Could Costa Rica Join USMCA?

Costa Rica’s trade czar wants to solidify the country’s relationships with North America’s biggest markets.

Minister of trade Manuel Tovar has recently traveled to Canada and the U.S. in hopes of persuading state officials to allow Costa Rica to join the U.S.-Mexico-Canada Free Trade Agreement (USMCA). While Costa Rica is a part of the Dominican Republic-Central America Free Trade Agreement, the “CAFTA-DR jacket is a little tight for us and we need one that fits us better,” he said during a November interview with the Americas Society. “There seems to be good consensus that Costa Rica, like no other country in Latin America, can fit in this agreement.”

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Tovar said that CAFTA-DR’s provisions and benefits don’t suit the Central American nation. But USMCA would complement Costa Rica’s participation in CAFTA-DR, allowing the nation of some 5.1 million to bolster exports. President Rodrigo Chaves, a former finance minister and World Bank official elected in 2022, has focused on driving economic growth by pursuing new free trade agreements and courting foreign investment from global companies that make semiconductors, electronics and medical devices, which account for some 40 percent of national exports.

Costa Rican officials met with President Joe Biden and lawmakers from Barbados, Canada, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Panama, Peru, and Uruguay in November at the Americas Partnership for Economic Prosperity (APEP) Leaders’ Summit. The framework for regional cooperation, which Biden introduced in 2022, aims to strengthen Western hemisphere supply chains focused on clean energy, semiconductors and medical supplies. It will include an investment platform to funnel capital into green infrastructure and an accelerator program for entrepreneurs.

APEP is not a traditional trade agreement, however, and its provisions and benefits to participating partners have not been fully fleshed out. U.S. Trade Representative (USTR) Ambassador Katherine Tai called it “a new type of economic arrangement, anchored on cooperation to build our economies from the bottom up and the middle out.”

Tovar, who has repeatedly said that the agreement isn’t moving along as quickly as he hoped, believes Costa Rica is more eager for progress than Washington. “It doesn’t mean that there’s no progress. It’s just that right now, the U.S. has entered a few months ago into the electoral mood, and certainly this could have impacts on progress under APEP,” he told Politico.

Tovar is determined to strengthen Costa Rica’s trade status through existing trade agreements. Last month he visited Canada to meet with Mary Ng, the country’s minister of export promotion, international trade and economic development, to discuss their 21-year bilateral trade relationship and shared commitment to sustainable innovation. Costa Rica, Canada’s second-largest Central American trading partner, is committed to reaching $1 billion in bilateral trade with the North American nation this year.

Tovar’s efforts to promote Costa Rica’s inclusion in USMCA haven’t fallen on deaf ears, according to Q Costa Rica, an independent news outlet, which last week reported that the country is in talks to sign the three-nation agreement. The trade ministry hasn’t released an official statement regarding the discussions, though Tovar shared the article on X, formerly known as Twitter, on Tuesday.