(Nov. 19, 3:00 p.m.) SAN JOSE, Costa Rica — Costa Rica’s fresh produce industry leaders applauded the country’s long anticipated entry into the Central American Free Trade Agreement in mid-November and said the pact will benefit both Costa Rica and the U.S.

While Costa Rica’s fresh produce exports to the U.S. already receive duty-free access because of the Caribbean Basin Trade Partnership Act, Costa Rica sources say the free trade deal will allow growers and packers to purchase U.S. machinery and other inputs at zero tariff levels.

Costa Rica’s long-awaited entrance into the CAFTA agreement will also be good for U.S. exporters of apples, grapes and other items. For example, Costa Rica’s applied tariff on apples is 16% and that will drop to zero after Jan. 1.

In Costa Rica, one exporter said the deal will make doing business more efficient.

“Most of the taxes on machinery and technology (imports) will be zero,” said Tarcisio Mora, general manager of the ADAPEX, Cartago, Costa Rica. “Growers have been waiting on CAFTA.”

He said the inclusion of Costa Rica will allow continued improvements to quality and performance by growers and exporters.

Costa Rican lawmakers passed the final necessary change needed before it could enter the treaty. The Central American Free Trade Agreement countries are the U.S., Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala and the Dominican Republic.

Costa Rica signed CAFTA in 2004 and voters there OK’d the treaty in October 2007. The treaty is scheduled to become effective on Jan. 1.

Balance of trade

Agricultural trade between Costa Rica and the U.S. favors Costa Rica. In 2007, the U.S. imported $1.23 billion in agricultural products from Costa Rica, while the U.S. exported $433 million in agricultural products to Costa Rica.

Costa Rica’s primary agricultural export to the U.S. in 2007 was pineapples, which totaled more $372 million. Banana shipments to the U.S. accounted for about $285 million in sales, and coffee exports to the U.S. totaled $130 million.

U.S. exports of fresh apples to Costa Rica in 2007 totaled $2.5 million and shipments of grapes tallied $4.6 million. The biggest U.S. exports to Costa Rica were wheat, rice and corn, which together totaled more than $200 million.

Background

CAFTA brings down trade barriers and strengthens intellectual property rights, as well as dismantles state insurance and telecommunications monopolies.

While some required regulations on intellectual property rights are pending, Jose Quirce, Washington, D.C.-based special envoy for CAFTA for Costa Rica, said everything should be wrapped up by the end of November.

“We will be ready for the Jan. 1 deadline,” he said. “We’re basically ready for implementation.”

Quirce said passing laws that altered the state’s insurance and telecommunications monopolies was difficult, but he believes the end result will be a more competitive country and benefits to consumers.