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Costa Rica moves closer to the Pacific Alliance

Thursday, May 15, 2014


 

Costa Rica will get benefits, which include improved capital formation, and streamlined diplomatic and consular procedures, as well as potential commercial gains, as a result of joining the Pacific Alliance.

Mexico is looking forward to expanded trade with Costa Rica, said the Mexican Secretary of Foreign Affairs, José Antonio Meade, earlier this month.

Costa Rica last February applied for membership in the organization, which includes Chile, Colombia, Mexico and Peru.

As far as Costa Rica is concerned, trade facilitation would come largely from harmonized procedures among partner countries.

Costa Rica already has a bilateral free trade agreement with each of the members of the alliance.

Countries which have observer status include Canada, the United States and Guatemala.

A coastline on the Pacific Ocean is a condition of membership in the alliance, which expects to focus on commerce with Asia.

Membership could create a mechanism, whereby Costa Rican companies could efficiently seek investment, through issuing stocks or bonds.

The alliance’s four members are in the process of establishing a common stock exchange, which would let a company from a member country list and sell securities on all of the exchanges, using a single set of rules.

Currently, Costa Rican companies face high costs of issuing securities on the local stock exchange, which because of its small size imposes high costs on any transaction.

Membership in the alliance will also let countries provide better services at lower cost, by sharing diplomatic and consular services.

In terms of bilateral trade, Costa Rica is currently Mexico's top trade partner in Central America and the Caribbean.

From 1994 to 2013, bilateral trade has grown 30-fold.

Tourism has also grown, including a one-third increase over the past three years in Costa Rican visitors to Mexico.

The Mexico-Costa Rica trade association for its part has existed since 2012, including well-known companies such as Gruma, the world's largest manufacturer of corn flour and tortillas; Banorte (Spanish only), the biggest bank with majority Mexican capital; Bimbo, breadmaker Femsa; Sigma foods; glass producer Vitro; and the engineering firm ICA (Spanish only).

Other Mexican firms operating in Costa Rica include Grupo Salinas, Cemex, and Ramírez, which operates the Cinépolis chain of cinemas.

The Pacific Alliance was created in 2011.

The four founding members together represent more than a third of the total annual production of Latin America, with a 2012 value of $3 trillion.