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Middle East trade ties with be strengthened through new Costa Rican free trade agreements with the United Arab Emirates and Israel.
During the last week of March 2023, Costa Rica became the third country in Latin America to launch a negotiation process to sign a free trade agreement with the United Arab Emirates (UAE). Colombia and Chile are the other two countries in the region to strike an accord with the UAE. In addition to this trade pact, Costa Rica also announced, during the same week, that it would begin negotiations on a free trade agreement with Israel. Costa Rican free trade agreements with the UAE and Israel will strengthen the Central American nation’s economic position in the Middle East.
The signing of the “Comprehensive Economic Partnership Agreement,” a process similar to a free trade agreement, took place in Dubai between the Minister of Foreign Trade, Mr. Manuel Tovar Rivera, and the Emirati Minister of State for Foreign Trade, Dr. Thani Al – Zeyoudi.
The movement towards greater commercial ties between Costa Rica and the UAE began in Davos
The diplomatic process that allowed the two countries to reach this milestone began with the bilateral meeting between the President of Costa Rica, Dr. Rodrigo Chaves Robles, and the CEO of the sovereign wealth fund of the Emirate of Abu Dhabi (ADQ), Mr. Mohammed Al- Suwaidi, which took place in Davos, Switzerland in the framework of the World Economic Forum meeting, last January.
Subsequently, Foreign Minister Arnoldo André’s official tour to the United Arab Emirates in February consolidated the agreement to move the process forward during a meeting with the diplomatic adviser to the Emirati president and Emir of Abu Dhabi, Dr. Anwar Gargash. This step culminated in another meeting among the foreign trade ministers of both countries in February.
“Bilateral relations today with the United Arab Emirates have gained a significant degree of confidence for both countries, and this step that we have taken proves that the Middle East is an important country committed to foreign trade and commerce, which we will further strengthen in the coming months, “ Foreign Minister André said.
Costa Rica and the United Arab Emirates exchanged resident embassies in 2017. Since then, more than twenty-five cooperative agreements of various kinds have been signed. The Costa Rican Ambassador Francisco J. Chacón, and the Emirati ambassador, Rawdha Al- Otaiba, are the heads of the missions in Abu Dhabi and San José, respectively.
Emirati data from the Ministry of Economy indicate that from 2021 to 2022, total trade between the UAE and Costa Rica grew by 19.3%, reaching 58.7 million dollars annually. Costa Rican exports reached 43.8 million dollars last year, an increase of 21.3% compared to 2021.
Costa Rica and Israel will negotiate a free trade agreement
Costa Rica and Israel agreed on Wednesday, March 29, 2023, to negotiate a Free Trade Agreement (FTA), with which the Central American country reinforces its commitment to new markets and deepens its relations with the Middle East.
“The Middle East is a region of the world with which there is a lot of space to strengthen our commercial exchange and investment, and this FTA that Costa Rica and Israel have decided to negotiate is framed precisely within that logic,” the Costa Rican minister of Foreign Trade, Manuel Tovar, said in a statement.
The official is in Israel was in Israel on March 29, when he signed a memorandum of understanding on trade with the Israeli Minister of Economy and Industry, Nir Barkat. The two diplomats announced the decision to negotiate an FTA.
The Government of Costa Rica affirmed the long-standing friendship between the two countries. Due to this relationship, both parties agree that there is an excellent outlook for deepening trade and investment ties. In addition to this, there are also opportunities to take advantage of global value chains for advanced manufacturing and highly sophisticated services.
“Both countries have a lot to offer each other. On the one hand, Israel is a leader in innovative industries such as high technology, cybersecurity, agrotechnology, and clean technologies; on the other, Costa Rica is an important supplier of high-quality agricultural products, as well as advanced manufacturing products and sophisticated business services and information technology,” said Tovar.
The benefits of Costa Rican free trade agreements with the the UAE and Israel
There are several potential benefits of free trade agreements (FTAs) between Costa Rica and the United Arab Emirates (UAE), and Israel, including:
- Increased trade: FTAs can eliminate tariffs and other trade barriers between countries, making it easier and cheaper for businesses to trade goods and services. This can increase trade volume between Costa Rica, the UAE, and Israel, leading to more economic activity and potentially higher business profits.
- Diversification of trade: By establishing FTAs with countries in different regions, Costa Rica can diversify its trade portfolio and reduce its dependence on one market. This can help mitigate the risk of economic disruption due to changes in global market conditions or political instability in any region.
- Access to new markets: FTAs can open up new markets for Costa Rican businesses, allowing them to sell their goods and services to consumers in the UAE and Israel. This can help expand Costa Rican companies’ customer base and increase their revenues.
- Enhanced competitiveness: By eliminating trade barriers, FTAs can increase competition between businesses in different countries. This can incentivize companies in all three countries to improve their products and services, reduce costs, and become more efficient. This will ultimately make them more competitive in the global marketplace.
- Improved investment opportunities: Costa Rican free trade agreements with the UAE and Israel can provide a framework for increased investment between the countries, creating new opportunities for businesses to expand into new markets and invest in new projects. This can lead to increased job creation, economic growth, and improved living standards for people in Costa Rica, the UAE, and Israel.
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