The CAFTA Report
Importing under treaty
could be a maze
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The CAFTA Report
Importing under treaty
could be a maze
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Importing under treaty
could be a maze
For The CAFTA Report
Individual expats who seek to import goods under the new free trade treaty with the United States and other Central American countries face a bewildering process. Little authoritative material has been published saying exactly how the treaty affects foreigners living here. Automobiles from North America still face high import fees because Costa Rica considers these payments to be an internal tax and not an import duty. Wines from the U.S. in two-liter bottles or smaller became duty free when the treaty went into effect Jan. 1. But not sparkling wine that incurs duty for five more years. One curious fact is that the Ministerio de Comercio Exterior, the foreign trade ministry, has said without explanation that the trade treaty will not have a financial effect on Costa Rica. Most government agencies both here and in the United States have been focusing their efforts on selling the treaty to voters and legislators instead of outlining the effects on the average citizen. The U.S. Department of Agriculture prepared extensive summaries by state to show how the treaty would help local producers there. One snippet confirms that Costa Rica and the Dominican Republic are eliminating their duty on yellow corn immediately and that duties on other corn products, like corn syrup, will be phased out over 15 years. Some potato products like frozen french fries became free of duty Jan. 1, and all duties will be eliminated in 15 years, except for fresh potatoes in Costa Rica, where liberalization will occur through expanded access, with an initial quantity of 300 metric tons, said the department. Current duties on potatoes in the Central American countries are generally 15 percent, it added. Current import duties on U.S. beef exports are as high as 30 percent, but duties on prime and choice cuts are eliminated immediately in Central American countries, the department added. For some reason Costa Rica has not eliminated custom duties immediately on U.S. blueberries, as have the other treaty countries. Instead, Costa Rica will phase out its 15 percent duty over five years, according to the treaty. Although some of this saving may be passed along to consumers at PriceSmart and other stores that cater to expats, most residents here are more concerned with importing clothing and other e-mail order items that used to result in endless visits to the Dirección General de Aduana. Although the treaty said that 80 percent of U.S. products would be free of duty when the treaty went into effect, some desired goods, like U.S. beer, face a lengthy period of duty reduction. A separate amendment to the treaty spells out Costa Rica's promise to cut duty. For beer: "On the date this agreement enters into force, duties shall be reduced by 2 percent of the base rate, and by an additional 2 percent of the base rate on Jan. 1 of year two. On Jan. 1 of year three duties shall be reduced by an additional 8 percent of the base rate, and by an additional 8 percent each year thereafter through year six. On Jan. 1 of year seven duties shall be reduced by an additional 16 percent of the base rate, and by an additional 16 percent of the base rate each year thereafter through year nine, and such goods shall be duty-free effective Jan. 1 of year 10." The amendment specifies four categories of products that may not reach duty-free status for 15 years. A compounding factor to the bewilderment of expats is a statement from the customs division of the Ministerio de Hacienda that importers have to select which treaty rules will be used for their products. There are differences among goods imported from the U.S. and those imported from other treaty countries. In addition, a lot of the clothing and other items expats want to import from the United States actually are manufactured elsewhere and may not be covered by the treaty. For its part, the Ministerio de Comercio Exterior reports that it will be addressing some treaty contingencies. Curiously, there has been no effort by the U.S. Embassy or other U.S. agencies to provide a working summary for expats here. The U.S. International Trade Administration's Trade Information Center has an extensive summary of the many categories of goods in the treaty, but the material appears overwhelming to persons not in the import-export business. |
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