As of 2020, the economy in Costa Rica is thriving. Due to an adamant commitment to trade openness and substantial improvements in fiscal policies, Costa Rica has drawn in numerous investors, many of which want to take advantage of its strategic location. If you want to start exporting to Costa Rica and explore its potential, we suggest that you start making plans now. For detailed guidelines, we will present you with a clear-cut overview of trade and export in Costa Rica.
Over the last couple of decades, there have been many government policies that aim to increase the stability and overall health of the Costa Rican economy, therefore drawing in investors and exporters. The fiscal reform of December 2018 is one such policy that successfully linked various legal initiatives with OECD (Organisation for Economic Co-operation and Development) accession.
The USA is Costa Rica’s largest trading partner, and its geographical proximity along with sea ports on both the Pacific and the Caribbean coasts represents a major opportunity for exporters that can ship cargo using short transit time transportation services.
Furthermore, Costa Rica’s growing middle class and its large North American expat population have strong purchasing power and are known to be highly receptive to US and European goods; which generates business openings for international companies.
On top of that, Costa Rica enjoys a free trade policy with very few trade barriers, and unified low tariffs, in compliance with the WTO and the Central America – Dominican Republic Free Trade Agreement (CAFTA-DR).
Therefore, it is relatively easy to import goods to Costa Rica and to benefit from its thrilling economy.
If you see the economic potential of exporting to Costa Rica, consider the top exports in 2019, as reported by the OEC:
Over 40% of exports to Costa Rica come from the US. The total value of US imported goods was $6.4 billion in 2019. This should give you a decent idea of how lucrative Costa Rica can be if you are a US exporter.
Doing business and exporting to Costa Rica can sometimes be quite challenging, due to:
When it comes to the import restrictions and prohibitions, Costa Rica follows similar standards as its neighboring countries. Among the more notable imports prohibitions and restrictions to Costa Rica are:
Regarding pharmaceuticals, drugs, cosmetics, and dietary supplements, an import permit and registration with the Ministry of Health are necessary.
The Costa Rican authorities also require a Good Manufacturing Practices Certificate for these products. This can become a problem as this certificate is not issued by the U.S. Federal Government, which results in an inability to obtain approval to sell in the Costa Rican market.
Some chemical products, such as solvents, agricultural inputs, and precursor chemicals that can be used to produce narcotic drugs are also strictly restricted and will require special permits or sanitary controls.
Furthermore, if you plan on exporting food products, additives, raw materials, animal feed or pet food for the first time, consider that you will have to register these products with the Ministry of Health.
Finally, if you wish to export used clothing to Costa Rica, a new regulation has been issued in 2020 which requires that all items must be washed at 60°c at a laundry facility approved by the Costa Rican Health Ministry. This new regulation increases the costs to import such commodity. Being the biggest exporter of used clothing to Costa Rica, the United States is currently seeking resolution of this issue.
As previously mentioned, bureaucracy can be a problem in Costa Rica. This fact makes Costa Rican customs procedures complex and lengthy.
However, some recent changes have improved the importation process making it more efficient. For instance, Single Windows (electronic “one-stop” import and export windows) has significantly reduced the time required for customs processing. Also, the Government of Costa Rica has installed a TICA (Technology for Customs Control) system. This system requires a seal to be randomly installed on products to monitor their delivery from the port to the purchaser.
In regards to documentation, Costa Rica only requires standard paperwork. This includes:
This permit can be obtained upon proving acceptable manufacturing practices and presenting quantitative-qualitative analysis certificates, and free-sale certificates, all provided by the foreign exporter.
The registration process for pharmaceuticals can be very slow, often taking more than half a year for full approval. Fortunately, the government is taking steps towards making this approval easier to obtain.
The global level of transport infrastructures in Costa Rica is quite low. That is why during the last years, the transportation systems have been the primary focus of the Costa Rican government.
Several projects are in progress to improve the overall transport efficiency in Costa Rica. Large infrastructure investments are currently being made in rails, ports, airports, highways, and bridges. Still, the main mode of transporting to Costa Rica is by ocean, and there are many advantages of this way of shipping that you can make use of as an exporter.
With all this in mind, is exporting to Costa Rica a good idea? Well, the answer will depend on the type of product being exported and on having the right logistic partner by your side to help you out.
Costa Rica can be a haven for investors, especially in the upcoming years. So, if you wish to take advantage of this growing economy, we suggest that you start preparing in advance.
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