Caribbean & Central America - July 2011

In mid-June, Chinchilla ratified the free trade agreement (FTA) with China that had been approved by congress on 31 May. The government believes the FTA will enhance trade and investment, incentivise job creation and stimulate production; Costa Rican producers, however, are not as hopeful. They fear an influx of cheap Chinese goods and are worried that the exchange rate is reducing their competitiveness.
Under the China FTA, over 90% of products from both sides will be gradually exempted from taxes. The deal, which went into effect this month, stipulates that 65% of Costa Rican products will enter China without tariffs immediately, while all bar 4% will be phased out over the course of the next 10 years; 63% of Chinese products will enter Costa Rica tariff-free immediately, a further 26% within 10 years, and 9% were excluded from the treaty altogether.

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