1 CARICOM-Costa Rica Free Trade AgreementPresentation by the Ministry of Trade and Industry May 19, 2017

2 Overview of PresentationKey Facts Trade with Costa Rica Overview of CARICOM-Costa Rica Free Trade Agreement (FTA) What’s in it? How can you benefit? Issues Facing exporters in the Costa Rican Market Where can you get more information?

3 Doing Business ranking - 62Key Facts – Costa Rica Population – 4.8 million Currency – Colón Doing Business ranking - 62 GNI per capita – US$10,210 GDP – US$ 54.1 billion Language - Spanish Source: World Bank 2016, Doing Business 2017: Equal Opportunity for all Costa Rica is an upper middle income economy with a population of 4.8m Spanish speaking persons. With a GDP US$ 54.1 billion, the population is recorded as having income (GNI) of approx. $US 10,210. Income inequality is high and ..% of the population is below the poverty level. Costa Rica’s Doing Business ranking in 2017 was 62, as compared to 60 in Trinidad and Tobago also fell in its Doing Business Ranking from 92 in 2016 to 96 in 2017.

4 Here we have a pictoral view of Trinidad and Tobago’s trade with Costa Rica over the period It can be seen that imports from Costa Rica were steady over the period averaging between TT$ 300 M – TT$330 M. However, exports displayed a bit more movement, demonstrating a general downward trend from 2013 to The spike in T&T exports in 2013 was as a result of increased exports of – semi finished iron (1B 346M), in 2014 it was 209M. Trinidad and Tobago generally experienced a trade surplus over the period, except for the years 2012 and 2016, where a trade deficit of approximately TT$279M was recorded in 2016.

5 Trinidad and Tobago’s Trade with Costa Rica – 2016Total Exports TT$ 50.2 M Total Imports TT$ M Top 5 Exports Liquefied propane, Urea, Semi-finished iron, Non-alloy bars/rods and Cereal preparations Top 5 Non-energy exports Cereal preparations, other food preparations, electric lamps and lighting fittings, plugs and sockets Top 5 Imports Other Food Preparations, Carrots, plastic lids and caps, detergents and Paperboard products Taking a closer look at what has trade with Costa Rica been like in Trinidad and Tobago exported approximately TT$ 50.2 M (50,158,555) worth of goods from Costa Rica, and imported approximately TT$ 329 M (329,208,177). As we can see, Trinidad and Tobago experienced a trade deficit of approximately TT$ 279 M. The majority of Trinidad and Tobago’s exports to Costa Rica is from the energy sector, as seen listed, Trinidad and Tobago’s top 5 exports to Costa Rica were …. In order to get an idea of non-energy exports to Costa Rica, the top five non-energy exports are also provided. These were… Looking at Trinidad and Tobago’s imports from Costa Rica in 2016, the top five products were…

6 CARICOM-Costa RICA Free Trade Agreement (FTA)Signed on March 9, 2004 Agreement reciprocal in nature for CARICOM MDCs – Barbados, Guyana, Jamaica and Trinidad and Tobago CARICOM LDCs are not required to grant preferences but benefit from preferential access into the Costa Rican market Covers trade in goods, with built-in agenda for the negotiation of Services and Investment Provides access for all goods, except for those listed in Annex III to the Agreement Act to give effect to the Agreement in Trinidad and Tobago was assented to on February 24, 2005 The CARICOM - Costa Rica Free Trade Agreement was signed on March 9, The Agreement provides for trade in goods, anti-dumping and dispute settlement. A built-in agenda is included for trade in services, investment, competition policy, and government procurement. The CARICOM - Costa Rica Free Trade Agreement will allow exporters from CARICOM States, including Trinidad and Tobago, more transparent and predictable access to the Costa Rican market consisting of over 4 million people. In Trinidad and Tobago, the CARICOM/Costa Rica Free Trade Bill was passed by the House of Representatives on December 10, 2004 and by the Senate on January 11, The Act No. 4, 2005, was assented to on February 24, 2005 and has since been in effect. Costa Rica has also completed its legislative requirements in order to implement the Agreement.

7 What’s in it? Investment Trade in Goods Institutional IssuesTrade in Services Institutional Issues Investment Trade in Goods Other Provisions Tariff Elimination Annexes Rules of Origin Annexes SPS, TBT Contact Points Dispute Settlement Annex Joint Council Built-in Agenda 2 years after Future Work Program for Competition Policy, Government Procurement and Double Taxation Agreement The Agreement includes disciplines on….

8 What’s in it? Tables contained in Annex IIIDescription of Treatment Granted A – Special Treatment of Selected Agricultural Products T&T - tomatoes, cauliflower, cabbage, lettuce and sweet potato from Costa Rica Costa Rica – cucumber, sweet peppers, pigeon peas, sweet potatoes, yams and avocados B – Excluded Products CARICOM – meat of swine and edible offal, fresh and frozen fish, milk and cream, pepper sauce, citrus fruits, beer and rum Costa Rica – coffee, rice, cigarettes, beer and rum, disinfectants, toilet paper and wooden furniture C – Phased reduction of duties CARICOM – cocoa beans, tomato ketchup, perfumes, trays and cups, plywood, lamps and light fittings and brooms Costa Rica – passion fruit, cocoa beans, jams, fruit jellies and marmalades and tableware The products listed in Table A are subject to the MFN duty during the months specified. Where a period is not indicated, the tariff line is subject to free trade. Products listed in Tables B are those which are excluded from tariff elimination under the Agreement, meaning the MFN rate of duty will be applied to these products. Here we will have a look at the Schedule of Excluded products, led by Ms. Lewis. Table C contained items which were to be eliminated in four (4) equal stages, starting on the date of entry into force of the Agreement, and continuing to phase out on January 1 of each of the following year as follows: Date of entry into force 25% reduction January 1, % reduction January 1, % reduction January 1, % reduction As a result, these products are now receive duty free access in the respective markets of the Parties.

9 What’s in it? Tables contained in Annex IIIDescription of Treatment Granted D – Special List T&T – excluded hams, bacon and luncheon meat. Offered duty free treatment for meats of sheep, sweet biscuits and aerated beverages. Phase reduction was applied to other fermented beverages and preparations for use on hair Costa Rica – excluded hams, bacon and luncheon meat for T&T. Offered duty free treatment for cocoa powder, peanuts, beauty or make-up preparations and aerated beverages. Phased reduction was applied to wheat or meslin flour, ice cream and other edible ice and cigars. E – Special Treatment applicable to Oils, Fats and Soaps The Parties are yet to discuss the treatment to be accorded to products of Chapter 15 and 34 under the Agreement. Table D – Special List containing products which are subject to differential preferential treatments as specified for each country. The treatments granted under this arrangement are: immediate duty free access upon entry into force, exclusion and phase out. Here it can be explained that preferences were granted on a differentiated basis Table E – The products listed in this table will be subject to special treatment. The Parties agreed that the Joint Council will meet within three months after internal negotiations in CARICOM have been concluded regarding the Oils and Fats Agreement to products of Chapter 15 and 34.

10 What’s in it? The following goods produced by companies operating under Free Trade Zone Regimes are eligible to tariff elimination benefits: parts and accessories of the machines of heading No. 8471 electrical resistors (including rheostats and potentiometers), other than heating resistors Printed circuits Electronic integrated circuits and microassemblies Parts The Agreement also made special provisions for goods produced in Free Trade Zones. Normally CARICOM does not allow duty-free treatment for good produced in free zones, however an exception was made in this Agreement. Companies such as EIG which make electrical components may benefit from this.

11 How can you benefit? Manufacturers will benefit from duty free access for all products, except for those listed in Annex III which are subject to special treatment. With the FTA… Therefore, once manufacturers can meet the rule of origin requirements for the products, there is substantial access to the Costa Rican market.

12 Issues Facing Exporters in the Costa Rican MarketNon-Tariff Measures (NTMS) and Administrative Practices Product Registration Requirements Requirement of Costa Rica’s Law 6209 of 1978 (Distributor Law) Inadequate Transportation Links between CARICOM countries and Costa Rica And now I will hand you over to Ms. Lewis to highlight some of the reported issues facing exporters in the Costa Rican market. During the course of trade, it is expected that difficulties will arise. Some of those difficulties which have been reported by you the manufacturers were… These issues were discussed at the First Meeting of the Joint Council established under the Agreement which was convened on June As it relates to product registration requirements, manufacturers/exporters have indicated that they incur substantial costs when registering any product entering the Costa Rican market with the Food and Drug Division of Costa Rica. Manufacturers/ exporters explained that individual varieties imported into Costa Rica must be registered separately. At the JC Meeting, CR clarified that products only had to be registered once and that instances to the contrary may have been as a result of miscommunication. Costa Rica requested evidence of such cases so further investigation can be conducted. Trinidad and Tobago has requested the evidence from the relevant firms. As it relates to documentation, exporters have indicated that all documentation relating to the export of products to Costa Rica must by notarized and translated into Spanish, including ingredients and products. This is seen as a expensive and time consuming process. At the First Meeting of the JC, Costa Rica explained that the requirement for translations to be notarized was not discriminatory since all foreign products entering Costa Rica were required to notarize and translate into Spanish all documents relating to the export of products to Costa Rica. Costa Rica’s Law 6209 of 1978 regarding the Protection of Representative of Foreign Enterprises aims to protect domestic distributors of imported goods. . Exporters to Costa Rica may incur rigid penalties if they unjustifiably terminate their relationships with the local distributors. Manufacturers/ exporters see this law as restrictive and a deterrence to trade. Given that Costa Rican exporters do not face a similar legal requirement in CARICOM Member States, CARICOM requested a waiver or exemption be granted in circumstances where it might apply to representatives of CARICOM exporters. CARICOM also invited Costa Rica to explain Law 6209 of 1978 and its implications for CARICOM exporters. CARICOM also requested that an English version of the law be submitted to the CARICOM Secretariat for analysis. Costa Rica agreed to share information on the law at a future meeting of the JC. Costa Rica expressed that Law 6209 of 1978 could not be modified and proposed that the information requested for a clearer explanation of the law and its implications for CARICOM exporters be communicated through dialogue between contact points. Costa Rica has agreed to make available a copy of Law 6209 of 1978 in English. Trinidad and Tobago is awaiting the English version of Law 6209 of 1978. Inadequate transportation between Trinidad and Tobago and Costa Rica poses a major barrier to trade between countries. Challenges were cited regarding both maritime and air transportation. This issue was raised at the First CARICOM – Costa Rica Joint Council Meeting and both Parties agreed to appeal to shipping lines to sail more regularly to Caribbean ports. There was also consensus on the development of a business model that would seek to address the transportation deficiency impacting bilateral trade. These are matters that we will continue to follow up with the TTMA and the manufacturers

13 Additional InformationContact the Trade Directorate Ministry of Trade and Industry Ms. Trudy Lewis, Senior Economist (Ag.) Tel: Ms. Melissa Marshall Tel: /4 ext