RESTRICTED
WORLD TRADE G/LIC/N/3/CRI/1
23January 1996
ORGANIZATION(96-0235)
Original: Spanish Committee onImport Licensing
REPLIES TOQUESTIONNAIRE ONIMPORT LICENSING PROCEDURES
NOTIFICATION UNDER ARTICLE 7.3OFTHE AGREEMENT
ONIMPORT LICENSING PROCEDURES
COSTA RICA
Thefollowing notification, dated 21November 1995, hasbeenreceived fromthePermanent
Mission ofCosta Rica.
_______________
Outline ofsystems
1. Inconnection withitsaccession toGATT in1990, Costa Ricaundertook toeliminate allexisting
import licensing requirements overaperiod offouryears. Thiscommitment wascarried outinfull
bytheendof1994 withtheentry intoforce oftheLawontheImplementation oftheUruguay Round
Agreements, No.7473 of20December 1994. Article 1ofthatLawprovides specifically forthe
elimination ofexisting licensing requirements andingeneral fortheelimination ofanysimilar procedure
requiring permits, prior authorization orapproval fortheimportation ofgoods. Accordingly, import
licensing requirements ofacommercial nature wereentirely eliminated together withtheaccompanying
procedures.
However, inconformity withitscommitments under theUruguay Round Agreement on
Agriculture, Costa Ricahasestablished tariff quotas forcertain agricultural commodities forwhich
non-tariff import barriers weretariffied. These quotas arenotadministered through import licensing
aswaspreviously thecaseinCosta Rica, butthrough aninnovative market mechanism requiring certain
administrative anddocumentary procedures which aredescribed indetail below.
Purposes andcoverage oflicensing
2. InCosta Rica, onesingle import licensing system iscurrently inforce. Thatsystem isgoverned
bytheRegulation ontheAllocation ofTariff Quotas. Incompliance withtheprovisions onthe
tariffication ofimport licensing foragricultural products intheUruguay Round Agreement on
Agriculture, current access andminimum access tariff quotas areadministered andawarded through
aprocedure involving thegranting ofcommodity exchange certificates authorizing importations within
theindicated tariff quota atalower tariff ratethanforimports outside ofthatquota.
Thisprocedure consists inatransparent mechanism whereby licences (certificates) areawarded
onthebasis ofatransparent market system. They areawarded through thecommodities exchange
totheimporter orexporter making thebestimport bid,aprocess which doesnotinvolve anypayments
thatmight distort thepriceagreed uponinthesaleandpurchase contract fortheiteminquestion (apartG/LIC/N/3/CRI/1
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from thefeescharged fortheactual Exchange transactions). Thelicence doesnotconsist inan
authorization toimport perse(such authorization isnotrequired: payment oftheMFN import tariff
issufficient), butinanauthorization toimport onthebasis ofthereduced tariff assigned toagiven
quota.
These transactions maytakeplace onanycommodity exchange authorized tooperate within
thecountry. Only theBolsa deProductos Agropecuarios S.A.(Stock Exchange forAgricultural
Commodities Ltd.)iscurrently inoperation. Inprinciple, assoonastheprocedure isinitiated, potential
parties totheExchange transaction (foreign exporter ordomestic importer) mayatanytimeestablish,
through amember oftheExchange, theterms ofthesalescontract, provisionally laying down theprice,
thequantity andthespecifications. Prices arequoted DDP (delivery dutypaid). Thepreliminary
contract isthenputtopublic auction, inwhich process thecommodities exchange mayaward thecontract
toanyparty(exporter orimporter) improving onthepriceconditions setoutinthepreliminary contract.
Ifnobetter terms areoffered, thepreliminary contract isaccepted andtheimporter isentitled toan
import licence fortheproduct inquestion, alicence which isprovided intheform ofacertificate.
Thequantity ofgoods thustransacted isdeducted fromthetariffquota forthatcommodity, theamount
ofwhich, asexplained below, ismade known totheparties beforehand.
Official control ofthequota isensured byconducting across-control between thecommodities
exchanges andtheMinistry ofAgriculture andLivestock oftheamount transacted. Thelicence holder
must actually haveimported thegoods within amaximum time-limit published bytheMinistry of
Agriculture.
Thesecommoditiesexchangetransactions,bothindividuallyandjointly,aresubjecttoamaximum
quantitative limitequal tothemaximum amount thatcanbeimported inaccordance withthetariffquota.
Thequotas areallocated periodically.
Theprocedures fortheawarding ofsuchcertificates cover thecommodities listed inAnnex 1
hereto, which areclassified according totheHarmonized Commodity Description andCoding System
nomenclature.
3. Themechanism draws nodistinction astotheorigin orprovenance oftheimported goods.
Indeed, itseeks toensure freetrade andnon-discrimination, andconsequently, thegoods maycome
from anycountry intheworld. Theaimistocontrol thequantity ofimported goods andnottheir
origin.
4. Themechanism isdesigned tolimitthequantity ofimports, andnottheirvalue.
Before thismechanism wasselected, others wereconsidered. Forexample, the"first come,
firstserved" method wasexamined andrejected asarbitrary andnotsufficiently transparent.
Consideration wasthengiven tovarious methods fortheallocation orsaleoflicences byauction,
butthesewerealsorejected fortworeasons: first,because inCosta Rica, thecollection, administration
andallocation ofthefunds raised through thesaleoflicences would require thedrafting ofaspecial
law,andthemoment wasnotconsidered rightforsubmission totheLegislative Assembly ofabill
tothateffect; second, because charging foralicence would distort theimport price ofthegoods, or
inother words, theamount charged would bereflected inthefinalpriceofthegoods, thusundermining
theultimate objective ofensuring aminimum amount oftradeliberalization. Moreover, itwould mean
thecreation ofanother non-tariff barrier inviolation ofthespirit oftheAgreement onAgriculture.
5. The Regulation ontheAllocation ofTariff Quotas iscontained inExecutive
Decree 23914-COMEX-MAG of22December 1994, published inOfficial Gazette No.246ofG/LIC/N/3/CRI/1
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27December1994andrevisedbyExecutiveDecree24599-COMEX-MAGof9August1995,published
inOfficial Gazette No.176of18September 1995. Article 5oftheLawonImplementation ofthe
Uruguay Round Agreements, No.7473of20December 1994, provides thelegalbasisforthesedecrees.
Licensing isstatutorily required. Costa Rican legislation doesnotleave thedesignation ofproducts
tobesubjected tolicensing toadministrative discretion. Thegoods concerned arethose thathavebeen
tariffied inaccordance withthecommitments oftheUruguay Round. Theexecutive branch isentitled
under theabove-mentioned Law7473 toabolish oramend licensing procedures without legislative
approval.
Procedures
6.I Quotas arenotallocated toanycountry orperson inparticular, butareplaced atthedisposal
oftheeconomic operators ingeneral, whomayparticipate inthetransaction through thecommodities
exchange. Thetransaction doesnotinvolve anyspecial formalities, andnospecial applications are
required forlicences. Theeconomic operators mustsubmit theiroffers tothecommodities exchange
through amember oftheexchange, whoisrequired topresent a"transaction order", adocument
ordinarily required foralltransactions onthecommodities exchange, inwhich theoperator authorizes
themember oftheexchange tocarry outthetransaction onhisbehalf. Consequently, there isnoneed
topublish information concerning allocation ofquotas andformalities ortoprovide anyinformation
onthatsubject topossible importers, governments, export promotion bodies ortrade representatives.
While theoverall amounts ofthequotas andthedateoftheiropening ismade public beforehand,
publication oftheamount allocated toeachcountry oreachimporter isnotrequired, sincethemechanism
isnotbased onanykindofpriorallocation. Theopening ofquotas isannounced intheOfficial Gazette
10working daysinadvance. Apublic announcement isalsomade through themost widely-read
newspapers. Thelawdoesnotprovide foranyexceptions orderogations fromthelicensing requirement.
II. Thesizeofthequotas wasdetermined onthebasis ofthemethodology andcommitments
established during thenegotiation oftheUruguay Round Agreement onAgriculture (Schedule LXXXV
forCosta Rica). Forthose products, quotas weredetermined fortheentire period ofapplication of
thecommitments contained intheAgreement (1995-2004). Article 4oftheRegulation ontheAllocation
ofTariff Quotas authorizes theMinistry ofAgriculture andLivestock todetermine theintervals at
which tariff quotas aremade available tothepublic. Theinterval mayvary according tothe
characteristics ofeachproduct. Thetotalorpartial opening ofaquota foragiven period ismade
public 10daysinadvance. Thelicence orcertificate awarded bythecommodities exchange mustbe
usedwithin thetime-limit specified inthedocument itself, andisnottransferable. Thelicence holder
must effect theimports during theperiod ofvalidity ofthelicence, failing which hemaynotapply
thatlicence toaquota subsequently opened forthesame product.
III. Themechanism functions asdescribed above. Innocircumstance maylicences bedeliberately
allotted partly oronlytothedomestic producers oflikegoods. Likeallother economic operators
domestic producers areentitled toparticipate intheexchange procedures, subject tothesameconditions.
Article 14,paragraph 3oftheRegulation stipulates thatanybuyer orseller, whether aphysical
orlegalperson,whohasfirmlycommittedhimselfsuchatransactionandsubsequentlybreakshiscontract
without effecting theimports, orwho,contrary tohisresponsibilities, failstoeffect theimports within
thesettime-limit, shallbebarred fromparticipating inthenegotiation ofquotas either directly orthrough
athird party foraperiod oftwoyears from thedateofthetransaction. Thesame provisions shall
apply tothose whocancel atransaction towhich theyhavefirmly committed themselves. Inorder
toapply thesemeasures, theMinistry ofAgriculture andLivestock shallinstitute ordinary administrative
proceedings, ensuring dueprocess ofthelawforthose affected.G/LIC/N/3/CRI/1
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TheRegulation doesnotauthorize theaddition ofunused allocations foragiven year, infull
orinpart,toquotas forasucceeding year, anditisnotpossible todoso.However, iftheamount
ofaquota foragiven yearismade available tothepublic overtwoormore periods during thatyear,
itispossible toaddtheunused quotas toasucceeding period within thesame year.
Under Article 18oftheRegulation, thecommodities exchanges arerequired tokeepadetailed
register containing eachtransaction carried outbythem, andtopublish theinformation periodically
intheOfficial Gazette insummary form. There isnothing preventing agovernment orexport promotion
body ofanexporting country from obtaining acopyofthatpublication onrequest.
IV. Bidsmaybesubmitted totheexchange assoonasthequotas areopened, i.e.10working days
following theannouncement ofthequotas.
V. Thisquestion doesnotapply totheprocedure described.
VI. Thisquestion doesnotapply totheprocedure described. Thenegotiation ofquotas begins
assoonasthequotas themselves areopened. Consequently, itwould bemeaningless tospeak ofthe
timeremaining between theawarding ofthecertificate andthedateofopening ofthequota.
VII. Asnoapplication isrequired, itispossible toparticipate inexchange transactions without
submitting anypapers toanyadministrative organ.
VIII. Theallocation ofquotas toagiven importer isbased onmarket criteria. Aquota isawarded
through theexchange totheimporter offering thebestprice fortheamount offered.
There isnomaximum amount tobeallocated perimporter beyond thetotalamount ofthequota
made available toeconomic operators foragiven period.
IX. Thisquestion doesnotapply totheprocedure described.
X. Thisquestion doesnotapply totheprocedure described.
XI. There arenoproducts forwhich licences areissued onlyoncondition thatgoods should be
exported andnotsoldinthedomestic market.
7. Notapplicable: themechanism described deals exclusively withthequantitative limits.
8. Thismechanism doesnotinvolve applications forlicences. Economic operators whodonot
submit thebestoffer during thecommodities exchange proceedings willnotbeawarded licences or
certificates. Because thetrade transactions takeplace ontheexchange, there isnoneedeither forthe
commodities exchange orforthegovernment institutions togivereasons fortherefusal ofaparticipant,
norcantheresult oftheproceedings beappealed. There isatacitunderstanding thattheaward will
notgotoanoperator whohasnotsubmitted thebestoffer.
Eligibility ofimporters toapply foralicence
9. Anynational orforeign physical orlegalperson hastherighttoparticipate inthenegotiation
process through amember oftheexchange without prior registration orofficial authorization. The
onlycondition isthathemust participate through adulyauthorized member oftheexchange.G/LIC/N/3/CRI/1
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Documentational andother requirements forapplication foralicence
10. Noapplication isrequired inorder toengage amember oftheexchange toparticipate ina
transaction. Thisisdoneonthebasis ofaprivate arrangement between theeconomic operator and
themember oftheexchange.
11. Upon actual importation, thecustoms authorities require theordinary international trade
documents andthecertificate awarded bythecommodities exchange inwhich thetransaction tookplace.
Thatcertificate entitles thelicence holder toimport agiven quantity ofgoods atalower tariff rate
andwithin adulyindicated period.
12. There isnolicensing feeoradministrative charge.
13. Theissue ofalicence isnotsubject toanydeposit oradvance payment.
Conditions oflicensing
14. Theexecutive branch mayforeachcasesetamaximum time-limit fortheimportation ofthe
goods inquestion. Thatlimit, together withtheconditions foritsextension, isindicated intheagreement
which isissued periodically uponopening ofthequotas. Thefirstagreement oftheexecutive branch,
issued inconnection withtheopening ofthefirstquotas for1995, established atime-limit oftwomonths,
extendable foraperiod ofonefurther month upon proof thattheimportation could notbeeffected
forreasons beyond thecontrol oftheimporter. Thesame time-limit wasmaintained intheagreement
issued bytheexecutive branch inconnection withtheopening ofthequotas fortheperiod corresponding
tothesecond semester of1995.
15. Thesanctions applied aredescribed inparagraph 6.IIIabove.
16. Article 8oftheRegulation stipulates thatlicences arenottransferable.
17. There arenoother conditions attached totheissue ofalicence.
Other procedural requirements
18. Importation isnotsubject toanyadministrative procedures other thanlicensing andsanitary
andphytosanitary measures.
19. Thebanking authorities provide theforeign exchange required forthepayment ofimports
immediately. Nolicence isrequired inorder toobtain foreign exchange. There havebeennoproblems
ofscarcity offoreign exchange thusfar.There arenospecial formalities forobtaining foreign exchange.