. /.WORLD TRADE
ORGANIZATIONG/SCM/N/74/CRI
20 December 2001
(01-6420)
Committee on Subsidies
and Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement on Subsidies
and Countervailing Measures
Requests Pursuant to the Procedure in Document G/SCM/39
COSTA RICA
The following communication, dated 19 December 2001, has been received from the
Permanent Mission of Costa Rica.
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In view of the fact that it meets the relevant requirements, Costa Rica would hereby like to
avail itself of the procedures provided for under the mechanism adopted during the recent Doha
Ministerial Meeting for extensions of the period for the application of export subsidy programmes
(see document G/SCM/39).
Over the past few years, the Costa Rican economy has suffered from a decline in the prices of
its main export products and significant increases in the international price of oil.  This, added to the
continued existence of other imbalances, has prevented the economy from performing well and
achieving a favourable balance of payments, with the principal result that access to short-term private
foreign savings has been limited.
A combination of other factors throughout 2001, such as signs of recession of the United
States economy, the crisis in the market for high-technology products – which constitute Costa Rica's
principal export – and the drop in coffee and banana prices, had a considerable impact on Costa Rican
exports, which will fall by an estimated 17.2 per cent in 2001.  This would mean a real growth of
production of 0.3 per cent for this year, and despite the increase in trade in services over the past
years, the current account deficit would reach 5 per cent of the gross domestic product.
In this economic climate, the prospects for growth of the Costa Rican economy in 2002 are
not bright either.  External shocks, added to an accumulation of structural and financial problems, will
hinder the rapid recovery of domestic production, and this, together with the uncertainty underlying
the international market, means that Costa Rica cannot count on positive results in the short andmedium term.
In this context, and in the light of the country's economic, financial and development needs,
an extension in the period for granting certain export subsidies contained in the programmes known as
the Free Zone Regime and the Inward Processing Regime is a necessity.G/SCM/N/74/CRI
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It should be stressed that the basic objective of the Free Zone Regime and Inward Processing
Regime programmes is to foster the country's socio-economic development by attracting foreign
investment, encouraging domestic investment and promoting exports.  Regimes of this kind help to
establish favourable conditions for the setting up of enterprises performing a wide range of operations
which generate wealth and technological know-how and enhance international competitiveness.
The Free Zone Regime consists in a set of incentives and benefits granted by the Costa Rican
Government to companies that make new investments in the country, provided they meet the other
requirements and obligations laid down in the relevant laws and regulations.  This programme of
incentives and benefits includes export subsidies in the form of full and partial exemptions from
import duties and internal taxes.  Similarly, the Inward Processing Regime allows for the import of
certain capital goods and inputs used in the production of export goods and also involves exemptionfrom certain import charges and indirect taxes.
These regimes are covered by the following domestic legislation:
• Law on the Free Zone Regime No. 7210 of 23 November 1990 and amendments
thereto;
• Regulations to the Law on the Free Zone Regime – Executive Decree
No. 28451-H-COMEX of 18 June 2001;
• General Customs Law No. 7557 of 20 October 1995 and amendments thereto;
• Regulations to the General Customs Law of 14 June 1996 and amendments thereto;
• Regulations for the Inward Processing and Duties Rebate Regimes – Executive
Decree No. 26285-H-COMEX of 19 August 1997 and amendments thereto.
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