonized, asoccurs inthemajority oftariff systems. Thissubject iscurrently being discussed
because anumber ofCentral American countries havealready adopted orareintheprocess ofadopting
other solutions. Even though acommon external tariff might atagiven timerestrict thecapacity for
manoeuvre intheareaoftariff reductions, theCentral American system hasproved tobesufficiently
flexible overtheyears, allowing member countries tomake progress according totheirdesires and
needs. Forthemoment, Costa Ricadoesnotenvisage moving forward inother areas ofeconomic
integration.WT/TPR/M/1/Add.1
Page12
48. TheGeneral Treaty forCentral American Economic Integration wasdulynotified toGATT
bytheonlyCentral American country which, atthetimetheTreaty wassigned, wasaGATT contracting
party, namely, Nicaragua (L/1425/Add. 1),therefore, Costa Ricaconsiders thattheobligation tonotify
theTreaty hasalready beenfulfilled.
49. Compliance withthecommitments undertaken attheCentral American levelismonitored by
various regional political bodies. There isnosingle regional jurisdictional body oraspecial body
withexclusive monitoring responsibilities. Thevarious political bodies aretheSummits ofPresidents,
themeetings ofministers responsible forintegration, meetings ofdeputy ministers responsible for
integration andmeetings ofdirectors ofCentral American economic integration. These bodies propose,
negotiate andresolve anydisputes thatmight ariseincarrying outtheregional integration commitments.
There isnoregional mechanism forthesettlement ofdisputes. Nevertheless, work iscurrently going
oninorder todefine andestablish suchamechanism andCosta Ricaisextremely interested inits
creation.
50. TheGovernment doesnotshare theviewexpressed inparagraph 23onpagexivoftheSummary
Observations because thedeliberate purpose oftariffescalation isnottoprotect domestic manufactures
andrawmaterials ofCACM origin. Bearing inmindthenational andregional scarcity ofrawmaterials,
Costa Rica'stariff policy isrelatively liberal towards rawmaterials andtheirorigin isnotrelevant.
Formanufactures notproduced inCosta Rica, thetrend ofthetariff structure issimilar tothatfor
rawmaterials anddoesnotdenote atypical tariff escalation model.
(iii) Free-Trade Agreement between Costa RicaandMexico
51. TheFreeTrade Agreement between Costa RicaandMexico provides forthegradual elimination
ofthetariffs applicable toalmost allthetariff schedule inseveral stages. Upon theentry intoforce
oftheTreaty on1January 1995, around 75percentoftariffs were immediately reduced inboth
countries. Inthecoming five,tenandfifteen years, theremaining tariffheadings willbereduced with
theexception of1.78percentofCosta Rica'stariffs and1.08percentofthose inMexico, which will
maintain theapplicable tariff.
52. According toAnnex 3toArticle 4-04oftheAgreement, ifMexico wishes tobuysugar in
aparticular year, itwillgiveCosta Ricaapreferential quota of19percentofitstotalrequirements.
IfMexico doesnotrequire sugar inaparticular year, thepreferential quota willbezero.
53. Together withMexico, Costa Ricawillshortly notify theFreeTrade Agreement between the
twocountries aftertheyhavedecided onthemostappropriate regulatory framework inwhich tomake
thenotification. Adecision regarding themechanism tobeusedfornotification hasnotyetbeentaken.
(iv) Other
54. Costa Ricawilldiscuss withtheDominican Republic andPanama themostappropriate way
inwhich tonotify thetrade agreement concluded withthese countries. Concerning theremarks by
onedelegation ontheNorthern Triangle, wemustmake itclearthatCosta Ricaisnotamember, nor
hasiteverbeenamember, oftheso-called "Northern Triangle", neither isMexico, sononotification
ofthissystem isrequired.
55. Thediversion oftrade andinvestment toMexico aretworealproblems facing Costa Rica
following thecreation oftheNorth American FreeTrade Agreement (NAFTA). Costa Ricawillshortly
besubmitting information inthisregard.WT/TPR/M/1/Add.1
Page13
56. AccesstothePanamanianmarketforCostaRicanproductsunderapreferentialschemeisdifficult
toassess inrealterms foranumber ofreasons. Ontheonehand, theso-called FreeTrade and
Preferential Trade Agreement withPanama identifies theproducts concerned according totheCentral
American Uniform Tariff Nomenclature (Nomenclatura Arancelaria Uniforme deCentroamérica
(NAUCA)), whereas Costa RicausestheCentral American Harmonized System (SAC). Since the
NAUCA system contains many fewer headings thantheSAC, thisgives theimpression thatthe
Agreement covers alarge number ofproducts, although infacttheprovisions donotapply toallthe
headings designated butonlytocertain products within agiven heading. Forexample, under theheading
relatingtocrustaceansandmolluscs,theAgreementonlycoversshrimps.Thestatisticsdonotdistinguish
products butheadings, which makes itappear thatanyproduct exported toPanama under thisheading
enjoys preferential treatment whereas thisisonlythecaseforshrimps. Oneother reason whytheTreaty
might appear tobetoobroad isthatthePanamanian market hasbeenclosed foryears, protected by
hightariffs anddifferent types ofnon-tariff barriers against alarge number ofCosta Rican products
notincluded intheAgreement -orsubject tominimum quotas -forexample, pork, dairy products,
sausages, coffee, oilsetc.,which Costa Ricaiswellplaced toexport. Finally, thefactthataproduct
iscovered bytheAgreement doesnotguarantee unrestricted access tothePanamanian market because
alarge number ofproducts covered bytheAgreement aresubject toquantitative import restrictions
onthebasis oflocalsupply criteria. Consequently, anyfigures concerning thepercentage ofCosta
Rican trade entering thePanamanian market under afreetrade regime mustbeanalysed inthelight
oftheforegoing considerations. Inview ofalltherestrictions onCosta Rican exports toPanama,
Costa Ricahasrequested bilateral consultations withPanama inthecontext ofitsaccession toWTO
inthehopeofimproving access towhatisanatural market forCosta Rican products.
57. Negotiations ontheconclusion ofafreetrade agreement among Central American countries,
Venezuela andColombia havebeensuspended foranumber ofreasons. Costa Ricabelieves thatit
isunlikely thatthenegotiations willrecommence intheshorttermbecause theAgreement wascomplex
fromtheoutset, thewayinwhich negotiations werepursued wasdifficult andthedefinition ofafuture
common external tariff isstillpending inCentral America.
58. InCosta Rica, theprocess ofopening uptrade wasinitiated unilaterally. However, overthe
years, liberalization measures havebeentaken inanumber offorums bothnationally, regionally and
atthemultilateral levelfollowing Costa Rica'saccession toGATT in1990. Itcannot bestated that
Costa Rica'sopening economy wastheresult ofregional liberalization processes, although itmust
beadmitted thatboththeregional andpurely national processes havebeenmutually supportive and
areofequal importance. Likewise, multilateral (GATT/WTO) andbilateral (Free Trade Agreement
withMexico) liberalization processes complement these measures.
IV. Specific questions related totrade policy
(i) Technical standards
59. National legislation ontechnical standards makes thenecessary separation between standards
andtechnical regulations, theformer being voluntary andthelatter mandatory. Executive Decree
No.22263-MEIC of3June1993, published intheLaGaceta No.129of8July1993ongeneral terms
anddefinitions (Términos Generales yDefiniciones Concernientes alaNormalización Técnica y
Actividades Conexas) recognizes thedifference between thetwoandtheirmandatory orvoluntary
characters.
60. Aprocedure exists forthepublication ofdraftstandards andfortaking intoaccount comments
thereon. Since 1995, theStandards Office (ONNUM) oftheMinistry ofEconomy, Industry and
Commerce (MEIC) haspublished anotice intheLaGaceta informing persons interested thattheyhaveWT/TPR/M/1/Add.1
Page14
aperiod of60daysinwhich tomake comments onaspecific drafttechnical regulation. These comments
aredulytaken intoaccount inthefinalversion oftheregulation orofficial standard.
61. Thefollowing fivegroups ofproducts mustobligatorily beregistered withtheorganizations
mentioned before theycanbesold:
- Drugs, cosmetics andsanitary products: Department ofNarcotics (Departamento de
Drogas Estupefacientes, Controles yRegistro) oftheMinistry ofHealth;
- Toxic substances orproducts anddangerous substances, products orobjects: Registsry
ofToxic Substances (Departamento deControl yRegistro deSustancias Tóxicas y
Medicina deTrabajo) oftheMinistry ofHealth;
- Food products: Department ofFood Control (Departamento deControl deAlimentos)
oftheMinistry ofHealth;
- Veterinary drugs: Department forVeterinary Products (Departamento deInscripción,
Constatación deCalidad yFiscalización deMedicamentos Veterinarios) oftheMinistry
ofAgriculture andLivestock;
- Agriculturalandsimilarpesticides:registeredbytheDirectorateGeneralofAgricultural
Protection (Dirección General deProtección Agropecuaria) oftheMinistry of
Agriculture andLivestock.
62. Where registration requires thesubmission ofacertificate issued bythehealth authority in
thecountry ofexport, anytypeofofficial certificate issued isacceptable provided thatithasbeen
legalized andauthenticated bytheCosta Rican consular authority inthecountry ofexport. These
certificates donothavetobeonaparticular typeofform, itsuffices thattheyshould contain the
information required andbeissued bythehealth authority inthecountry ofexport. Insome cases,
where theadministrative structure ofaparticular country doesnotprovide fortheissue ofsuch
certificates, theymaybeissued bychambers ofcommerce, relevant institutes orother associations
ofrecognized capacity incertifying thecharacteristics required byCosta Rican legislation.
63. Costa Rican technical regulations andstandards arebased oninternational technical standards.
When drawing upaparticular standard, international parameters fortheproduct concerned are
incorporated and,inprinciple, careistaken nottodistort thestandard inorder toaccommodate domestic
production conditions. Only twodomestic standards areincompatible withinternational standards:
soapandcondensed milk.
64. ONNUM oftheMinistry oftheEconomy, Industry andCommerce isthenational organization
responsible foraccrediting quality control bodies andisalsotheofficial organization responsible for
metrology.
65. ONNUMissuesthelabellingcertificateforfoodproductsandforallothergoodswhosetechnical
specifications arenottheresponsibility ofother special ministerial offices (forexample, theMinistry
ofAgriculture andLivestock andtheMinistry ofHealth withtheexception oftheFood Control Office).
Thelabelhastobeapproved forthefirstshipment oftheproduct. After ithasbeenapproved, imports
maybeshipped forthefollowing fiveyears without anyfurther approval ofthelabel, unless theproducer
alters anyofthecomponents listed onthelabel. When thisfive-year period hasexpired, theinterested
party maysubmit anewapplication forapproval ofthelabel.WT/TPR/M/1/Add.1
Page15
66. There arenorestrictions onmarket access ornational treatment fororganizations supplying
laboratory services wishing tosetupinCosta Rica. Iftheyfulfil thehorizontal requirements for
establishment, theymaysetupinCosta Rica. ONNUM istheofficial organization responsible for
authorizing laboratories.
67. Thelabelling certificate issued byONNUM isrequired before theforeign tradesingle window
canapprove theimport permit andthegoods canbecleared through customs. Thedecision approving
thelabel(i.e.thecertificate) isonlysubmitted oncetotheforeign trade single window anddoesnot
havetoaccompany theproduct forretail sale. Thelabelitselfmust, however, beaffixed totheproduct
forretail salesothatthefinalconsumer mayreadit.
(ii) Anti-dumping
68. Thecurrent anti-dumping legislation isbeing amended toharmonize domestic legislation with
theWTO 'sAnti-Dumping Code. Thefollowing aresome oftheamendments being discussed: more
stringent criteria forlawful initiation ofananti-dumping procedure; increased possibilities for
intervention bysectors concerned; notallowing selling atalosstobepartoftheproduction costs;
increased transparency criteria; changes inthedeminimis rules; clauses ontherevision andgradual
elimination ofanti-dumping duties.
69. CostaRicananti-dumpinglegislationwillbebasedonCentralAmericananti-dumpingregulations.
National legislation willthenbeconsistent withCentral American rules.
70. Regarding theFreeTrade Agreement between Costa RicaandMexico, thechapter regulating
unfair trade practices isbased ontheprinciple thatthetwocountries willapply domestic legislation
instrict conformity with theAnti-Dumping Code andtheWTO Agreement onSubsidies and
Countervailing Measures. There are,however, minor differences intheprocedures andapplication
ofcountervailing oranti-dumping duties. These include thefollowing: aninvestigation isterminated
notonlywhen imports oftheproduct concerned represent lessthan3percentoftotalimports (as
provided intheCodes), butalsowhen suchimports represent lessthan1percentofthedomestic market
(which isnotthecaseintheCodes); theFreeTrade Agreement includes anti-circumvention provisions;
italsoallows theholding ofpublic hearings atwhich interested parties mayquestion theircounterparts
ontheinformation orevidence submitted.
71. According tothelegislation inforce, theroleplayed byconsumers andindustry inanti-dumping
procedures isverylimited andtwochannels areavailable: (1)initiating aprocedure, inthecaseof
industry, or(2)through theTechnical Commission, which isconsulted onthedraftfinaldecision.
TheCommission iscomposed ofofficials fromthepublic sector andrepresentatives oftheprivate sector,
including industrialists. Itisenvisaged thattheCentral American draftregulations willnotonlycontain
broader parameters forparticipation byinterested parties butwillalsoinvolve consumers 'organizations
intheTechnical Commission.
72. Inprinciple, there areatpresent nodetailed mechanisms tohaltunfair trade practices within
theCentral American system. Anysuchpractices mustbediscussed andnegotiated attheGovernment
levelthrough thevarious regional bodies administering theintegration process: themeeting ofdirectors
ofCentral American economic integration, themeeting ofdeputy-ministers ofintegration orthemeeting
ofministers responsible forintegration. AsoneofthenewCentral American regulations onunfair
tradepractices,CostaRicasupportsapplicationoftheregulationstobeadopted,whichwillbecompatible
withtheWTOCodes,tounfairtradepracticesbothwithinandoutsidetheregionwithoutanydistinction
whatsoever.WT/TPR/M/1/Add.1
Page16
(iii) Freezones
73. Although itistruethatthefree-zone regime isanimportant toolforpromoting exports and
attracting investment, itisnotcorrect tostatethatalarge partoftheeconomy isoperating under this
regime. Exports under thefree-zone regime represented 10.23 percentofthetotalvolume ofexports
in1993 and12percentin1994. Itisnotpossible topropose theincorporation ofincentives under
thisregime within thegeneral taxsystem because thiswould seriously affect public finance.
74. AnyCosta Rican orforeign natural orlegalperson notbenefitting fromanyother special export
regime forthesame product maytakeadvantage ofthefree-zone regime, theonlyrequirement being
tosubmit anapplication form andmeetcertain non-substantive formal requirements.
75. Thegranting offree-zone status tocompanies outside theregime hasbeenverylimited. It
onlyapplies to20percentofthe160companies created, soitisclear thatgranting sucharegime
tocompanies outside freezones isanexception. Thevastmajority ofcases concern companies whose
operations arenotadapted tothefree-zone areabecause theirproduction processes require location
inaspecial geographical areaorbecause theirprocessing plants must benearthesuppliers oftheir
rawmaterials or,finally, because theyprovide employment opportunities inless-developed areas of
Costa Rica.
76. Thesignificant growth intheregime inrecent years hasledtonetimprovements ininvestment,
employment andexports. Only fiveofthe160companies intheregime moved intoCosta Ricaitself
inorder toincrease investment andthenumber ofjobs.
77. Thetaxincentives inforce inCosta Ricaarefully compatible withtheprovisions ofthe
Agreement onSubsidies andCountervailing Measures. According tothese provisions, exemptions
inthecontext offreezones arelegalanddonotconstitute aspecific subsidy because theyaregranted
toanyagricultural orindustrial, commercial orproduction enterprise, whether domestic orforeign,
producing goods andservices, andestablished inafreezoneregardless ofthenumber ofemployees
ortheamount ofitscapital. Regarding incentives thatareprohibited suchasexemption fromprofits
taxinthefreezoneregime, Costa Ricahasundertaken toeliminate them within theperiod ofeight
years available toit.
(iv) Other
78. Theconcepts of"traditional, non-traditional andself-sufficient" products havebeenusedto
distinguish groups ofproducts andpolicies inspecific instances andthiscontinues tobethecase. The
term"self-sufficient" isusedtodistinguish products whose major market isCosta Rica. Thisdoes
not,however, imply anyrestriction ontheexport ofsuchproducts. Thistermisnotrelated tofood
security.
79. The"Plan 5000" forexports isaimed atestablishing clearlong-term rulesfortheexport sector.
TheGovernment hastherefore sought toenact anewscheme ofincentives consistent withtheobjective
ofeliminating existing distortions inthestructure ofproduction costs andwithCosta Rica'sfiscal
situation, aswellasbeing compatible withtheWTO Agreement onSubsidies andCountervailing
Measures. Thenewprogramme ofincentives iscurrently attheinitial stages ofdiscussion within the
Government andwillthenberevised andmade available tothepublic. Thefollowing aresome of
theincentives being discussed: modernization ofthefinancial system; tariffreduction; improvement
oftheportinfrastructure; promotion ofcompetition incertain public services; flexibility ofprocedures
related toforeign trade.WT/TPR/M/1/Add.1
Page17
80. TheGovernment willformally abrogate thelegalprovisions related toCIEX during thecourse
of1995.
81. Customs procedures require theconsular authentication ofcertain international tradedocuments
before theyaresubmitted tothecustoms attheportofentry. TheGovernment ofCosta Ricahas
consular offices intheworld 'smajor ports sothattheycanexamine theexport documents andcollect
thecorresponding consular feesforlegalizing orauthenticating documents. Theobjective ofthepolicy
oflegalizing civilandcommercial documents istoguarantee theirlegitimacy. Since these documents
aredrafted andagreed inforeign territory, theymustbelegalized byCosta Rican consular authorities
inthecountry ofissueinorder tobevalidinCosta Rica. Inaccordance withtheconsular tariff, fixed
inExecutive Decree No.23118-RE of14March 1994, thefollowing commercial documents oracts
must belegalized bytheCosta Rican consul inthecountry ofshipment: sworn declarations on
trademarks; signatures offoreign authorities (including phytosanitary andzoosanitary authorities);
power ofattorney fortheregistration oftrademarks, patents orauthentication ofcertification ofa
trademark orpatent inthecountry oforigin orcertification thataparticular trademark orpatent is
notregistered; certificates oforigin, billsoflading, airwaybills andcommercial invoices; documents
forshipping clearance, listsofcrews, listsofpassengers, declaration thatnopassengers arecarried,
cargo manifests, consular clearance papers, health permits andrectifications; certified copies or
duplicates ofdocuments needed fortheclearance ofships. Theamount ofthefeestobepaidisshown
ontheCosta Rican consular tariff. There isadirect relationship between thefeefortheauthentication
process andthecostoftheservice itself.
82. Although itistruethatthemooring andhandling feesarehigher forimports thanexports,
theGovernment iscurrently revising these systems aspartoftheoverall reform ofportactivities.
83. Regarding paragraph 11inChapter IV,page41,oftheSpanish version oftheReport ofthe
Secretariat, itshould beemphasized thattheexpression "todas lasexportaciones deben seralmacenadas
parasuinspección "isincorrect. Thetextshould readthatallimports mustbestored atthecustoms
warehouses, asappears intheEnglish version oftheReport.
84. Costa Ricaabolished import licences forpoultry products on1January 1995. Since then,any
economic agent hasbeenabletoimport poultry, poultry products andanyother product previously
subject toanimport licence. Some poultry products forwhich tariffquotas havebeenfixed(0207.3990,
0207.4190, 1601.0020, 1602.1020, 1602.3900) havebeenmade available toeconomic agents through
astock exchange regulated bymarket rulesunder TitleIVoftheCode ofCommerce andinaccordance
withtheprocedure described above. Atpresent, contracts havebeengiven toenterprises participating
inthestock exchange mechanism toimport atotalof72metric tonnes ofchicken legs(thisallocation
corresponds tothefirstfourmonths oftheyearandatotalof698metric tonnes remains forthelast
twofour-month periods). Theimporter maybeanynational orforeign economic agent andtheproduct
mayoriginate from anycountry.
85. Thesanitaryregulationsgoverningtheimportofpoultryproductsareconsistentwithinternational
rules andhavebeenineffect since March 1993. They bearnorelation totherules applied byother
Central American countries andareinfactverysimilar totheregulations applied bytheUnited States,
withwhich theGovernment ofCosta Ricahasmaintained closecontact totheextent thattheGovernment
oftheUnited States hasdeclared thatCosta Ricaisfreeofcertain diseases andmayexport totheUnited
States. Over thefiveyears during which Costa Ricahasbeentrying toenter thepoultry market in
theUnited States, ithastoalarge extent harmonized itssanitary regulations withthose inforce in
theUnited States. Allzoosanitary regulations areapplied onthebasisofnational treatment andlogically
thisisalsoapplicable topoultry products. Acopyoftherelevant regulations isattached.WT/TPR/M/1/Add.1
Page18
86. Article 51oftheCentral American regulations (Reglamento Centroamericano dePrácticas
deComercio Desleal yMedidas deSalvaguardia ),Executive Decree No.21984-MEIC, states that
definitive safeguard measures mustbeintheformoftariffs. However, italsoprovides thatnon-tariff
safeguard measures maybeimposed inaccordance withdomestic legislation. InCosta Rica, inaddition
totariffmeasures, thelegislation allows onenon-tariff measure tobeapplied asasafeguard measure.
Thecompetition law(LeydePromoción delaCompetencia yDefensa Efectiva delConsumidor (Law
No.7472of20December of1994)) provides that,exceptionally, non-automatic import licences may
beimposed.
87. Costa Ricahasalready made progress inestablishing ascheme fortheelimination and
rationalization ofexisting systems ofexemption. AspartoftheGovernment 'scontinuing tariffreduction
programme, consideration isbeing given tothepossibility ofestablishing azerotariffforrawmaterials
andcapital goods, inwhich caseanexemption system willnolonger beneeded.
88. Chart IV.2, (a)and(b)oftheReport oftheSecretariat giveapicture ofthenumber oftariff
exemptions under various legalprovisions. These exemptions onlyapply when there isnodomestic
offerforthegoods tobeimported; ifthesegoods areavailable locally, theirimport issubject topayment
ofthecorresponding import tariff. Thetariff reduction process haspartly eliminated theadvantages
ofthese tariff exemptions, withtheaimofpromoting international trade. Thissituation, combined
withthefactthatexemptions promote international trade, leadstotheconclusion thatthetariffexemption
policy incites increased imports ofgoods freeoftariffs. Theobjective ofthispolicy isnottohinder
international trade. Regarding taxexemptions inother programmes (freezones, export contracts,
temporary admission, tourism incentives andGovernment procurement), these havenotbeencreated
toserve asobstacles totrade nordotheyhavethateffect. These exemptions arenotsubject toany
criteria onorigin andareavailable toanynatural orlegal person enjoying thetaxincentives under
these programmes. Such exemptions aretotally neutral.
89. Atpresent, Costa Ricahasnotgiven consideration totheadvantages ofjoining theATACarnet
scheme, therefore, nodecision hasbeentaken inthisregard.
90. Thefollowing services aresubject totherestrictions mentioned regarding market access and
national treatment:
- Architectural andengineering services; (i)market access restrictions: inorder tojoin
theFederated College ofCosta Rican Engineers andArchitects (Colegio Federado de
Ingenieros yArquitectos deCosta Rica),membership ofwhich iscompulsory inorder
toexercise theprofessional service engineers andarchitects whohavegraduated in
Costa Ricaorabroad musthaveresided foraminimum uninterrupted period offive
years inCosta Rica. Aminimum period ofresidence isnotrequired when theforeign
professional iscovered byareciprocity agreement onexercise oftheprofession;
(ii)restrictions onnational treatment: registration quotas andtheannual subscription
totheCollege forengineering andarchitectural consulting enterprises vary: nationals
payC/5,000 (around US$28 attheprevailing exchange rate)under eachheading and
foreigners payC/200,000 (around US$1,111 attheprevailing exchange rate)under
eachheading; (iii)localpresence: notwithstanding theprovisions onmarket access,
engineers andarchitects entering Costa Ricaforthepurpose ofprofessional consultancy
work inStatebodies orprivate enterprises orinprofessional colleges orassociations
mustregister withtheFederated College, butdonotneedtojoinit,andareconsidered
temporary members. They maynotundertake anyprofessional activity other thanthat
forwhich theyentered Costa Rica. Permits areonlygranted foraperiod notexceeding
oneyearandtheirrenewal isatthediscretion oftheCollege. Ingranting thepermit,
lackofexpertise inCosta Ricaintheprofessional fieldconcerned istaken intoaccountWT/TPR/M/1/Add.1
Page19
andthepermit willbegranted subject totheCollege assigning anational professional
towork alongside theforeign professional inorder toenhance hisexperience and
knowledge. Nolawhasbeendrawn uptoreform legislation inthisarea;
- Administrative consulting services: administrators ofenterprises must bemembers
oftheprofessional association inorder toexercise theirprofession. Professionals who
have graduated abroad must submit their degrees toaCosta Rican university for
recognition orequivalence before theycanexercise theirprofession inCosta Rica.
Anexception tothisprocedure maybemade when thereisanagreement onequivalence
orqualifications withtheprofessional 'scountry oforigin. Registration offoreigners
astemporary members isallowed when theyenter Costa Ricatocarry outspecified
tasks;
- Equipment repair andmaintenance services: therearenorestrictions onthecommercial
establishment offoreign enterprises inCosta Rica. Thesupply ofaprofessional service
related torepair andmaintenance is,however, regulated bytherequirement onaccess
andnational treatment intheareaofprofessional services;
- Distribution services: norestrictions, except fordistribution ofthefollowing goods:
protected fishspecies (access prohibited), crude petroleum andby-products (State
monopoly), fuel(restricted access). Acommercial presence maybeestablished in
areas towhich norestrictions apply;
- Transport agency services: transport agencies forairormaritime freight arenotsubject
toanyrestrictions onmarket access ornational treatment. Transport agencies for
passengers (travel agencies) aresubject tothefollowing restrictions: (i)market access
restrictions: (a)travel agencies musthaveapermit inorder tooperate and,toobtain
thepermit foreign enterprises must show thatthefirm'scapital exceeds C200,000
(US$1,111 attheprevailing exchange rate), ofwhich notlessthan51percentmust
belong toCosta Rican nationals; (b)theCosta Rican Tourism Institute (Instituto
Costarricense deTurismo )mayensure thatthere isnosaturation oftravel agencies
tothedetriment ofthequality ofservices supplied; (ii)localpresence; inorder to
obtain apermit, foreigners must havetherightofresidence inCosta Rica.
91. Theprincipal function oftheforeign tradesingle window istoprocess export andimport permits
asquickly aspossible through anautomated system decentralized inthemain customs ports ofentry
anddeparture. Following theestablishment ofthewindow, import andexport formalities havebeen
significantlyspeededup.Itshouldbeemphasizedthatbothimportandexportproceduresaretransparent.
Themainobjectives arethefollowing: tocentralize thepublic andprivate offices empowered bythe
lawtoissue export andimport permits; tospeed upthecompletion offoreign trade formalities; to
simplify thedocumentation usedtoauthorize imports andexports; todecentralize theautomated system
soastoprovide services inthevarious customs ports ofentry anddeparture; toprovide up-to-date
foreign trade statistics. Thesingle window provides thefollowing services: advice toexporters and
importersregardingexportandimportproceduresanddocumentation;advicetoexportersandimporters
ontariff headings, tariffs andtheuseofcertificates oforigin; showing theforeign trade sector how
theforeigntradeandborderproceduresinglewindowoperates;processingexportandimportdocuments;
certifying processing operations; export andimport statistics; saleofdocuments required forexport
andimport; processing service forthevarious customs ports ofentry anddeparture; centralization
oftheprocessing ofimport exemptions covered byexport contracts.
92. Regarding theCODESA holding companies shown inTable IV.4, thecurrent situation has
changed asallthecompanies mentioned havebeensoldorliquidated (seeattached table). ConcerningWT/TPR/M/1/Add.1
Page20
State involvement intheCosta Rican economy, shown inTable IV.5, important changes aretaking
place. Asmentioned above, adraftlawopening uptheState'sliquor monopoly isbeing considered
bytheLegislative Assembly withthebasic objective ofeliminating it;twodraftlawsoninsurance
arealsounder consideration soasgradually toopenupthenational insurance market andtheNational
Insurance Institute, leading totheprivatization ofthemarketing ofinsurance andmodernization of
theInstitute; twodraftlawsonmodernizing andopening upthefinancial sector arebeing considered:
thefirstamends thelawgoverning theCentral Bank (LeyOrgánica delBanco Central )inorder to
make theBank more independent andgiveitbroader authority tosupervise financial entities operating
inCosta Rica, while thesecond isaimed atgiving private enterprises greater participation intheCosta
Rican banking market, allowing them interaliaaccess totheCentral Bank'srediscount facilities and
toreceive current account deposits, atpresent restricted toStatebanks. Concerning TRANSMESA,
itshould bepointed outthatitisnotsolely concerned withpassenger transport butisastill-functioning
mechanism ofaformer CODESA subsidiary which isbeing wound up,without anyeffect ontrade
inthese services. Lastly, theNational Production Council doesnotatpresent market anyseeds. See
attached table.
93. Theselective consumption taxisafiscal measure derived fromtheneedtogenerate newrevenue
when, attheendofthe1970s, important fiscal exemptions weregranted totheindustrial sector. From
theoutset, thelawhasdivided taxable products intothreeannexes withvarying taxlevels, eventhough
theExecutive maychange thesewithin verystrictlimits. Eachproduct issituated inanannex according
toitsconsumption, whether itisabasic product oraluxury good. Thetaxistotally neutral asfar
asitsimpact onforeign trade isconcerned. Goods areimposed inthesame way, solely onthebasis
oftheaforementioned criteria, regardless ofnational orforeign origin. Thelistofproducts subject
tothistaxbyheading, together withthetaxlevels, willshortly besubmitted.
94. Thelistofproducts subject totheIFAM andIDAtaxeswillalsobesubmitted shortly together
withfurther information ontheIDAtax.
95. Themodern basket ofbasic consumer items (canasta básica moderna )isaconcept utilized
toprotect consumers withlower incomes, i.e.those whose wages areequivalent toorlessthanthe
legalminimum wage, andiscomposed ofthemainitems consumed bythissocial sector andidentified
through market surveys carried outbytheDirectorate General ofTrade oftheMinistry ofEconomy,
Industry andTrade. Thebasket isnotaprice-fixing mechanism, although insome cases theoretically
prices could befixed forcertain products inconformity withthecriteria explained. Itisanofficial
mechanism formonitoring price trends ofproducts inthebasket. Theprices ofthese products are
subject toregular analysis. Ifthere isanexcessive increase intheirprices thatdoesnotreflect real
economic factors (inflation, increased prices ofimported inputs, etc.)andithasnotbeenpossible to
exercise control through theother mechanisms mentioned above, theprice maybefixed. Prior to
doing so,however, consultations areheldwithproducers inorder tofindaprompt andpractical solution
totheproblem. Onthebasisofthese provisions, theDirectorate General ofTrade (which isthebody
responsible foradministering thebasket) fixedtheprices ofrice,beef,butter, milk, cement andparking
services inpublic carparks. TheDirectorate General implements thebasket price policy, which is
founded onfourelements:
(1) Ongoing monitoring ofmarket prices, asmentioned;
(2) marketsurveysinordertodetecttrendsthatcouldberemediedbypromotingcompetition;
(3) educating andinforming consumers toshow themhowtoidentify andchoose themost
appropriate products andinsist onthefulfilment oftheirrights;WT/TPR/M/1/Add.1
Page21
(4) regular revision ofcostmodels toallow thebenefits ofincreased productivity toaccrue
bothtoproducers andconsumers.
96. Under Costa Rica'sbanking legislation, theestablishment offoreign subsidiaries orofforeign
branches offoreign banks receive different legal treatment. Ingeneral terms, banking legislation
differentiates between State banks andprivate banks. Foreign banks areclassified asprivate banks.
Aforeign bankisnottreated differently from aCosta Rican bankifitwishes tobecome established
inCosta Rica.
97. Banking legislation doesnotallow theestablishment ofbranches offoreign banks (without
their ownseparate legal status) because, inorder tooperate, aprivate bank must obligatorily be
established asastock company (sociedad anónima ),union orfederated cooperative (federación
cooperativa )(each ofwhich hasitsownlegalstatus). Ontheother hand, foreign banks mayestablish
foreign subsidiaries inCosta Ricaiftheyaresetupasastock company, union orfederative cooperative
andcomply withtherelevant restrictions onnational treatment. Theestablishment ofabankinCosta
Rica, requires thatatleast20shareholders must benatural persons, none ofwhom mayholdmore
than5percentofthecapital. Ifitcannot beshown thatthebank'sshareholding isdivided upinthis
way, theestablishment ofaforeign banksubsidiary isnotallowed. Asingle foreign bankmaynot
therefore establish wholly owned subsidiaries inCosta Rica. Onlyforeign legalpersons mayestablish
private banks inCosta Rica. Itshould beemphasized, however, thatthisrequirement isonlynecessary
fortheestablishment ofthebankandnotforitsoperation.
98. Thebanking legislation inforce iscurrently being revised byaSpecial Committee ofthe
Legislative Assembly. TheCommittee hasmanaged toobtain significant opening upofthebanking
sector, buthasnotyetdiscussed thequestion offoreign banks. Aconsensus hashowever beenreached
thataccess requirements forforeign banks willbebased onstrictly legalcriteria andnotonconditions
assessed atthediscretion ofthecompetent authority.
99. Comprehensive cropinsurance isregulated byaspecial law(LeydeUniversalización delSeguro
Integral deCosechas ),LawNo.5932 of27December 1976. Traditionally, thisinsurance hasbeen
thesubject ofsizeable deficits. Article 2oftheLawtherefore states that"25percentoftheannual
liquid revenue fromtheinsurance monopoly shallbesetaside toincrease thecapital oftheINS. The
remaining 75percentshallbeusedbytheInstitute toreinforce thetechnical reserve forcontingencies
ofthecomprehensive cropinsurance". Crop insurance istherefore subsidized bytherevenue from
theother partsoftheINSinsurance portfolio andbytherevenue fromtheissueofspecial Statebonds
(Aporte Extraordinario Seguro Integral deCosechas ),whose funds maybeusedinsecond place when
thetechnical reserve forcontingencies isnotsufficient.
100. Development ofthetourism sector inCosta Ricaisgoverned bytwofactors. Firstly, the
country 'sgeographical situation, climate andgeography, combined withitsstable economic andpolitical
situation, provide idealconditions giving Costa Ricaasignificant comparative advantage inthesupply
andexport ofthisservice. Costa Rica'snatural diversity, stable climate allyearround anditsrelative
security aresome ofthefactors thathavehadanimpact ontourism. Transport facilities, theshort
distances between thebeaches, mountains andcities have made Costa Rica anattractive tourist
destination. Inaddition, thepleasure provided bynature inallcountries isparticularly attractive in
Costa Ricaandhasbeenexploited. Costa Rica'sroleinmediating peace inCentral America has
increased international interest inthecountry. From theinstitutional perspective, theconditions required
inorder torespond effectively togrowing demand havebeencreated. AMinistry ofTourism has
beensetup,aNational Tourism Planhasbeendrawn upandthetourism industry hasbeengiven
important incentives, allofwhich havemade tourism adynamic activity. TheCosta Rican business
community, withsupport from foreign investment, hasadapted tothedemands fortourist services,WT/TPR/M/1/Add.1
Page22
undertaking thetransformation needed intransport, hotels, various tourist services etc.,which makes
them attractive fortourists from allparts oftheworld.
Regarding incentives, thesituation haschanged slightly since1992. LawNo.7293wasadopted
on31March 1992 andpublished inLaGaceta No.66of3April 1992, withtheaimofrationalizing
incentives. Tourist companies maybenefit from anumber ofincentives depending ontheirsphere
ofactivity: exemption from tariffs andtaxes onthepurchase ofgoods forthepurpose ofexploiting
tourism, increased rateofdepreciation ofgoods, exemption frommunicipal andterritorial taxes and
theestablishment ofaspecial foreign exchange regime. Nodatehasbeenfixed forthetermination
ofthese incentives.
There isnoevidence thattheorientation offoreign direct investment tothetourist sector has
affected other areas ofeconomic activity.
Because thereisnoregister ofcapital inCosta Rica, itisnotpossible toestimate thetotalamount
offoreign direct investment devoted totourist activities.
There isnoproof thattherestriction onnational origin for50percentofthecapital ofatourist
enterprise hasbeenanobstacle toinvestment. Firstly, because thisrestriction onlyapplies toland
concessions inthecostal zone(abandof200metres landwards fromtheusual highwater mark along
thewhole ofthenational coastline), andnotintherestofnational territory. Secondly, because
foreigners, asnatural persons, mayobtain suchaconcession provided thattheyhaveresided forfive
years inCosta Rica.
101. Acopyofthecompetition andconsumer lawisattached.WT/TPR/M/1/Add.1
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LIST OFNOTIFICATIONS SUBMITTED TOTHE WTO
BYCOSTA RICA
Agreement Article Dateofnotification
Agreement ontheApplication ofSanitary
andPhytosanitary MeasuresAnnex B,paragraph 10 27January 1995
Agreement onTextiles andClothing Article 6.1
Articles 2.6and2.7(b)1March 1995
12June1995
Agreement onTechnical Barriers toTrade Articles 10.1and10.3 23March 1995
Agreement onTrade-Related Investment
MeasuresArticle 5.1 3April 1995
Agreement onImplementation ofArticle VI
oftheGeneral Agreement onTariffs and
Trade 1994Article 16.4
Article 18.524February 1995
15March 1995
Agreement onImplementation ofArticle VII
oftheGeneral Agreement onTariffs and
Trade 1994Article 20.1
Article 20.2
Article 4
Article 5.217January 1995
17January 1995
17January 1995
17January 1995
Agreement onPreshipment Inspection Article 5 23March 1995
Agreement onRules ofOrigin Article 5.1 28March 1995
Agreement onImport Licensing Procedures Article 2.2
Footnote 5
Article 5
Article 8.2(b)17January 1995
1March 1995
30March 1995
Agreement onSubsidies andCountervailing
MeasuresArticle 25.11
Article 32.624February 1995
15March 1995
Agreement onSafeguards Article 12.7
Article 12.61March 1995
15March 1995
Understanding ontheInterpretation of
Article XVII oftheGeneral Agreement on
Tariffs andTrade 1994Articles 2and3 30June1995
Date: 13July1995.WT/TPR/M/1/Add.1
Page24
TABLE 1
Tariff heading Description I.T. F.T. Period
0207.3990 Other (poultry cuts) 274.2 233.0 1995-2004
0207.4190 Other (chicken cuts) 274.2 233.0 1995-2004
04.01 Milk andcream, notconcentrated
norcontaining added sugar or
other sweetening matter111.4 94.7 1995-2004
04.02 Milk andcream, concentrated,
containing added sugar orother
sweetening matter111.4 94.7 1995-2004
04.03 Buttermilk andcurdled cream,
yoghurt, etc.111.4 94.7 1995-2004
04.04 Whey 111.4 94.7 1995-2004
04.05 Butter andother fats 111.4 94.7 1995-2004
04.06*Cheese andcurd 111.4 94.7 1995-2004
1601.0020 Sausages andsimilar products 274.2 233.0 1995-2004
1602.1020 Ofmeatandpoultry offalunder
heading 0105274.2 233.0 1995-2004
1602.3900 Other preparations offowls 274.2 233.0 1995-2004
*Thefollowing tariff headings have lower bound duties: 0406.2010, 0406.2090, 0406.4000
and0406.9000.
I.T. Initial Tariff
F.T. Final Tariff
Source: Uruguay Round, Schedule LXXXV -Costa Rica.WT/TPR/M/1/Add.1
Page25
TABLE IV.4
Status ofCODESA Holding Companies, 1984-95
Firm Activity Situation
Agro-industry AGROPALMITO Palmetto processing Sold 1986
ALCORSA Cotton processing Liquidated 1993
CATSA Sugar production Sold 1989
CONSOLIDACION Agro-industry Liquidated 1988
DAISA Agro-industry Liquidated 1991
INGENIO GUANACASTE Sugar production Liquidated 1988
Fisheries ACUACULTURA Prawn farming Liquidated 1993
ATUNES DECOSTA RICA Tuna fishing Sold 1987
ATUNES DEL PUERTO Tuna fishing Liquidated 1988
Light industry AZUFRERA GUANACASTE Sulphate production Liquidated 1980
GUANACAL Limestone extraction Liquidated 1988
PESCA ESCAMA Fishproducts Liquidated 1988
PETROLAC Oilindustry Liquidated 1988
STABAPARI Wood processing for
construction purposesSold 1993
SUBPRODUCTOS DEL CAFE Coffee subproducts Sold 1985
TERRENOS DEORO Gold extraction Sold 1987
Heavy industry ALUNASA Aluminium production Sold 1987
CEMPASA Cement production Sold 1994
CEMVASA Cement production Liquidated 1991
FERTICA Fertilizer production Sold 1994
Financial services BOLSA NACIONAL DE
VALORESStock exchange agency Sold 1994
PUESTO DEBOLSA Stock exchange agency Liquidated 1994WT/TPR/M/1/Add.1
Page26
Trading CONEXPO Marketing goods abroad Liquidated 1988
DISCOCEM Cement distribution Liquidated 1984
MACASA Wood andfinished products Sold 1987
MULTIFERT Marketing fertilizers Transfer tothepublic
sector andliquidated1987
PANCAFE Marketing coffee products Liquidated 1987
ZONA FRANCA Operation ofindustrial zones Transfer tothepublic
sector1986
Transport FECOSA Railtransport Liquidated 1988
LACSA Airtransport Sold 1987
NAMUCAR Maritime transport Transfer tothepublic
sector andliquidated1987
SANSA Airtransport Sold 1987
TEMPISQUE FERRY BOAT River transport Liquidated 1991
TRANACO Airtransport Liquidated 1988
TRANSMESA Passenger transport Transfer tothepublic
sector1986
Other services CENTRO DEFERIAS Fairs andconventions centre Liquidated 1988
FLEMAR Maritime freight chartering Liquidated 1987
GUACAMAYA Tourism Liquidated 1988
IMMOBILIARIAS
TEMPORALESRealestate Liquidated 1991
MINASA Mining Transfer tothepublic
sector1986
SEDEMAT Machinery andtransport Liquidated 1988
Source: Government ofCosta Rica.WT/TPR/M/1/Add.1
Page27
Main changes inState involvement intheCosta Rican economy, 1995, inrelation toTable IV.5of
theReport bytheSecretariat
A. Monopolies
Goods
Fábrica Nacional deLicores (FANAL) Adraftlawonelimination ofthemonopoly
isbeing considered bytheLegislative
Assembly.
Energy
Generation, transmission anddistribution of
electricityLawNo.7508 of9May1995 broadens the
opportunities forprivate investment inthe
jointgeneration ofelectricity. Itallows the
establishment ofCosta Rican enterprises with
foreign capital ofupto65percentforthe
generation ofupto20MW.
Services
Banking TheLegislative Assembly isdiscussing two
draftlawsonmodernization andopening up
ofthefinancial sector. They areaimed at
giving theCentral Bank greater independence
andallowing private banks toplayamore
important roleintheCosta Rican banking
market, allowing them access totheCentral
Bank'srediscount facilities andtoaccept
current account deposits.
Insurance TheLegislative Assembly isconsidering two
draftlawswhich willgradually openupthe
national insurance market andtheNational
Insurance Institute, leading toprivatization of
themarketing ofinsurance andmodernization
oftheInstitute.
Transport, ports
TRANSMESA Thisisnotanenterprise forpassenger
transport, butastill-functioning mechanism
ofaformer subsidiary ofCODESA thatis
being wound up.
Entities without monopoly rights
Consejo Nacional deProducción (CNP) InFebruary 1995, thetaskofimporting basic
grains wastransferred totheprivate sector.
TheCNP doesnotatpresent market grains;
thistaskiscarried outbytheprivate sector.