 
  WORLD TRADE  
ORGANIZATION  WT/REG147/3 
8 September 2004 
 (04-3762) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN CANADA AND COSTA RICA 
 
Communication from the Parties
 
  The following communication, dated 7 September 2004, is being circulated at the request of 
the Delegations of Canada and Costa Rica. 
 
_______________ 
 
 I. BACKGROUND INFORMATION ON THE AGREEMENT  
 The governments of Costa Rica and Canada agr eed on the need to strengthen trade relations 
among their countries inter alia  through a bilateral trade agreement.  
  The Free Trade Agreement between Costa Rica a nd Canada is divided into seven parts, sub-
divided into 15 chapters:  Objectives, General De finitions; National Treatment and Market Access of 
Goods; Rules of Origin; Customs Procedure; Em ergency Action; Antidumping Measures; Services 
and Investment; Trade Facilitation and Additional Procedures; Temporary Entry; Competition Policy; Publication, Notification and Administration of  Laws; Institutional Arrangements and Dispute 
Settlement Procedures; Exceptions; and Final Provisions.  1. Membership And Dates Of Signature, Ratification And Entry Into Force 
 The Free Trade Agreement between Costa Rica and Canada was signed on April 23 of 2001. 
  In Costa Rica, the Agreement is contained in  Law No. 8300 of 10 September 2002, published 
in the Official Journal La Gaceta  No. 198 of October 15 of 2002. 
 
 In Canada, the Agreement is assented in the legislation to implement the Canada-Costa Rica 
Free Trade Agreement of December 18 of 2001.   The Agreement entered into force on the 1st of November of 2002.  
 The Agreement was provided to Members in  a communication to the Committee on Regional 
Trade Agreements (WT/REG147/1) dated 17 January 2003.  
2. Type Of Agreement 
 In Article I.1 of the Agreement, the Parties establish a free-trade area consistent with Article 
XXIV of the GATT 1994. 
 WT/REG147/3 
Page 2  
 
 3. Scope 
 The Agreement is a comprehensive trade agr eement, covering trade in goods and services,  
and dispute settlement mechanisms. On Investme nt, the Parties note the existence of the Agreement 
between the Government of Canada and the Govern ment of Costa Rica for the Promotion and 
Protection of Investment , signed in 1998. 
 
 The scope of the Agreement extends to trade in goods between Costa Rica and Canada. The 
Parties agree to grant national treatment to products  originating in the other Party, in accordance with 
Article III of the GATT 1994, to which no exceptions are provided.  
 As regards trade data in relation to the tariff elimination or liberalization process, it has been 
determined that almost 90% of the total amount of trade between Costa Rica and Canada will be 
liberalized within a period of eight years following  the signing of the Agreement, according to 2001 
the trade figures, year when the negotiations were co mpleted.  This is shown in the table and charts 
below. 
 
Free Trade Agreement (FTA) between Costa Rica and Canada
 
Bilateral Trade According to Market Access Under the FTA  
2001  
  
Category US$ % partic 
Canadian market access for Costa Rican exports 
Immediate elimination of duties (A) 28,923,685 93.4% 
Deferred immediate elimination (A1) 693,505 2.2% 
Phasing out – five stages (B) 58 0.0% 
Phasing out – eight stages (C) 1,345,108 4.3% 
Costa Rican exports to Canada 30,962,356 100.0% 
 
Costa Rican market acces s for Canadian exports 
Immediate elimination of duties (A) 64,461,027 87.7% 
Phasing out – eight stages (B) 3,979,347 5.4% 
Phasing out – fifteen stages (C) 2,805,495 3.8% 
Tariff Rate Quotas 1,611,298 2.2% 
Exclusion 1/ 650.321 0,9% 
Costa Rican imports from Canada 73,507,488 100.0% 
Source: Own calculations based on data from the Costa Rican Foreign Trade 
Promotion Agency  (PROCOMER) and the Central Bank of Costa Rica (BCCR). 
1/ Include the trade on goods with preferential access under Tariff Rate Quota. 
 
  WT/REG147/3 
 Page 3 
 
 
 Canadian market access for Costa Rican exports, 
2001
Phasing out - 
eight stages
4.3%Deferred 
immediate 
elimination
2.2%phasing out - 
five stages
0.0%
Immediate 
elimination
93.4%
 
 
Costa Rican market acces for the canadian 
exports, 2001
Immediate 
elimination
87.7%Phasing out - 
eight stages
5.4%Exclusion
0.9%TRQ's
2.2%Phasing out - 
fifteen stages
3.8%
 
 
 
4. Trade data 
 Trade between Costa Rica and Canada has intensified since the mid-1990s. For 2003, the 
flow of trade between the two countries amounted to US$ 261.8.1 millions.   During the last decade, Costa Rican exports to  Canada have grown at an average rate of 
13.6%, while imports have grown at an average rate of 9%. 
 
 For the year 2003, Costa Rican main exports to Canada were electronic devices, bananas, 
pineapples, sugar, melons and coffee. Those products  accounted the 80% of the total exports. In the 
same year, Costa Rican imports from Canada were newsprint paper, potassium chloride, sack Kraft paper, injection-molding machines and textur ed yarn of nylon or other polyamides. 
 WT/REG147/3 
Page 4  
 
 
Costa Rica: Trade with Canada
1990-2003
050100150200250Thousands US$
EXPORTS 49.3 76.7 109.3 99.7 110.4 118.8 107.5 133.8 135.8 118.2 123.1 121.8 156.6 210.5
IMPORTS 23.9 19.0 20.8 26.1 26.5 33.6 37.1 53.6 32.7 46.3 57.9 39.5 48.4 48.5
BALANCE 25.5 57.6 88.5 73.6 83.8 85.2 70.4 80.2 103.1 71.9 65.2 82.3 108.3 162.01990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: Statistics Canada and Strategis  
 
 
II. TRADE-RELATED PROVISIONS 
1. Import Restrictions 
 The Parties agree to accord national treatment  to the goods of the other Party. Certain 
measures listed in Annex III.2 are exempted for this  obligation. The parties agree not to adopt or 
maintain restrictions on any good imported from or e xported to the territory of the other Party, except 
as provided for in Article XI of the GATT 1994 or any successor agreement to which both Parties are party. This implies a commitment to refrain from imposing import restrictions that are not based on Articles XX and XXI of the GATT 1994 or those regul ated in the Chapter dealing with Sanitary and 
Phytosanitary Measures and Standard-Related Measu res, Metrology and Approval Procedures of the 
Agreement. The prohibition to apply import and ex port price requirements is also reaffirmed. 
  1.1 Duties And Charges   Each Party shall eliminate customs duties pursu ant to the provisions of Annex III.3.1 (Tariff 
Elimination). For Costa Rica, the goods are listed in  five different staging categories; meanwhile 
Canada’s Schedule lists the goods in seven categori es. A category applies for each tariff line in the 
Harmonized System.  
Category Costa Rica’s Sc hedule Canada’s Schedule 
A Immediate elimination upon the entry into force of the Agreement 
A1 Not applicable  Deferred immedi ate elimination, no more than 
120 days after the Costa Rican government 
notifies the Canadian Government of the elimination of the subsidies under the Free Trade 
Zone Regime 
A2 Not applicable Immediate elimination, applicable for tariff items 
with temporary application during a specific 
period 
B Phasing out in eight equal stages from the 
entry into force of the Agreement Phasing out in five equal stages from the entry 
into force of the Agreement 
B1 Phasing out in nine equal stages from the Not applicable  WT/REG147/3 
 Page 5 
 
 
 Category Costa Rica’s Sc hedule Canada’s Schedule 
entry into force of the Agreement 
C Phasing out in fifteen equal stages from the 
entry into force of the Agreement Phasing out in eight equal stages from the entry 
into force of the Agreement1/ 
D Not applicable Phasing out in nine equal stages from the entry 
into force of the Agreement1/ 
E Goods excluded from the provisions of customs duties elimination 
1/ For the goods from Free Trade Zones, phase out shall apply to the applicable tariff rate for that year according 
to the provisions of the phasing out category on the year in which the Costa Rican Government notifies the 
Canadian Government the elimination of the tax exoneration programs and export subsidies provided for Free Trade Zones’ industries. 
 
 For Canada, the Agreement provides immediate,  duty free entry into Costa Rica for 65% of 
the tariff items. 18.7% of the tariff lines are included under Category B (phasing out in eight stages), 14.6% in Category C (phasing out in fifteen stages), 0.03% in Category B1 (phasing out in nine stages), 0.4 % under Tariff Rate Quotas and 1.1%  are excluded from the customs elimination. 
 
 For Costa Rica, the Agreement provides immedi ate duty free entry into Canada for 82.5% of 
the tariff items. 3.5% and 0.3% of the tariff lines are included in the categories A1 and A2, 
respectively; 0.8% are included in Category B (phasing out in five stages), 10.8% in category C (phasing out in eight stages) and 0.1% in categor y D (phasing out in nine stages). Canada excluded 
1.9% of the tariff lines in its Schedule. 
 
 
Percentage of Tariff Lines
 
by Staging Category  
 
Category Costa Rica Canada 
A 65.1% 82.5% 
A1 -- 3.5% 
A2 -- 0.3% 
B 18.7% 0.8% 
B1 0.03% -- 
C 14.6% 10.8% 
D -- 0.1% 
Tariff Rate Quotas 0.4% n.s. 
E 1.1% 1.9% 
 n.s. – not significant 
  Costa Rica excluded the following types of products: bovine, poultry and swine meat, dairy products; horticultural products (potatoes, tomato es, onions, beans, sweet pepper, cauliflower); 
sausages and similar preparations of poultry meat. However, for some of these products Costa Rica 
had granted preferential access under quota. Canada ex cluded three types of products: dairy products 
(including ice cream, modified milks and milk based drinks); poultry products (live animals, meat, fat, 
eggs, sausages and similar preparations of meat, a nd eggs) and beef, fresh, chilled or frozen. A tariff-
rate-quota was also established for both countries.   1.2 Quantitative Restrictions 
   
 Article III.7 stipulates the elimination of impor t and export restrictions in accordance with 
Article XI of the GATT 1994 (General Elimination of Quantitative Restrictions), while allowing the 
possibility of incorporating the results of th e negotiation of any successor agreement or treaty 
concluded by the Parties.  The Parties excluded certain measures from these provisions. Annex III.2 
lists these exemptions. WT/REG147/3 
Page 6  
 
  1.3 Common External Tariff 
  The Agreement does not include among its objectives the establishment of a common external tariff for third markets.   2. Export restrictions 
 2.1 Duties And Charges 
   Article III.10 (Export Taxes) stipulates that no Party may adopt or maintain any duty, tax or 
other charge on the export of any good to the terr itory of another Party, unless such duty, tax or 
charge is adopted or maintained on any such goo d when destined for domestic consumption.  The 
foregoing is without prejudice to Annex III.10 (E xport Taxes), which in the case of Costa Rica 
specifies the following exceptions:  
• Bananas, as provided in Law No. 5515 of 19 April 1974 and amendments thereto, 
Law No. 5519 of 24 April 1974 and amendments thereto, and Law No. 4895 of 16 
November 1971 and amendments thereto,  or under any equivalent successor 
legislation;  
 
• Coffee, as provided in Law No. 2762 of 21 June 1961 and amendments thereto, and 
Law No. 5519 of 24 April 1974 and amendments thereto, or under any equivalent successor legislation;  and 
 
• Beef and live cattle, as provided in La w No. 6247 of 24 May 1978 and amendments 
thereto, and Law No. 5519 and amendments  thereto, or under any equivalent 
successor legislation. 
  2.2 Quantitative Restrictions  
 As is the case with import quantitative restri ctions (see Section 1.2), according to Article 
III.7, the parties are required not to adopt or mainta in any prohibition or rest riction on the exportation 
or sale for export of any good destined for the territory of the other Party. Exceptions to this provision are listed in Annex III.2.   
 2.3 Other Export Measures 
  Article III.11 of the Agreement states that a Pa rty may maintain export restrictions justified 
under GATT 1994 provisions. However, a series of c onditions must be met in order to adopt or 
maintain such a restriction:  
• the restriction does not reduce the proportion of the total export shipments of the 
specific good made available to the other Party relative to the total supply of that good of the Party maintaining the restriction as compared to the proportion prevailing in the 
most recent 36-month period for which data are available prior to the imposition of 
the measure, or in such other representative  period on which the Parties may agree;  
 
• the Party does not impose a higher price for exports of a good to the other Party than 
the price charged for such good when consumed domestically; and  
  WT/REG147/3 
 Page 7 
 
 
 • the restriction does not require the disrupti on of normal channels of supply to the 
other Party or normal proportions among specific goods or categories of goods 
supplied to the other Party.  
 
3. Rules Of Origin 
 Detailed rules of origin are set out in Chapter IV  of the Agreement.  In general, origin is 
conferred when goods are wholly produced in the fr ee-trade area; all of the non-originating materials 
used in the production of goods undergo the change in  tariff classification specified for that good in 
Annex IV.1 and, in some cases, contain a certain amount of Costa Rican and Canadian content; when 
goods are produced in the free-trade area entirely fro m originating materials; or when the good is 
produced entirely in the territory of one or both of  the Parties but one or more of the non-originating 
materials used in the production of the good cannot undergo a change in tariff classification because 
both the good and the non-originating materials are classi fied in the same subheading, or heading that 
is not further subdivided into subheadings, provided there is a regional value-content for the good. 
  There are also a number of other special rules th at can be applied in certain circumstances, but 
which may help otherwise non-origin ating goods to qualify under the Agreement.  These special rules 
are included in Article IV.3 "Accumulation" and Article IV.4 "De Minimis".  The accumulation article allows for accumulation of materials and of production process among producers in the 
territory of Canada and Costa Rica.   There are also provisions that establish how certain materials are to be treated when 
determining the origin of goods (eg. packing and packaging materials; fungible goods and materials; 
sets or assortments of goods; accesso ries, spare parts and tools, and indirect materials consumed 
during production of goods). Additionally, there is also a list containing the operations that do not 
confer origin.   
 As regards transshipment, the Agreement specifi es that a good will loose its originating status 
if subsequent to that production, the good underg oes further production or any other operation outside 
the territories of the Parties, other than unloadi ng, reloading or any other operation necessary to 
preserve it in good condition or to tr ansport the good to the territory of a Party; does not remain under 
customs control while outside the territories of the Par ties; or enters into trade or consumption in the 
territory of a non-Party. 
 
 The specific rules of origin contained in A nnex IV.1, sought to ensure for exporters, the 
possibility to access the other market, even thought the good contained imported inputs.   
The Customs Procedures are set out in Chapter V .  This Chapter provid es a general reference 
framework of principles to be followed by the re levant authorities in the countries belonging to the 
free-trade area and by users, the objective bei ng to reduce the burden of customs procedures.  
  This Chapter includes rules regulating cust oms procedures for the purposes of determining 
the origin of goods.  For example, it contains provisions relating to certificates of origin, the 
obligations of importers and exporters, procedures for verifyi ng the origin of goods, confidentiality, 
advance rulings, penalties, review and appeal, unifo rm regulations and cooperation between customs 
administrations. WT/REG147/3 
Page 8  
 
 4. Standards 
4.1 Technical Barriers to Trade 
  TBT relations between the Parties are governed by the WTO Agreement on Technical Barriers to Trade. 
 
 In addition, in Article IX.6 paragraph 3 the Parties undertake the obligation to develop 
programs for technical cooperation aimed at ach ieving full and effective compliance with the 
obligations set forth in the WTO TBT Agreement th rough the promotion of bilateral institutional and 
regulatory information exchange and technical cooperation, and the promotion of bilateral 
coordination by appropriate agencies in multilateral and international for a on standards, including 
metrology.    
4.2 Sanitary and Phytosanitary Measures 
 
 Sanitary and Phytosanitary (SPS) issues are regulated in Article IX.5 following a twofold 
approach:  reaffirmation of the rights and obliga tions between the Parties under the WTO Agreement 
on the Application of Sanitary and Phytosanitary Me asures and recognition of the benefits of bilateral 
programs of technical and institutional cooperation.   SPS relations between the Parties are governed by the WTO SPS Agreement.  In addition, a 
Committee on Sanitary and Phytosanitary Measur es, comprising representatives of each Party who 
have responsibility for SPS matters is established,  providing a regular forum for consultation and 
cooperation.         
5. Safeguards 
 Chapter VI (Emergency Action) establishes the rules and technical criteria for applying 
safeguard measures. It distinguishes between meas ures defined as bilatera l emergency actions and 
global emergency actions. As regards global emer gency actions, each Party retains its rights and 
obligations under Article XIX of the GATT 1994 and the WTO Agreement on Safeguards and any 
successor agreements.      
 Provision is made for bilateral emergenc y actions (i.e. between the importing and the 
exporting country) where imports of the other Party,  as a result of the reduction or elimination of a 
duty provided for in the Agreement, have under gone a significant increase and under such conditions 
that the imports of the good from that Party alone c onstitute a substantial cause of serious injury, or 
threat thereof, to a domestic industry producing a lik e or directly competitive good.  In this case the 
affected Party may, during the transition period: suspend the further reduction of any rate of duty 
provided for under the Agreement; increase the rate of duty to a level not exceeding the lesser of the 
most-favoured-nation rate of duty at the time the act ion is taken and the most-favoured-nation rate of 
duty in effect on the day immediately preceding the en try into force of the Agreement; or in the case 
of a duty applied to a good on a seasonal basis, in crease the rate of duty to a level not to exceed the 
MFN applied rate of duty that was in effect on the good for the corresponding season immediately 
preceding the date of entry into force of this Ag reement.  The Chapter also specifies conditions 
concerning notification, time frames for implementa tion, possible extension and compensation for the 
other Party, inter alia , in regard to the application of such m easures.  These provisions do not apply to 
emergency actions respecting goods covered by the Annex on Textile and Apparel Goods. 
 
 The Chapter includes provisions governing the administration of emergency action 
proceedings in general.  These refer to the consis tent, impartial and reasonable administration of its 
laws, regulations, decisions and rulings governing a ll emergency action proceedings.  It also states  WT/REG147/3 
 Page 9 
 
 
 that each Party shall adopt or maintain equitable,  timely, transparent and effective procedures for 
emergency action proceedings. It also establishes th at each Party shall entrust determinations of 
serious injury, or threat thereof, in emergenc y action proceedings to a competent investigating 
authority, subject to review by judicial or administ rative tribunals, to the ex tent provided by domestic 
law. Negative injury determinations shall not be su bject to modification, except by such review. The 
competent investigating authority empowered under domestic law to conduct such proceedings should 
be provided with the necessary resources to enable  it to fulfill its duties. These provisions do not 
apply to emergency actions resp ecting goods covered by the Anne x on Textile and Apparel Goods. 
  Neither Party may request th e establishment of an arbitral panel under the corresponding 
Article of the Institutional Arrangements and Dis pute Settlement Procedures Chapter regarding any 
proposed emergency action.   
6. Anti-Dumping And Countervailing Measures 
Chapter VII (Antidumping Measures) regulates the imposition of antidumping measures.   
 
 The Chapter consists of one Article stipula ting that except as otherwise provided in this 
Chapter the rules of the WTO Agreement shall govern  the rights and obligations of the Parties in 
respect of the application of antidumping duties. It  also establishes that all disputes between Parties 
arising in respect of the application of antidum ping measures by either Party shall be settled in 
accordance with the WTO Agreement. 
 
 The Chapter further states that in the in terest of promoting improvements to, and 
clarifications of, the relevant provisions of the WTO Agreement the Parties recognize the desirability 
of establishing a domestic process whereby the inves tigating authorities can consider, in appropriate 
circumstances, broader issues of public interest; pr oviding for the possibility of imposing antidumping 
duties that are less than the full margin of dumping in appropriate circumstances; having a transparent 
and predictable method for the imposition and coll ection of antidumping duty that provides for the 
expeditious assessment of definitive antidumping dut ies; and assessing the conditions of competition 
between the imported products and the conditions of competition be tween the imported products and 
the like domestic product pursuant to Article 3.3 of the WTO Agreement on the Interpretation of 
Article VI of the General Ag reement on Tariffs and Trade 1994. 
 
 The Chapter also reaffirms their full adhere nce to their obligations under the relevant 
provisions of the WTO Agreement in their interest of  ensuring procedural fairness and transparency in 
anti-dumping investigations.  
The Agreement does not include provisions regarding the impositi ons of countervailing 
duties.  
7. Subsidies And State-Aid 
 Articles III.12 and III.13 state that both Parties agree to cooperate to eliminate export 
subsidies for agricultural goods at a multilateral level.  Bilaterally, the Parties agree to eliminate in 
their reciprocal trade, on the date of entry into fo rce of the Agreement, any form of export subsidy for 
agricultural products and to prevent the rein troduction of these subsidies in any form.  
 
The Parties recognize the importance of domestic support for the agricultural sector, but also 
recognize that it may have distorting effects on produc tion and trade. In order to reduce and eliminate 
these distortions, the Parties agree to cooperate in the WTO negotiations on agriculture for the 
following purposes:  WT/REG147/3 
Page 10  
 
 • to obtain the maximum reduction or elimination of this type of measures that distort 
production and trade; 
 
• to obtain an overall limit on the amount of each type of domestic support measure 
(“green”, “blue” and “amber”) 
 
• to review the criteria for “green box” support in order to ensure that it does not distort 
production and trade; 
 
• to reach an agreement that “green box”  support should not be countervailable.  
  
Pending the elimination of trade-distorting do mestic support measures, if either Party 
maintains such a measure which the other Party consid ers to be distortive of bilateral trade under this 
Agreement, the Party applying the measure shall, at th e request of the other Party, consult with a view 
to making a best efforts endeavor to avoid nullif ication or impairment of concessions granted under 
this Agreement.   
8. Sector-Specific Provisions 
 In addition to the provisions of the Agreemen t that apply to all industrial sectors, the 
Agreement contains one annex in Chapter 3 (N ational Treatment and Market Access of Goods) 
addressing sector specific provisions for textiles and apparel goods (Annex III-1). 
  Under the FTA, there are special provisions a pplicable to textile a nd apparel goods under this 
Annex, that include the following: (i) immediate duty free treatment for certain certified hand-made 
goods, (ii) specific safeguard measures, (iii) definiti ons related to this Annex, (iv) exceptions to 
certain rules of origin.  
9. Other Provisions 
Trade Facilitation 
  Regarding trade facilitation, the Agreement,  under Chapter IX, establishes a framework of 
principles and specific obligations, fundamentally in cu stoms matters, in order to facilitate trade in the 
free trade area. The Chapte r establishes obligations with respect  to release of goods (including low 
risk goods); harmonization of the information require ments that must be presented by the importers 
and exporters; express consignments and low of va lue; and electronic exchange of information 
between the customs administrations and the trading community. It is recognized that cooperation is 
fundamental to facilitate the fulfillment of the Agre ement, which is why it was agreed to develop a 
future work program of technical cooperation in cu stoms matters. A future wo rk program in several 
customs subjects includes, among others training, risk assessment, audit and verification frameworks and electronic exchange of information.  Goods Produced Under Free Zones Regime 
 
 The goods produced in companies operating under Free Zone Regime in Costa Rica, subject to immediate tariff rate elimination, could benef it of the preferences if they met all requirements 
established under Chapter IV. In spite of that, for some leather, rubber and ceramic products, 
produced under the Costa Rican Free  Zones Regime, the tariff will be reduced to free 120 days after 
the Government of Costa Rica satisfies the Governme nt of Canada that Costa Rica has eliminated all 
tax exemptions and other export subsidies offered to companies operating in Costa Rica’s Free Zone 
Regime.  WT/REG147/3 
 Page 11 
 
 
  
 For products under other tariff Schedule produ ced in companies operating under Free Zone 
Regime in Costa Rica, the reduced rate provided for by such phasing will come in to effect only in the 
year, at the rate applicable for that year, that the Government of Costa Rica satisfies the Government 
of Canada that Costa Rica has eliminated all ta x exemptions and other e xport subsidies offered to 
companies operating in Costa Rica’s Free Zone regime. 
  
III. GENERAL PROVISIONS OF THE AGREEMENT 
1. Exceptions And Reservations 
 Chapter 14 (Exceptions) contains the rules rela ting to exceptions.  Their purpose is to identify 
specific situations in which the provisions of th e Agreement would not apply for any the following 
reasons:  exceptions of article XX of the GATT 1994, national security, taxation, balance-of-
payments, disclosure of information and cultural industries.  General Exceptions 
 
 As regards general exceptions, Article XX of  the GATT 1994 and its interpretative notes, or 
any equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made part of this Agreement.  National Security 
 
 As far as national security is concerned, the Parties may provide for exceptions in order to 
protect their essential security interests or take action in pursuance of their obligations under the 
United Nations Charter for the maintena nce of international peace and security. 
 
Taxation 
 
 None of the provisions of the Agreement app lies to tax measures or affects the rights and 
obligations of the Parties under tax conventions.  In the event of inconsistency between the 
Agreement and any such convention, that convention prevails to the extent of the inconsistency. 
 
 Notwithstanding the above, the national treatme nt provisions apply to tax measures to the 
same extent as does Article III of the GATT 1994 and the export tax provisions to tax measures. 
 
Balance Of Payments 
 
 The Parties may establish exceptions in order to  adopt or maintain me asures that restrict 
transfers where a Party faces serious balance-of-pay ments difficulties or the threat thereof, provided 
that such restrictions are consistent with certain  requirements under the relevant Article.  As soon as 
practicable after a Party imposes a measure restricti ng transfers, in pursuance of its international 
obligations the Party is required to submit all rest rictions on current account operations for review by 
the International Monetary Fund (IMF) under Article VIII of the IMF Articles of Agreement;  to enter 
into good faith consultations with the IMF on economic adjustment measures to address the 
underlying economic problems;  and to adopt or ma intain economic policies consistent with such 
consultations.  
 The measures applied or maintained must al so avoid unnecessary damage to the commercial, 
economic or financial interests of the other Party, not be more burdensome than necessary to deal with 
the balance-of-payments difficulties, be of temporary and be progressively phased out as the situation WT/REG147/3 
Page 12  
 
 improves, be consistent with the consultations held with the IMF and with the IMF provisions of the 
Articles of Agreement, and be applied on a national treatment or most favored nation treatment basis. 
  A Party may adopt or maintain a measure that gi ves priority to services th at are essential to its 
economic programme, provided that the measure is not imposed for the purpose of protecting a 
specific industry or sector, unless the measure is consistent with the provisions of the IMF Articles of 
Agreement.   The Article further stipulates that restrictions on transfers imposed on payments for current international transactions must be consistent with  Article VIII(3) of the IMF Articles of Agreement;  
must be consistent with Article VI of the IM F Articles of Agreement and be imposed only in 
conjunction with measures imposed current international transactions; where imposed on transfers covered by Article IX of the Agreement Between the Government of the Republic of Costa Rica and 
the Government of Canada for the Prom otion and Protection of Investments , signed in San Jose on 
March 18, 1998, shall be consistent  with Annex I, Section V of that Agreement; where imposed on 
transfers related to trade in goods, may not substan tially impede transfers from being made in a freely 
usable currency at a market rate of exchange; and may not take the form of tariff surcharges, quotas, 
licenses or similar measures.  
Disclosure Of Information 
  Nothing in the Agreement shall be construed to  require a Party to furnish or allow access to 
information the disclosure of which would impede law enforcement or would be contrary to the 
Party's law protecting personal privacy or the financ ial affairs and accounts of individual customers of 
financial institutions.  Cultural Industries 
 
 Measures affecting cultural industries are exempt from the provisions of the Agreement except as specifically provided for in Chapter III (N ational Treatment and Market Access of Goods).  
  
Reservations 
 
 The Agreement shall not be subject to unila teral reservations or unilateral interpretative 
declarations.  
2. Accession  
 There is no specific provision for othe r countries to accede to the Agreement. 
 
3. Dispute Settlement Procedures 
 The dispute settlement mechanism is establishe d in Chapter 13 of the Agreement. This 
Chapter applies with respect to the avoidance or settlement of all disputes between the Parties 
regarding the interpretation or application of this Agreement or wherever a Party considers that an 
actual or proposed measure of the other Party is or would be inconsistent with the obligations of this 
Agreement or cause nullification or impairment in the sense of Annex XIII.5 (Nullification and 
Impairment).    The Agreement establishes that, except as othe rwise provided in the Agreement, disputes 
regarding any matter arising under both this Ag reement and the WTO Agreement, any agreement 
negotiated thereunder, or any successo r agreement, may be settled in either forum at the discretion of  WT/REG147/3 
 Page 13 
 
 
 the complaining Party. Once a fo rum has been selected, the forum selected shall be used to the 
exclusion of the others.   If the mechanism established by the Agreement is chosen, it first provides for consultations 
between the Parties.  If, the matter fails to be r esolved by the consultations, the complaining Party 
may request the establishment of an arbitral panel made up of three members, acting in conformity 
with rules of procedure to be laid down by th e Commission. Panelists are normally selected from a 
roster, drawn up by the Parties, of persons w ith international expertise and experience.  
  Within a period of 90 days after the last pa nelist has been selected, the panel presents its 
initial report containing findings of fact, its determination as to whether the measure at issue is or 
would be inconsistent with the Agreement or causes nullifi cation and impairment, and its 
recommendations.  Once the Parties have submitted their comments on the initial report, the panel 
shall present its final report to the Parties.  The Pa rty complained against shall notify the other Party 
its intentions in respect of implementation of the recommendations and rulings of the final report 
within a reasonable period of time mutually agreed by the Parties or set out by an arbitrator. Any 
disagreement between the Parties in relation to the compliance of the final report by the Party 
complained against shall be resolved through a dis pute settlement procedure directed by a compliance 
panel comprised of the original panelists. The co mplaining Party shall not suspend concessions or 
other obligations until the compliance panel has provi ded its report to the Parties and the complaining 
Party has notified the Party complained against whic h particular concessions or obligations the Party 
intends to suspend. Compensation and the susp ension of concessions or other obligations are 
temporary measures available in the event that th e recommendations and rulings are not implemented 
within a reasonable period of time.   
4. Relation With Other Trade Agreements 
 Except as otherwise provided, the provisions of  the Agreement prevail in the event of any 
inconsistency with other intern ational agreements.  Nevertheless, it should be emphasized that 
obligations deriving from the Convention on Intern ational Trade in Endangered Species of Wild 
Fauna and Flora, the Montreal Protocol on Substa nces that Deplete the Ozone Layer and the Basel 
Convention on the Control of Transboundary Move ments of Hazardous Wastes and Their Disposal 
prevail in the event of any inconsistency with the Agreement. 
  
5. Institutional Framework 
 The Agreement establishes a series of rules fo r its administration and for the settlement of 
disputes stemming from its implementation.  
Administrative bodies:
 
  The Free Trade Commission  (comprising cabinet level representatives) supervises the 
implementation of the Agreement; oversees its further elaboration;  and considers any other matter 
that may affect the operation of the Agreement.  
 The Commission may also adopt binding interpre tations of the agreement, seek the advice of 
non governmental persons or groups; take such other action in the ex ercise of its functions as the 
Parties may agree; modify in fulfillment of the objectives of the Agreement the Tariff Elimination 
schedule of a Party, with the purpose of adding one  or more goods excluded in the Tariff Elimination 
Schedule, the phase-out periods established, with th e purpose of accelerating the tariff reduction,  the 
rules of origin, and the Uniform regulations  on Customs Procedures; establish committees, 
subcommittees or working groups; and establish its rules and procedures. 
  WT/REG147/3 
Page 14  
 
  The Free Trade Coordinators  shall supervise the work of all committees, subcommittees and 
working groups; recommend to the Commission th e establishment of committees, subcommittees and 
working groups; follow up with any decisions ta ken by the Commission, as appropriate; receive 
notifications pursuant to this Ag reement; and consider any other ma tter that may affect the operation 
of this Agreement as mandated by the Commission. 
 
 The Secretariat  shall provide administrative assistance to panels established under the 
Dispute Settlement Chapter and, as the Commi ssion may direct, support the work of other 
committees, subcommittees and working groups esta blished under this Agreement; and otherwise 
facilitate the administration of the Agreement. 
 
 
IV. OTHER 
1. Final Provisions 
 Chapter 15 (Final Provisions) contains the fina l provisions of the Agreement.  These rules 
regulate procedures regarding annexes, appendices and footnotes; amendments; entry into force; 
duration and termination and authentic texts. It is important to note that the Agreement has an 
indefinite duration.   The full text of the Agreement is available on the following websites:  
 In Costa Rica:  www.comex.gov.cr
 
 In Canada:  www.dfait-maeci.gc.ca/tna-nac/Costa_Rica_toc-en.asp  
   
__________ 
 
 