In February 2018, the entire Central American region, except Guatemala, jointly negotiated a Free Trade Agreement (FTA) with South Korea. Just over two years later, the agreement goes into full effect. Said treaty was signed for a period of ten years.
This, after Panama became, the last of the five nations, where the pact began to rule ratified its adherence. It had already come into effect, partially, since 2019 when it began to be carried out in Costa Rica, Honduras and Nicaragua.
In this way, the fourth largest economy in Asia is ahead of its direct competitors in China and Japan in establishing a trade agreement with the region. This treaty eliminates tariffs for 95% of the goods exported by both sides.
An important market
South Korea represents a market of 50 million people and has a net Gross Domestic Product (GDP) of $ 1.6 billion. It is estimated that the average inhabitant has an annual income of $ 32,000.
According to data from the Ministry of Foreign Trade, as of 2019, business between Costa Rica and South Korea grew between 2009 and that year, at an annual average of 2.6%. However, exports from our country to the Asian nation increased an average of 7.8% during that period.
Costa Rican Agricultural sector
In the case of Costa Rica, the agreement entered into force on March 18th, 2019. Initially, 80% of Costa Rican products that are exported to the eastern country had immediate free entry.
These products included coffee, sugar, non-alcoholic beverages, medical devices, and pharmaceuticals. Gradually, the remaining 15% will be released from the fees. In the case of imported products from the Asian country, unrestricted entry applies to 68% of products, while 27% will be gradually exempted. Since South Korea is a food-importing country, this pact represents a great opportunity for the Costa Rican agricultural sector.
For its part, the more accessible import of technological components for artificial intelligence and electronic commerce could be of great benefit to the growing related markets that are being developed in our country. Precisely, the United Nations (UN) recently highlighted Costa Rica as the best country in Latin America for e-commerce, according to its latest global index.
Meanwhile, the Korean government seeks to consolidate its influence in the region as this FTA joins its recent appointment as an extra-regional member of the Central American Bank for Economic Integration (CABEI).