China-Costa Rica FTA Comes into Effect
Aug. 2 – The free trade agreement (FTA) between China and Costa Rica – China’s first such bilateral FTA with a Central American country – officially came into force on August 1. As important trading partners, both countries believe the new FTA will help strengthen mutual trading ties and bring about significant increases in business opportunities.
Related provisions in the FTA will enable over 60 percent of the two countries’ products to enter each other’s market duty-free immediately, and will allow tariffs to be removed from another 30 percent of products gradually in the next 5 to 15 years. According to information from the web site of China’s Ministry of Commerce, China’s main exports that will benefit from the FTA include textiles, machines, electric appliances, vegetables, fruits, automobiles, chemical products, raw fur and leather. At the same time, products of coffee, beef, pork, fruit juices and jam from Costa Rica will also be able to debut on the Chinese market at lower prices thanks to the tariff cuts.
In addition to a tariff-free entry for products, the two countries have agreed to open service sectors to each-other for bilateral free trades and mutual investments. Costa Rica will allow free service trades in 45 sectors including telecommunications, business services, construction, real estate, distribution, education, environment services, information technology (IT) services and tourism, while China will open seven sectors in return, including IT services, real estate, market research, translation and interpretation, and sports.
The China-Costa Rica FTA – which was officially signed in April 2010 after more than one-year of negotiations – is hoped to infuse even more energy into the two countries’ fast growing trading ties. According to Chinese Customs statistics, bilateral trade between the two countries rose by 19.2 percent to US$3.8 billion in 2010. Seeing some US$3.1 billion worth of exports to China last year, Costa Rica has found the emerging Asian country its second largest export market in the world after the United States. At the same time, China sold US$690 million of goods to the Costa Rican market last year and values the country as its most important trading partner in Central America.
China’s deal with Costa Rica marks the 10th similar bilateral FTA China has signed with another state, region or bloc. It has inked FTAs with the Association of Southeast Asian Nations, Chile, Pakistan, New Zealand, Singapore and Peru, struck Closer Economic Partnership Agreements with its Special Administrative Regions of Hong Kong and Macau respectively, and also signed an economic Cooperation Framework Agreement with Taiwan. Some other FTAs – such as deals with Australia, the Cooperation Council for the Arab States of the Gulf, Switzerland, Norway and Iceland – are still under negotiation.