A Costa Rica and Ecuador free trade agreement has been signed: what are its benefits?

Costa Rica and Ecuador have successfully closed the negotiation of a Free Trade Agreement (FTA), informed the president of Ecuador, Guillermo Lasso.

The president of the South American nation, who is currently visiting the US, said that he recently spoke with his Costa Rican counterpart, Rodrigo Chaves, to close the negotiation on the Costa Rica and Ecuador Free Trade Agreement.

The agreement will lead to greater international economic integration

“This negotiation that we have managed to complete recently is a clear sign of the commitment that we assume to resume the path of integration of Costa Rica into international markets,” Chaves said.

He indicated that this type of agreement is beneficial because it will allow the “generation of increased economic growth” and “job creation.”

The Costa Rican president stressed that the negotiation process was carried out “in an expeditious and pragmatic manner,” in a clear demonstration of the “technical and political capacities” of his country.

Indeed, this FTA was negotiated in a short time since it was barely announced last June, after a meeting Lasso held with Chaves on the sidelines of the IX Summit of the Americas, which was held in Los Angeles, California ( USA ). 

The Presidency of Costa Rica specified that the discussions started last August. The respective heads of foreign trade led the teams from both countries.

The Costa Rica and Ecuador Free Trade Agreement negotiated a satisfactory balance sheet

According to the Costa Rican Presidency, in the Costa Rica and Ecuador Free Trade Agreement negotiation, “both countries achieved a mutually satisfactory balance that meets the main interests of each.”

The Minister of Foreign Trade of Costa Rica, Manuel Tovar, explained that when the agreement enters into force, “more than 90% of current Costa Rican exports to the Ecuadorian market could enter duty-free.”

The agreement, says the Costa Rican Presidency, will allow its countries’ exporters to sell into the Ecuadorian market products such as “ground roasted coffee, tires, electric batteries, vitamin supplements, medicines, fruit juices, syrups for preparation of beverages, hair preparations and steel rods” on a duty-free basis.

Meanwhile, the Ecuadorian Ministry of Production, Foreign Trade, Investment, and Fisheries indicated that the agreement “will allow preferential access for 96% of current exports from Ecuador to Costa Rica.”

Among the items that they can send to that Central American country duty-free, communicates the Ministry, are products that include paper, steel wire, textiles, appliances, electrical appliances, detergents, plastics, chemicals, boards, pasta, medicines, juices, fruit preparations and jams, wood and construction products, as well as other fishing products, such as canned sardines, tuna, and shrimp.

The trade agreement is novel

Tovar commented that the Costa Rica and Ecuador Free Trade Agreement is a novel agreement because it includes issues “that have never been addressed before in trade negotiations,” such as “good regulatory practices, gender equity, and the strengthening of SMEs (Small and Medium Enterprises).”

According to Ecuador’s Foreign Trade portfolio, the commercial exchange between these two countries currently exceeds 25 million dollars. This is an amount they expect to increase with the implementation of the FTA.

For its entry into force, the Costa Rica and Ecuador Free Trade Agreement must undergo a legal review process to subsequently proceed with its signing, which is expected to occur during the first quarter of 2023.

After that, it must be submitted for approval in the two countries Parliaments.