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No free trade with Costa Rica without rules of origin

Published:Wednesday | June 20, 2012 | 12:00 AM

Minister of Industry Investment and Commerce, Anthony Hylton, said Jamaica would not enter into a free-trade agreement with Costa Rica unless the Central American nation establish proper rules of origin to ensure there is not a pass-through of goods to Jamaica.

Hylton emphasised that unless Costa Rica implemented an "administrative programme" that could stand up to scrutiny, Jamaica would not entertain such an arrangement.

"One of the issues with Costa Rica is that they moved to establish a free-trade agreement with the United States, and I am insisting that if we are going to get the benefit of a free-trade arrangement, there must be an agreement to ensure that there is not a trade pass-through from the United States to Jamaica, so we need to have proper origin rules," he said.

"We don't want to have those goods pass through from the United States into the Jamaican economy," Hylton said, adding, "not that we don't want US goods if those imports are coming in at a higher quality and at a lower price."

However, he said, "You can't engage in one set of regulations with certain expectation and then have a straight pass-through like the Costa Rica arrangement with the United States and have that pass-through coming in (to Jamaica and) affecting businesses without any kind of adjustment. That part of the arrangement will not work," Hylton declared.

Costa Rica has free-trade agreements with countries such as Canada, the United States, China, Panama, Mexico, Chile and the Dominican Republic. The country is also seeking to enter into similar agreements with Peru, and last Friday it signed an agreement with Colombia, signalling the first step toward a free-trade agreement between the two countries.

Hylton was responding to comments by assistant professor of economics at the Stanford Graduate School of Business, Renée Bowen at a conference organised by the Mona School of Business at the Terra Nova Hotel, St Andrew, yesterday.

According to Bowen, Costa Rica has experienced tremendous growth by focusing on production in areas in which it has a comparative advantage and has benefited even more through free trade agreements.

As such, she questioned why there are "pushbacks" by the Jamaican Government to an agreement with Costa Rica when there were benefits that could be realised.

In 2004, Costa Rica signed an agreement with CARICOM for seven years, but only Trinidad, Guyana and Barbados have completed the ratification process. Jamaica is the only remaining member of CARICOM's more developed countries that have not formally implemented the agreement.

However, in the interim, the provisions of the agreement have been entered on a provisional basis. Last year, discussions took place and Cabinet endorsed the issuing of instructions for the drafting of the requisite amendments to the Customs Act to give effect to the arrangement.

The CARICOM-Costa Rica free-trade agreement is intended to increase trade between CARICOM and the Central American country, by granting reciprocal duty-free or preferential access to a wide range of products.

In 2010, Jamaica imported US$52.8 million worth of products from Costa Rica, making it the second-largest Caribbean importer from that country that year. In that same period, Jamaica exported US$514,000 worth of goods to Costa Rica.

"The long and short of it is that, as I did back then (with the 2004 agreement), we ask CARICOM to insist that Costa Rica put in place certain administrative arrangements that can withstand scrutiny, and I come back as investment and industry minister and I am insisting on the same thing."