Costa Rica: The newcomer of the Pacific Alliance

How could the Central American country benefit the economic compact?

Costa Rica, Paciffic Alliance 

Leer en Español: Costa Rica: un posible nuevo aliado de la Alianza del Pacífico

The Pacific Alliance is the economic compact formed by Chile, Colombia, México, and Peru. Established in 2011, the alliance seeks to create a free trade space among its nations. The region containing 200 million people has an average median income of $7,871 dollars and is highly competitive regarding mining and food production.

The collusion’s household median earnings are 27% higher than that of China’s as the Latin territory’s purchasing power is projected to keep rising thanks to a newer generation of skilled workers that are entering the workforce.

Costa Rica is an upper-middle income country that has exhibited progressive economic expansion over the last 25 years; its success resides on an acquired openness to free markets and receptiveness for foreign investment which is fostered by a sound regional leadership regarding environmental policies.

The Central American nation’s interest of joining the Pacific Alliance was originally disclosed in 2014, but the alleged search of the right timing for the inclusion of the country has caused its delay until 2017. President Luis Guillermo Solis has faced criticism from the private sector as the integration has not occurred fast enough.

The Pacific Alliance wishes to have 90% of the products from Costa Rica into a free market condition while some agricultural sectors could feel the backlash from exporting along with competitive nations, such as Colombia. Nevertheless, the market opportunities for broader integration with the US, Canada, and Asia would generate an aggregate benefit in the long run.

In order to be part of the Pacific Alliance, a country must have free trade deals with all the other members.

Colombia’s trade deal with Costa Rica was signed on the 11th of May, 2013 and became effective on the 1st of August, 2016. The principal assets are medications, chemical products, prosthetic devices, syringes, iron, steel, and polypropylene, according to Ernst and Young.

Mexico’s trade relations with Costa Rica remain solid as both nations lead the Central American economic space; the free trade agreement between both countries began on January 2005 and has seen a surge in Mexican imports ranging from software, computer processors, and palm oil, while Costa Rica has benefitted from Mexican televisions, vehicles, and avocados.

Economic relationships between the Central American applicant to the Pacific Alliance and Peru have remained stable since June 1st, 2013. Peru has received chocolate, tea, and milk-based drinks while it exports asparagus, grapes, corn, resin, rubber, textiles, jewelry, and metals, according to the Tico Times. Peruvian trade deal with Costa Rica is oriented to the average consumer, as it aims to increase its freedom of choice.

Last but not least, the Chilean free trade agreement with Costa Rica came into full effect on February 14th, 2002. Based on the Chilean export of wheat, wheat flour, edible oils, sugar, chicken meat, dairy products, and vegetables.  In return they receive potatoes, beans, onions, chicken meat and sausages, and forestry.


Latin American Post | David Eduardo Rodríguez Acevedo

Copy edited by Susana Cicchetto

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