WORLD TRADE
ORGANIZATIONG/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
23 January 2002
(02-0354)
Working Party on
State Trading EnterprisesOriginal:  Spanish
STATE TRADING
New and Full Notification and Updating Notifications Pursuant to
Article XVII.4(a) of the GATT  1994 and Paragraph 1 of the
Understanding on the Interpretation of Article XVII
COSTA RICA
The following communication, dated 21 January 2002, has been received from the Permanent
Mission of Costa Rica.
_______________
Pursuant to Articles 2 and 3 of the Understanding on the Interpretation of Article XVII of the
General Agreement on Tariffs and Trade 1994, the Government of Costa Rica herewith submits itsreplies to the Questionnaire on State Trading, corresponding to the periods June 1998 to June 1999,
June 1999 to June 2000 and June 2000 to June 2001.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 2
REPLIES TO THE QUESTIONNAIRE ON STATE TRADING
(Period from 30 June 1998 to 30 June 1999)
I. ENUMERATION OF STATE TRADING ENTERPRISES
In Costa Rica there is only one enterprise covered by the provisions of Article XVII of the
GATT 1994.  This is the Refinadora Costarricense de Petróleo S.A. (RECOPE) which has a
monopoly on the importation, refining and wholesale distribution of crude oil, fuels derived from oil,
asphalt and naphtha.  RECOPE is a state trading enterprise which was established as a joint stock
company.  All of its shares are held by the State.  It is a legal person regulated, as far as itscommercial activities are concerned, by private law.
The list of products marketed by RECOPE and their tariff headings is as follows:
Products Tariff Heading
Light Crude* 27.09.00.10.00
Heavy Crude* 27.09.00.10.00
Regular Gasoline 27.10.00.55.00
Premium Gasoline 27.10.00.55.00
Diesel 27.10.00.73.20
Jet Fuel 27.10.00.61.00
L.P.G. 27.11.12.00.00
Aviation Gasoline (Av Gas) 27.10.00.52.90
Fuel Oil 27.10.00.72.00
Heavy Naphtha 27.10.00.63.00
MTBE 29.09.19.00.00
Asphalt 27.13.20.00.00
    *Crude oils refined by the Company.
II. REASON AND PURPOSE
RECOPE has the exclusive right to manage the State monopoly on the importation, refining
and wholesale distribution of crude oil and derivatives in order to satisfy domestic demand.  This right
is derived from Law No. 5508 of 8 April 1974 and Law No. 7356 of 24 August 1993 (ratification of
the above-mentioned State monopol y administered by RECOPE).
The importation and marketing of fuels is a strategic national interest.  State intervention
guarantees effective control over fuel price policies; fuel prices in turn have a powerful impact on the
stability of the prices of a wide range of other goods and services, hence even a slight increase in fuel
prices is enough to appreciably affect inflation.  It follows that, through th e intermediary of RECOPE,
the State performs an important social function, namely to maintain macroeconomic stability.
Likewise, RECOPE must take proper account of the needs relating to the country's energyprogramme.
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE
The monopoly held by RECOPE consists firstly in the exclusive right to import and refine all
crude oil and oil by-products, and secondly in exclusive wholesale fuel distribution rights.  In this
connection, and in accordance with Executive Decree No. 24943-MINAE of 13 January 1996,G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 3
wholesale sales are defined, for the purposes of establishing the distribution monopoly, in terms of the
following minimum volumes:
Products Minimum Sales
Volume (litres)
Regular Gasoline 1,900
Premium Gasoline 1,900
Diesel 1,900
Kerosene 1,900
Bunker Oil 1,900
Heavy Diesel 1,900
Asphalt 1,900
Asphaltic Emulsion 1,900
L.P.G. 757
Aviation Gasoline(Av Gas)1,900
Jet Fuel 1,900
Heavy Naphtha 1,900
Light Naphtha 1,900
IFO-380 25,000
IFO-180 25,000
Article 4 of the Regulation under Law No. 6588 (law regulating the activity, objectives and
other aspects of RECOPE), provides that RECOPE  may sell oil and oil derivatives abroad, provided
that domestic market requirements are guaranteed.  In addition to the above, it should be pointed out
that, with regard to hydrocarbon exploration and production (national oilfields), Article 36 of the
Hydrocarbons Law provides that such production shall be used as a matter of priority to coverdomestic requirements and the national reserve.  These requirements are determined by the Executive,
through the Ministry of Natural Resources, Energy and Mining, and every contractor is obliged to sell
to the State the amount of output required to satisfy domestic market needs.  Accordingly and in view
of the monopoly managed by RECOPE, the output of na tional oilfields must be sold to RECOPE on a
priority basis.
Furthermore, Article 6 of Law No. 6588 of 30 June 1981 provides that RECOPE may
participate individually or jointly in tendering procedures organized by the Directorate-General of
Hydrocarbons for the exploration and production of hydrocarbons, in accordance with the provisions
of the Hydrocarbons Law.
RECOPE imports, processes and markets all the crude oil and derivatives consumed
domestically in Costa Rica and exported (the country does not produce oil).  On the basis of its yearly
demand estimates, RECOPE buys crude oil and finish ed products on the international market.  Import
quantities are determined on the basis of local demand and the refining and storage capacity ofRECOPE plants.  Export levels are set principally in the light of storage capacity and the size of
shipments.
With regard to import prices and resale prices for imported products, RECOPE purchases
crude oil and oil by-products on the international market on the basis of strict market criteria. These
are determined by reference to international market prices in the Caribbean and on the United SatesG/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 4
Gulf Coast.  RECOPE does not negotiate import contracts; these have a one-year limit and prices are
negotiated each year in the light of price fluctuations on the international oil market.
Article 4 of Law No. 5508 provides that, gi ven RECOPE's status as a public enterprise
(carrying with it certain general prerogatives and privileges which it enjoys exclusively or in
conjunction with all other public entities) the Ministry of Finance is authorized, on the State's behalf
and under its responsibility, to give RECOPE the gu arantee(s) it needs to obtain financing for its
working capital, provided that the total amount does not exceed US$5,000,000.00 (five million US
dollars).  To this end, approval must be obtained from the Central Bank of Costa Rica and loans must
be negotiated with leading banks and institutions.
Lastly, RECOPE has an obligation, which also ta kes the form of a right, to engage in an
activity related to its principal, statutory and routine corporate activity when situations arise requiring
the efficient and effective supply of fuels in the national interest.  This obligation and right is derived
directly from Article 5, first paragraph, of Law N o. 5598, which in turn comes within the framework
of the public objectives assigned to RECOPE.  For example, RECOPE would be required to engage in
wholesale distribution activity when there is a need for an effective supply at that level and
development of the activity is affected by serious or unexpected problems.
RECOPE calculates fuel prices on the basis of the principle of service at cost, pursuant to
Article 3(b) of Law No. 7593 (Public Services Act); these must be approved by the Public Services
Regulatory Authority (ARESEP, formerly SNE, th e National Electricity Service), in accordance with
Laws Nos. 6588 and 7593. Export sales prices are set by RECOPE on the basis of prescribed formulae
which take both local prices and prices on other markets into consideration; these are not controlled
by the ARESEP.
In conclusion, as regards market structure, RECOPE - as was said earlier - has a monopoly on
the importation and domestic distribution of petroleum products given that it was granted exclusive
statutory powers to these ends.  The situation is different with regard to exports, since any natural or
legal person who buys products from RECOPE can resell them for export to another country.
However, this type of transaction is not at all common.
IV. STATISTICAL INFORMATION
The attached Annex contains three tables with figures on imports, exports and domestic
activities for the corresponding period, set out in terms of quantity and value.
V. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE
There has been foreign trade, as shown in the above-mentioned tables.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 5TABLE I
STATE TRADING:  RECOPE
Statistical Information:  Imports
(Period from 1 July 1998 to 30 June 1999)
Product
DescriptionTariff
HeadingTotal Quantity
Imported
(M3)Average
Import Price
($/M3)Average
Domestic Sales
Price
($/M3)Mark-up
($/M3)Domestic
Production
(M3)
Regular Gasoline 27.10.00.55.00 326,351 115.90 157.82 41.92 ----
Premium Gasoline 27.10.00.55.00 404,805 121.72 166.88 45.16 ----
Diesel 27.10.00.73.20 780,208 102.59 123.25 20.66 ----
Bunker Oil 27.10.00.72.00 219,023 70.54 73.54 3.01 ----
Av Gas 27.10.00.52.90 6,368 220.30 216.94 -3.36 ----
Jet Fuel 27.10.00.61.00 172,485 109.01 142.13 33.12 ----
Asphalt 27.13.20.00.00 46,827 107.92 108.71 0.79 ----
L.P.G. 27.11.12.00.00 118,830 96.10 101.39 5.29 ----
IFO-380 27.10.00.72.00 124,835 73.77 79.78 6.01 1,940
     Source: RECOPE financial statements for the period July 1998 to June 1999.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRIPage 6TABLE II
STATE TRADING:  RECOPE
Statistical Information:  Exports
(Period from 1 July 1998 to 30 June 1999)
Product
DescriptionTariff
HeadingQuantity Exported
by the State
Trading Enterprise
(M3)Average
Representative
Domestic Sales Price
($/M3)Average
Export Price
($/M3)Domestic
Production
(M3)
Regular Gasoline 27.10.00.55.00 12 157.82 329.12 ----
Premium Gasoline 27.10.00.55.00 103 166.88 315.46 ----
Diesel 27.10.00.73.20 18,635 123.25 144.60 ----
Av Gas 27.10.00.52.90 682 216.94 296.33 ----
Jet Fuel 27.10.00.61.00 29,067 142.13 186.53 ----
IFO-380 27.10.00.72.00 128,907 ---- 79.78 1,940
IFO-180 27.10.00.72.00 508 ---- 75.64 ----
L.P.G. 27.11.12.00.00 30 101.39 164.11 ----
Bunker Oil 27.10.00.72.00 106 73.54 87.69 ----
     Source: RECOPE financial statements for the period July 1998 to June 1999.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 7TABLE III
STATE TRADING:  RECOPE
Statistical Information:  Domestic Activities
(Period from 1 July 1998 to 30 June 1999)
Product
DescriptionTariff
HeadingPurchases on the
Domestic Market
(M3)Domestic
Production
(M3)Sales on the
Domestic Market
(M3)Domestic
Consumption
(M3)
Regular Gasoline 27.10.00.55.00 ---- ---- 320,282 No data available
Premium Gasoline 27.10.00.55.00 ---- ---- 391,471 No data available
Diesel 27.10.00.73.20 ---- ---- 759,829 No data available
Av Gas 27.10.00.52.90 ---- ---- 4,276 No data available
Jet Fuel 27.10.00.61.00 ---- ---- 118,152 No data available
L.P.G. 27.11.12.00.00 ---- ---- 114,813 No data available
Bunker Oil 27.10.00.72.00 ---- ---- 214,939 No data available
Kerosene 27.10.00.62.00 ---- ---- 10,879 No data available
Asphalt 27.13.20.00.00 ---- ---- 19,683 No data available
Heavy Diesel 27.10.00.71.00 ---- ---- 4,753 No data available
Asphaltic Emulsion 27.13.20.00.00 ---- 9,727 9,272 No data available
Heavy Naphtha 27.10.00.59.90 ---- ---- 3,036 No data available
     Source: RECOPE financial statements for the period July 1998 to June 1999.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 8
REPLIES TO THE QUESTIONNAIRE ON STATE TRADING
(Period from 30 June 1999 to 30 June 2000)
VI. ENUMERATION OF STATE TRADING ENTERPRISES
In Costa Rica there is only one enterprise covered by the provisions of Article XVII of the
GATT 1994.  This is the Refinadora Costarricense de Petróleo S.A. (RECOPE) which has a
monopoly on the importation, refining and wholesale di stribution of crude oil, fuels derived from oil,
asphalt and naphtha.  RECOPE is a state trading enterprise which was established as a joint stock
company.  All of its shares are held by the State.  It is a legal person regulated, as far as its
commercial activities are concerned, by private law.
The list of products marketed by RECOPE and their tariff headings is as follows:
Products Tariff Heading
Light Crude* 27.09.00.10.00
Heavy Crude* 27.09.00.10.00
Regular Gasoline 27.10.00.55.00
Premium Gasoline 27.10.00.55.00
Diesel 27.10.00.73.20
Jet Fuel 27.10.00.61.00
L.P.G. 27.11.12.00.00
Aviation Gasoline (Av Gas) 27.10.00.52.90
Fuel Oil 27.10.00.72.00
Heavy Naphtha 27.10.00.63.00
MTBE 29.09.19.00.00
Asphalt 27.13.20.00.00
    *Crude oils refined by the Company.
VII. REASON AND PURPOSE
RECOPE has the exclusive right to manage the State monopoly on the importation, refining
and wholesale distribution of crude oil and derivatives in order to satisfy domestic demand.  This right
is derived from Law No. 5508 of 8 April 1974 and Law No. 7356 of 24 August 1993 (ratification ofthe above-mentioned State monopol y administered by RECOPE).
The importation and marketing of fuels is a strategic national interest.  State intervention
guarantees effective control over fuel price policies; fuel prices in turn have a powerful impact on the
stability of the prices of a wide range of other goods and services, hence even a slight increase in fuelprices is enough to appreciably affect inflation.  It follows that, through th e intermediary of RECOPE,
the State performs an important social function, namely to maintain macroeconomic stability.
Likewise, RECOPE must take proper account of the needs relating to the country's energy
programme.
VIII.  DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE
The monopoly held by RECOPE consists firstly in the exclusive right to import and refine all
crude oil and oil by-products, and secondly in exclusive wholesale fuel distribution rights.  In this
connection, and in accordance with Executive Decree No. 24943-MINAE of 13 January 1996,
wholesale sales are defined, for the purposes of establishing the distribution monopoly, in terms of the
following minimum volumes:G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 9
Products Minimum Sales
Volume (litres)
Regular Gasoline 1,900
Premium Gasoline 1,900
Diesel 1,900
Kerosene 1,900
Bunker Oil 1,900
Heavy Diesel 1,900
Asphalt 1,900
Asphaltic Emulsion 1,900
L.P.G. 757
Aviation Gasoline(Av Gas)1,900
Jet Fuel 1,900
Heavy Naphtha 1,900
Light Naphtha 1,900
IFO-380 25,000
IFO-180 25,000
Article 4 of the Regulation under Law No. 6588 (law regulating the activity, objectives and
other aspects of RECOPE), provides that RECOPE  may sell oil and oil derivatives abroad, provided
that domestic market requirements are guaranteed.  In addition to the above, it should be pointed out
that, with regard to hydrocarbon exploration and production (national oilfields), Article 36 of the
Hydrocarbons Law provides that such production shall be used as a matter of priority to cover
domestic requirements and the national reserve.  These requirements are determined by the Executive,
through the Ministry of Natural Resources, Energy and Mining, and every contractor is obliged to sell
to the State the amount of output required to satisfy domestic market needs.  Accordingly and in viewof the monopoly managed by RECOPE, the output of na tional oilfields must be sold to RECOPE on a
priority basis.
Furthermore, Article 6 of Law No. 6588 of 30 June 1981 provides that RECOPE may
participate individually or jointly in tendering procedures organized by the Directorate-General ofHydrocarbons for the exploration and production of hydrocarbons, in accordance with the provisions
of the Hydrocarbons Law.
RECOPE imports, processes and markets all the crude oil and derivatives consumed
domestically in Costa Rica and exported (the country does not produce oil).  On the basis of its yearlydemand estimates, RECOPE buys crude oil and finish ed products on the international market.  Import
quantities are determined on the basis of local demand and the refining and storage capacity of
RECOPE plants.  Export levels are set principally in the light of storage capacity and the size of
shipments.
With regard to import prices and resale prices for imported products, RECOPE purchases
crude oil and oil by-products on the international market on the basis of strict market criteria. These
are determined by reference to international market prices in the Caribbean and on the United Sates
Gulf Coast.  RECOPE does not negotiate import contracts; these have a one-year limit and prices are
negotiated each year in the light of price fluctuations on the international oil market.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 10
Article 4 of Law No. 5508 provides that, gi ven RECOPE's status as a public enterprise
(carrying with it certain general prerogatives and privileges which it enjoys exclusively or in
conjunction with all other public entities) the Ministry of Finance is authorized, on the State's behalf
and under its responsibility, to give RECOPE the gu arantee(s) it needs to obtain financing for its
working capital, provided that the total amount does not exceed US$5,000,000.00 (five million US
dollars).  To this end, approval must be obtained from the Central Bank of Costa Rica and loans must
be negotiated with leading banks and institutions.
Lastly, RECOPE has an obligation, which also ta kes the form of a right, to engage in an
activity related to its principal, statutory and routine corporate activity when situations arise requiring
the efficient and effective supply of fuels in the national interest.  This obligation and right is deriveddirectly from Article 5, first paragraph, of Law N o. 5598, which in turn comes within the framework
of the public objectives assigned to RECOPE.  For example, RECOPE would be required to engage in
wholesale distribution activity when there is a need for an effective supply at that level and
development of the activity is affected by serious or unexpected problems.
RECOPE calculates fuel prices on the basis of the principle of service at cost, pursuant to
Article 3(b) of Law No. 7593 (Public Services Act); these must be approved by the Public Services
Regulatory Authority (ARESEP, formerly SNE, th e National Electricity Service), in accordance with
Laws Nos. 6588 and 7593. Export sales prices are set by RECOPE on the basis of prescribed formulae
which take both local prices and prices on other markets into consideration; these are not controlledby the ARESEP.
In conclusion, as regards market structure, RECOPE - as was said earlier - has a monopoly on
the importation and domestic distribution of petroleum products given that it was granted exclusive
statutory powers to these ends.  The situation is different with regard to exports, since any natural orlegal person who buys products from RECOPE can resell them for export to another country.
However, this type of transaction is not at all common.
IX. STATISTICAL INFORMATION
The attached Annex contains three tables with figures on imports, exports and domestic
activities for the corresponding period, set out in terms of quantity and value.
X. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE
There has been foreign trade, as shown in the above-mentioned tables.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 11APPENDIX
TABLE I
STATE TRADING:  RECOPE
Statistical Information:  Imports
(Period from 1 July 1999 to 30 June 2000)
Product
DescriptionTariff
HeadingTotal Quantity
Imported
(M3)Average
Import Price
($/M3)Average
Domestic Sales
Price
($/M3)Mark-up
($/M3)Domestic
Production
(M3)
Heavy Crude 27.09.00.10.00 7,041 158.89 ---- ----
Regular Gasoline 27.10.00.55.00 400,452 194.14 251.58 57.44 ----
Premium Gasoline 27.10.00.55.00 327,598 197.83 266.02 68.18 ----
Diesel 27.10.00.73.20 716,958 177.22 198.09 20.86 ----
Bunker Oil 27.10.00.72.00 235,348 119.83 117.23 -2.60 ----
Av Gas 27.10.00.52.90 4,000 290.04 337.13 47.09 ----
Jet Fuel 27.10.00.61.00 142,424 189.40 218.96 29.56 ----
Asphalt 27.13.20.00.00 67,361 160.78 173.30 12.52 ----
L.P.G. 27.11.12.00.00 134,350 159.66 161.62 1.96 ----
IFO-380 27.10.00.72.00 150,976 127.71 137.65 9.94 ----
Heavy Naphtha 27.10.00.63.00 5,427 196.77 274.40 77.63 ----
MTBE 29.09.19.00.00 1,002 261.41 ---- ---- ----
      Source: RECOPE financial statements for the period July 1999 to June 2000.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRIPage 12TABLE II
STATE TRADING: RECOPE
Statistical Information: Exports
(Period from 1 July 1999 to 30 June 2000)
Product
DescriptionTariff
HeadingQuantity Exported
by the State
Trading Enterprise
(M3)Average
Representative
Domestic Sales Price
($/M3)Average
Export Price
($/M3)Domestic
Production
(M3)
Premium Gasoline 27.10.00.55.00 29 266.02 451.92 8,192
Diesel 27.10.00.73.20 14,635 198.09 224.04 ----
Av Gas 27.10.00.52.90 859 337.13 320.74 ----
Jet Fuel 27.10.00.61.00 25,682 218.96 272.75 ----
IFO-380 27.10.00.72.00 120,062 ---- 137.65 ----
IFO-180 27.10.00.72.00 778 ---- 133.38 775
L.P.G. 27.11.12.00.00 610 161.62 151.93 ----
     Source: RECOPE financial statements for the period July 1999 to June 2000.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 13TABLE III
STATE TRADING:  RECOPE
Statistical Information: Domestic Activities
(Period from 1 July 1999 to 30 June 2000)
Product
DescriptionTariff
HeadingPurchases on the
Domestic Market
(M3)Domestic
Production
(M3)Sales on the
Domestic Market
(M3)Domestic
Consumption
(M3)
Regular Gasoline 27.10.00.55.00 ---- ---- 396,355 No data available
Premium Gasoline 27.10.00.55.00 ---- ---- 346,276 No data available
Diesel 27.10.00.73.20 ---- ---- 741,430 No data available
Av Gas 27.10.00.52.90 ---- ---- 3,887 No data available
Jet Fuel 27.10.00.61.00 ---- ---- 112,349 No data available
L.P.G. 27.11.12.00.00 ---- ---- 131,545 No data available
Bunker Oil 27.10.00.72.00 ---- ---- 225,355 No data available
Kerosene 27.10.00.62.00 ---- ---- 10,268 No data available
Asphalt 27.13.20.00.00 ---- ---- 57,466 No data available
Heavy Diesel 27.10.00.71.00 ---- ---- 7,603 No data available
Asphaltic Emulsion 27.13.20.00.00 ---- 11,897 11,375 No data available
Heavy Naphtha 27.10.00.59.90 ---- ---- 1,934 No data available
      Source: RECOPE financial statements for the period July 1999 to June 2000.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 14
REPLIES TO THE QUESTIONNAIRE ON STATE TRADING
(Period from 30 June 2000 to 30 June 2001)
I. ENUMERATION OF STATE TRADING ENTERPRISES
In Costa Rica there is only one enterprise covered by the provisions of Article XVII of the
GATT 1994.  This is the Refinadora Costarricense de Petróleo S.A. (RECOPE) which has a
monopoly on the importation, refining and wholesale distribution of crude oil, fuels derived from oil,
asphalt and naphtha.  RECOPE is a state trading enterprise which was established as a joint stock
company.  All of its shares are held by the State.  It is a legal person regulated, as far as its
commercial activities are concerned, by private law.
The list of products marketed by RECOPE and their tariff headings is as follows:
Products Tariff Heading
Light Crude* 27.09.00.10.00
Heavy Crude* 27.09.00.10.00
Regular Gasoline 27.10.00.55.00
Premium Gasoline 27.10.00.55.00
Diesel 27.10.00.73.20
Jet Fuel 27.10.00.61.00
L.P.G. 27.11.12.00.00
Aviation Gasoline (Av Gas) 27.10.00.52.90
Fuel Oil 27.10.00.72.00
Heavy Naphtha 27.10.00.63.00
MTBE 29.09.19.00.00
Asphalt 27.13.20.00.00
    *Crude oils refined by the Company.
II. REASON AND PURPOSE
RECOPE has the exclusive right to manage the State monopoly on the importation, refining
and wholesale distribution of crude oil and derivatives in order to satisfy domestic demand.  This rightis derived from Law No. 5508 of 8 April 1974 and Law No. 7356 of 24 August 1993 (ratification of
the above-mentioned State monopol y administered by RECOPE).
The importation and marketing of fuels is a strategic national interest.  State intervention
guarantees effective control over fuel price policies; fuel prices in turn have a powerful impact on thestability of the prices of a wide range of other goods and services, hence even a slight increase in fuel
prices is enough to appreciably affect inflation.  It follows that, through th e intermediary of RECOPE,
the State performs an important social function, namely to maintain macroeconomic stability.
Likewise, RECOPE must take proper account of the needs relating to the country's energy
programme.
III. DESCRIPTION OF THE FUNCTIONING OF THE STATE TRADING ENTERPRISE
The monopoly held by RECOPE consists firstly in the exclusive right to import and refine all
crude oil and oil by-products, and secondly in exclusive wholesale fuel distribution rights.  In this
connection, and in accordance with Executive Decree No. 24943-MINAE of 13 January 1996,G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 15
wholesale sales are defined, for the purposes of establishing the distribution monopoly, in terms of the
following minimum volumes:
Products Minimum Sales
Volume (litres)
Regular Gasoline 1,900
Premium Gasoline 1,900
Diesel 1,900
Kerosene 1,900
Bunker Oil 1,900
Heavy Diesel 1,900
Asphalt 1,900
Asphaltic Emulsion 1,900
L.P.G. 757
Aviation Gasoline(Av Gas)1,900
Jet Fuel 1,900
Heavy Naphtha 1,900
Light Naphtha 1,900
IFO-380 25,000
IFO-180 25,000
Article 4 of the Regulation under Law No. 6588 (law regulating the activity, objectives and
other aspects of RECOPE), provides that RECOPE  may sell oil and oil derivatives abroad, provided
that domestic market requirements are guaranteed.  In addition to the above, it should be pointed out
that, with regard to hydrocarbon exploration and production (national oilfields), Article 36 of the
Hydrocarbons Law provides that such production shall be used as a matter of priority to cover
domestic requirements and the national reserve.  These requirements are determined by the Executive,
through the Ministry of Natural Resources, Energy and Mining, and every contractor is obliged to sellto the State the amount of output required to satisfy domestic market needs.  Accordingly and in view
of the monopoly managed by RECOPE, the output of na tional oilfields must be sold to RECOPE on a
priority basis.
Furthermore, Article 6 of Law No. 6588 of 30 June 1981 provides that RECOPE may
participate individually or jointly in tendering procedures organized by the Directorate-General of
Hydrocarbons for the exploration and production of hydrocarbons, in accordance with the provisions
of the Hydrocarbons Law.
RECOPE imports, processes and markets all the crude oil and derivatives consumed
domestically in Costa Rica and exported (the country does not produce oil).  On the basis of its yearly
demand estimates, RECOPE buys crude oil and finish ed products on the international market.  Import
quantities are determined on the basis of local demand and the refining and storage capacity of
RECOPE plants.  Export levels are set principally in the light of storage capacity and the size of
shipments.
With regard to import prices and resale prices for imported products, RECOPE purchases
crude oil and oil by-products on the international market on the basis of strict market criteria. These
are determined by reference to international market prices in the Caribbean and on the United Sates
Gulf Coast.  RECOPE does not negotiate import contracts; these have a one-year limit and prices are
negotiated each year in the light of price fluctuations on the international oil market.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 16
Article 4 of Law No. 5508 provides that, gi ven RECOPE's status as a public enterprise
(carrying with it certain general prerogatives and privileges which it enjoys exclusively or in
conjunction with all other public entities) the Ministry of Finance is authorized, on the State's behalf
and under its responsibility, to give RECOPE the gu arantee(s) it needs to obtain financing for its
working capital, provided that the total amount does not exceed US$5,000,000.00 (five million US
dollars).  To this end, approval must be obtained from the Central Bank of Costa Rica and loans must
be negotiated with leading banks and institutions.
Lastly, RECOPE has an obligation, which also ta kes the form of a right, to engage in an
activity related to its principal, statutory and routine corporate activity when situations arise requiring
the efficient and effective supply of fuels in the national interest.  This obligation and right is deriveddirectly from Article 5, first paragraph, of Law N o. 5598, which in turn comes within the framework
of the public objectives assigned to RECOPE.  For example, RECOPE would be required to engage in
wholesale distribution activity when there is a need for an effective supply at that level and
development of the activity is affected by serious or unexpected problems.
RECOPE calculates fuel prices on the basis of the principle of service at cost, pursuant to
Article 3(b) of Law No. 7593 (Public Services Act); these must be approved by the Public Services
Regulatory Authority (ARESEP, formerly SNE, th e National Electricity Service), in accordance with
Laws Nos. 6588 and 7593. Export sales prices are set by RECOPE on the basis of prescribed formulae
which take both local prices and prices on other markets into consideration; these are not controlledby the ARESEP.
In conclusion, as regards market structure, RECOPE - as was said earlier - has a monopoly on
the importation and domestic distribution of petroleum products given that it was granted exclusive
statutory powers to these ends.  The situation is different with regard to exports, since any natural orlegal person who buys products from RECOPE can resell them for export to another country.
However, this type of transaction is not at all common.
IV. STATISTICAL INFORMATION
The attached Annex contains three tables with figures on imports, exports and domestic
activities for the corresponding period, set out in terms of quantity and value.
V. REASON WHY NO FOREIGN TRADE HAS TAKEN PLACE
There has been foreign trade, as shown in the above-mentioned tables.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 17APPENDIX
TABLE I
STATE TRADING:  RECOPE
Statistical Information:  Imports
(Period from 1 July 2000 to 30 June 2001)
Product
DescriptionTariff
HeadingTotal Quantity
Imported
(M3)Average
Import Price
($/M3)Average
Domestic Sales
Price
($/M3)Mark-up
($/M3)Domestic
Production
(M3)
Light Crude 27.09.00.10.00 39,729 177.35 ---- ----
Heavy Crude 27.09.00.10.00 6,075 122.94 ---- ----
Regular Gasoline 27.10.00.55.00 393,291 223.19 287.39 64.21 ----
Premium Gasoline 27.10.00.55.00 359,408 238.29 303.85 65.57 ----
Diesel 27.10.00.73.20 786,056 224.37 227.92 3.56 16,487
Bunker Oil 27.10.00.72.00 204,065 133.03 134.22 1.19 20,917
Av Gas 27.10.00.52.90 5,225 342.46 384.94 42.48 ----
Jet Fuel 27.10.00.61.00 168,782 235.59 250.21 14.62 ----
Asphalt 27.13.20.00.00 61,590 185.38 198.14 12.76 3,493
L.P.G. 27.11.12.00.00 147,951 189.42 195.20 5.78 ----
IFO-380 27.10.00.72.00 111,175 133.59 141.10 7.51 ----
MTBE 29.09.19.00.00 3,026 419.86 ---- ---- ----
     Source: RECOPE financial statements for the period July 2000 to June 2001.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRIPage 18TABLE II
STATE TRADING:  RECOPE
Statistical Information: Exports
(Period from 1 July 2000 to 30 June 2001)
Product
DescriptionTariff
HeadingQuantity Exported
by the State
Trading Enterprise
(M3)Average
Representative
Domestic Sales Price
($/M3)Average
Export Price
($/M3)Domestic
Production
(M3)
Premium Gasoline 27.10.00.55.00 9 303.85 576.20 18,933
Diesel 27.10.00.73.20 18,978 193.80 317.14 16,487
Av Gas 27.10.00.52.90 297 384.94 587.65 ----
Jet Fuel 27.10.00.61.00 33,609 250.21 184.59 ----
IFO-380 27.10.00.72.00 122,176 ---- 141.10 15,435
L.P.G. 27.11.12.00.00 599 195.20 191.82 ----
    Source: RECOPE financial statements for the period July 2000 to June 2001.G/STR/N/5/CRI
G/STR/N/6/CRI
G/STR/N/7/CRI
Page 19TABLE III
STATE TRADING: RECOPE
Statistical Information: Domestic Activities
(Period from 1 July 2000 to 30 June 2001)
Product
DescriptionTariff
HeadingPurchases on the
Domestic Market
(M3)Domestic
Production
(M3)Sales on the
Domestic Market
(M3)Domestic
Consumption
(M3)
Regular Gasoline 27.10.00.55.00 ---- ---- 463,447 No data available
Premium Gasoline 27.10.00.55.00 ---- ---- 301,169 No data available
Diesel 27.10.00.73.20 ---- 16,487 770,962 No data available
Av Gas 27.10.00.52.90 ---- ---- 3,571 No data available
Jet Fuel 27.10.00.61.00 ---- ---- 108,669 No data available
L.P.G. 27.11.12.00.00 ---- ---- 138,420 No data available
Bunker Oil 27.10.00.72.00 ---- 21,185 209,393 No data available
Kerosene 27.10.00.62.00 ---- ---- 8,676 No data available
Asphalt 27.13.20.00.00 ---- 6,651 58,248 No data available
Heavy Diesel 27.10.00.71.00 ---- 2,641 7,375 No data available
Asphaltic Emulsion 27.13.20.00.00 ---- 10,182 9,030 No data available
Heavy Naphtha 27.10.00.59.90 ---- 10,630 678 No data available
     Source: RECOPE financial statements for the period July 2000 to June 2001.
__________