The Central American and Caribbean Chamber of Cosmetics and Cleaning Products (CACECOS) and the Costa Rican Chamber of Commerce (CCCR), warn about the economic impact that companies in the industry will suffer from an initiative of the Ministry of Health that seeks to tighten the health registration processes.
Since 2018, the countries of the region have made progress in unifying regulations, however, for the initiative to prosper, all the countries involved must agree. In the case of Costa Rica, the health authorities insist on asking companies to place the health registration number on the label exclusively for the Costa Rican market.
The Chambers point out that one of the most efficient ways to reactivate the economy of the Central American countries and encourage companies to continue operating, despite the current adverse conditions, is through the simplification of product registration procedures and the adoption of modern and uniform regional standards.
Officials from the Ministry of Foreign Trade (COMEX) and the Ministry of Health met virtually this past week with representatives of the industry. However, the Costa Rican authorities maintain the position of tightening the sanitary registration processes in the country, which hinders and makes the commercialization of cosmetic products in the region more expensive.
Price increase
“The measure promoted by Costa Rica, in addition to increasing the operating costs of companies, translates into an increase in the price of the product at the local level, affecting consumers and limiting their access to innovations and new presentations of cosmetic products,” warned Melissa Pérez of Patterson, President of CACECOS.
According to Pérez, Costa Rica’s plan to impose additional requirements on the commercialization of cosmetic products reduces the competitiveness of the country and the region since the manufacturing companies would take up to more than a year to complete the changes proposed by the Costa Rican authority according to the proposal.
“This requirement would apply to products already registered and for new products as well, which represents months of lost sales, before being able to bring the product to market”, assured the president of CACECOS.
Elevated costs
According to data from CACECOS, the cost per unit in labeling issues ranges from 0.15 – 0.20 cents, which would represent a cost of more than USD 1,000,000.00 in a batch of five million units only in labeling issues for one category of products. This estimate does not include time and costs for storage and labor for relabeling, among others.
Both unions urge the Costa Rican authorities to decline the proposal to include the registration number in the labeling of cosmetic products, which will be discussed at the Central America Integration Directors Forum, or, failing that, adopt other alternatives that do not translate into no duty barriers.
Among other consequences for the sector, if this measure succeeds, are the impact on the competitiveness of small companies and putting the industry at a disadvantage against illicit trade. In order to avoid this scenario, the Chambers urge to modernize the current regulatory system, through control mechanisms implemented at an international level, such as the use of market surveillance standards based on risk criteria.
The position of the Costa Rican Chamber of Commerce
For Víctor Ruiz, vice president of the Costa Rican Chamber of Commerce (CCCR), eliminating requirements is a way to encourage the industry, without taking controlof the authorities. “In Latin America, success stories can be identified where these types of requirements have been eliminated that do not provide relevant information in relation to product safety, concentrating their efforts on market surveillance. The practices of international standards do not require labels with registration numbers, as it is a category of safe products for consumers, and doing so does not guarantee compliance with the regulatory framework of the country of commercialization,” said Ruiz.
Ruiz added that, as an industry, they have asked the Costa Rican authorities to desist from the proposal. “We foster an open dialogue with the officials in charge so that they reconsider this position and instead opt for more modern standards that mainly benefit the consumer, at the same time that they will act as an incentive for the industry, just when in our country measures are urgently needed to drastically promote economic reactivation”, indicated the representative of the Chamber of Commerce.
According to Ruiz, the rest of the countries in the area have desisted from including a requirement on their labels since it is not an indicator of compliance with the regulation. “For those who are participants in illegal trade, it is very easy to falsify the registration numbers and include them on a label,” said Ruiz.
A growing market
The Central American region as a whole represents a market of more than 48 million inhabitants, where intra-regional imports reached US $ 473.3 million as of December 2019, which represents 23.36% of the region’s total imports, according to data from the Secretariat for Central American Economic Integration (SIECA).
