China/Costa Rica Free-Trade Agreement Begins
China has free-trade agreements with Peru and Chile in South America, but on Aug. 1, the international trade giant kicked off its first free-trade pact with a Central American country.
The new free-trade agreement between China and Costa Rica, countries that signed an accord more than a year ago, has gone into effect.
China’s major exports to Costa Rica include textiles, machines, electric appliances, vegetables, fruits, cars, chemical products, raw fur and leather. Costa Rica’s chief exports to China are coffee, beef, pork, fruit juices and jam.
Last year, Costa Rica imported $25.5 million in textiles from China, according to the Costa Rica Department of Commerce.
Chinese fabrics are not allowed to be used for duty-free goods coming in from Costa Rica to the United States. The only exception is if they are under the short-supply list approved by the member countries of the free-trade agreement. The China/Costa Rica free-trade agreement could make short-supply textiles cheaper in Costa Rica because they wouldn’t be subject to tariffs. But Nicaragua already has trade-preference levels, allowing them a certain amount of outside fabric to be used in garments sent to the United States. The new agreement means about 60 percent of the two countries’ products immediately will be duty-free. Tariffs on another 30 percent of goods will gradually expire after five to 15 years.
In addition to tariff-free entries for products, the two countries have agreed to open their service sectors. Costa Rica will allow free service trades in 45 sectors, including telecommunications, business services, construction, real estate, distribution, education, environment services, information-technology services and tourism, while China will open seven sectors in return, including IT services, real estate, market research, translation and interpretation, and sports.
In 2010, the value of bilateral trade between the two countries was $3.8 billion, a 19 percent jump over 2009. China, which received $3.1 billion in goods from Costa Rica in 2010, has become the Central American country’s second-largest export market, after the United States. —Deborah Belgum
