Market Access Challenges for Costa Rica in the Process of Accession to the Pacific Alliance

Abstract

This chapter stresses the importance to Costa Rica’s economy of its accession to the Pacific Alliance (PA) and analyses market access negotiation challenges. One of the requirements for accession to the PA is for new members to have existing free trade agreements in place with the PA members. We compare the agreements Costa Rica already has with each of the PA countries in order to identify the sensitive products that may present the greatest challenges in the accession process. One of the difficulties with these sensitive products is to determine how the four separate agreements that Costa Rica has negotiated with each Member of the PA can be converted into a single agreement in terms of the tariff schedule and rules of origin. The chapter concludes that with respect to rules of origin, all preferential trade agreements (PTAs) signed by Costa Rica with PA member states – except for the Free Trade Agreement (FTA) with Chile – have diagonal cumulation of origin and therefore the benefits of market cumulation outweigh the challenges posed by sensitive products. In terms of the tariff schedule, sensitive products are identified in current PTAs. However, if Costa Rica becomes a full member of this economic bloc, the country will benefit from increased market access due to the regional cumulation, as well as from many other commitments beyond market access.