28 April 2024 (Latin&Gulf / Dubai-UAE) – Manuel Tovar:, the Minister of Foreign Trade of Costa Rica, shares in this exclusive interview, about the important role of The Comprehensive Economic Partnership Agreement (CEPA) on Trade and Investment between Costa Rica and the United Arab Emirates (UAE), Signed the past April 17th, 2024.
Manuel Tovar, Minister of Foreign Trade of Costa Rica, has served the country for almost 20 years, accumulating experience and technical understanding of complex geopolitical situations, diplomacy and the role of trade and investment in the development of our country.
LG: What are the main objectives of the Economic Partnership Agreement signed between Costa Rica and the UAE?
The Comprehensive Economic Partnership Agreement on Trade and Investment between Costa Rica and the United Arab Emirates (UAE) (CEPA) is an instrument destined to enhance the commercial relationship and promote foreign direct investment (FDI) between both countries. Once into force, the CEPA will allow for a more favorable climate for the promotion and development of trade and investment opportunities that will directly and positively impact the citizens of each country.
LG: How does the agreement aim to stimulate foreign direct investment and boost bilateral trade?
The CEPA provides a clear, transparent, and predictable legal framework, ranging from market access conditions on goods (creating a free trade area where almost 90% of products will have no tariff once into force) to provisions on trade in services, digital trade, financial services, trade facilitation, intellectual property, micro, small and medium-sized enterprises, and others.
Regarding investment, the CEPA will complement the Bilateral Investment Agreement between Costa Rica and the UAE that has been in force since 2020, covering numerous matters relevant to promote investment. It creates a Technical Council on Investment to enhance the economic cooperation on investment matters, monitor investment relations and identify both opportunities for expanding investment and impediments to investment flows to work towards identifying the appropriate actions to address them.
Both countries aimed by means of the CEPA to promote an attractive investment climate that encourages the expansion of trade in products and services, and that creates favorable conditions for long-term economic development and diversification of trade between the two countries.
LG: What role did Manuel Tovar, the Minister of Foreign Trade of Costa Rica, play in the signing of the agreement?
Trade has been fundamental in the economic development of Costa Rica. This Administration has been clear in its intention to take more of Costa Rica to the world and bring more of the world to Costa Rica. Accordingly, Manuel Tovar, as Minister of Foreign Trade, has led different initiatives to further diversify our trade platform, where the Middle East stands as a strategic region where there is still plenty of room for our commercial and investment ties to grow.
Costa Rica and the UAE share the view that both countries had much to offer one another. Under this understanding, a year ago, Minister Tovar and Minister Al Zeyoudi announced the decision to negotiate a free trade agreement, which resulted in the CEPA that was recently signed by both Ministers on April 17th, 2024.
LG: Can you detail the sectors that will benefit from the Costa Rica-UAE agreement, such as tourism and renewable energy?
The CEPA, like any trade agreement, creates opportunities for many different activities. The complementarity of our economies, the already existing trade flows, and the conditions agreed in the CEPA allow for an educated guess on sectors that are more likely to benefit once the Agreement is in force. For example, products such as coffee (roasted and unroasted), fresh fruit (such as bananas and pineapple), fruit juices and purees (such as pineapple, banana, and orange) and personal care preparations (such as shampoos and gels) stand out for Costa Rica. Additionally, some products from the UAE that may benefit include raw materials for the plastics (polymers) and metals (wire, sheets, and strips) industries, perfumes, fuels, and extracts for medicinal use.
A stronger economic relationship is expected to also generate an enabling environment for fostering synergies and exchanges in other areas of mutual interest. Specifically, in services such as tourism and air transport, both countries can explore alliances and new alternatives to generate more interest and influx of visitors. Renewable energies, where Costa Rica leads as one of the few countries where almost 100% of the energy derives from renewable sources, present another promising area of collaboration among both countries.
LG:What are the anticipated impacts of the agreement on Costa Rica’s position as a gateway to the Latin American region?
Costa Rica bears a strategic location in the heart of the Americas, and a well-established and stable democratic tradition. What is more, it boosts an open and eco-friendly economy, a strong emphasis on upholding the rule of law, and a highly skilled and productive workforce.
Once the CEPA is in force, it can be anticipated that it will further position Costa Rica as an attractive destination for UAE companies looking to expand their presence in our continent, leveraging Costa Rica’s open trade policy which provides for preferential access to more than 60 countries worldwide.
LG: How will the agreement enhance the global value chain participation of Costa Rica?
Costa Rica has deployed a clear and well-conceived strategy aimed at broadening, deepening, and modernizing our robust platform of trade agreements, where the CEPA will stand, once it enters into force, as our 18th free trade agreement. Therefore, this Agreement will complement our existing network of preferential access to global markets.
Clearly, having an agreement with a country that has emerged as the most important logistics and export hub in the Middle East and that bears robust connectivity to many companies around the world, will allow Costa Rica to foster its participation in global and regional supply chains, particularly in a region encompassing dynamic and vibrant economies which together account for almost 500 million consumers. Such participation may include activities ranging from agricultural crops and processed food items to medical devices, semiconductors and even advanced IT and business services.
LG: What was the significance of the virtual ceremony during which the UAE-Costa Rica Comprehensive Economic Partnership Agreement was signed?
The ceremony held for the signature of the CEPA was especially important as this Agreement marked the history of both countries: for Costa Rica it was the first of its kind
signed with a country from the Middle East and for the UAE it was the first signed with a country from Latin America. Additionally, and more importantly, both Presidents were able to intervene and affirm the common interest to continue bridging the geographical distance between the countries and pursuing stronger relations.
LG: How does the agreement align with Costa Rica’s strategic objective of diversifying into new markets?
As mentioned before, Costa Rica has established a path towards greater diversification of markets and investment, leading to a better insertion in the world economy. This Agreement, the first of its kind signed with a country from the Middle East, is a concrete example of the results of the country’s work to achieve such objective.
LG: What has been the growth in non-oil trade between Costa Rica and the UAE since the agreement, and what does this indicate?
Both Costa Rica and the UAE signed the CEPA on April 17th, 2024, and for the Agreement to enter into force, each country must complete their internal legal procedures. Once this happens, both countries will be able to measure in due time the growth in trade numbers and draw conclusions of how to further expand the commercial exchange through the Agreement.
LG: With his extensive background in international relations and trade, how is Manuel Tovar uniquely positioned to foster this new era of economic collaboration between Costa Rica and the UAE?
Manuel Tovar, Minister of Foreign Trade of Costa Rica, has served the country for almost 20 years, accumulating experience and technical understanding of complex geopolitical situations, diplomacy and the role of trade and investment in the development of our country. His background has led Minister Tovar to identify the UAE as a strategic partner, with which strengthening trade and investment ties will lead to greater economic and social development for our citizens. Minister Tovar will continue to work promoting the Agreement during the assessment process the Congress has to carry out and, hopefully, in its approval and implementation in the short run.
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