|Alexander Mora, Costa Rica's foreign trade minister /Courtesy of Embassy of Costa Rica|
By Rachel Lee
Gains from a free trade agreement with Korea would go way beyond increased trade with the country, whose global leadership in innovation and manufacture of high-tech products is a benchmark for Costa Rica, Costa Rica's foreign trade minister said.
Alexander Mora, who was in Seoul last week for the Korea-Latin America Business Summit, said his country could learn a "great deal" and benefit from spillovers through foreign direct investment and bilateral cooperation.
"Some preliminary estimates we have developed using a computable general equilibrium model reveal that Costa Rican exports of fruit, medical devices, vegetables, pork meat, beef, plants, flowers and electronic products may register the largest increases, while Korean exports of cars, electronic devices, machinery and equipment, textiles and footwear, plastic manufactures and metal products would be the ones with the largest expected increases," Mora said.
Korea struck the trade deal with six Central American countries last November after 17 months of negotiations. The six countries are Costa Rica, El Salvador, Guatemala, Nicaragua, Panama and Honduras. Korea is the first Asian country to sign an FTA with all six Central American countries.
Following the deal, tariffs will be scrapped on over 95 percent of goods. Korea promised to scrap the tariffs on the major export items of the Central American countries, such as coffee, sugar, bananas, pineapples and mangos. Korea, meanwhile, will benefit in automobiles and home electronics. The deal also opened up doors for Korean companies to advance into the region's government procurement market, including energy, infrastructure and construction.
"Korean industrial products may find interesting trading opportunities in Costa Rica once the FTA is in force, while there is a huge potential for Costa Rican agricultural and food products to find their way into the Korean market once the FTA is in force," Mora said.
Costa Rica boasts a highly skilled labor force, the minister said.
Its healthy business climate and its robust trade platform allow firms operating and producing in Costa Rica to export under preferential conditions (duty free) and legal certainty to more than 50 countries.
According to the Korea International Trade Association, Korea takes up 2.3 percent of exports by the six Central American countries. The trade between Korea and the region has decreased during the past few years, mostly due to fewer exports of Korean ships
The minister said strengthening commercial ties with Korea and the trade agreement would be of great relevance to Costa Rica, as they would allow his country to establish clear rules guaranteeing a regulated and transparent trade relationship with one of the three major powers in Asia.
"Likewise, we would consolidate our strategy to have a stronger presence in this continent, getting closer to one of the most Westernized countries with higher levels of income per capita and with the more attractive consumption patterns of Asia," he said.