According to Costa Rica’s Ministry of Foreign Trade data, the agreement with the South American nation will provide access to a market of over 17 million potential consumers. Costa Rica’s Minister of Foreign Trade, Manuel Tovar Rivera, confirmed that the FTA between Costa Rica and Ecuador will be effective on October 1. Tovar stated in the Costa Rican Congress that he would travel to Quito, the Ecuadorian capital, at the beginning of September to exchange the ratification instruments with the authorities of that country. The Legislative Assembly approved this trade agreement on May 30 with a vote of 45 Congress members. The Executive Power signed it on June 19.
While some agricultural products, such as bananas and pineapples, dairy products, beef, pork, and chicken, were excluded from the agreement, the Costa Rican Chamber of Exporters (Cadexco) estimates that the FTA between Costa Rica and Ecuador could significantly boost Ecuador’s exports by US$35 million annually. This potential growth is a promising sign for the future of trade between the two nations.
The FTA between Costa Rica and Ecuador is not just a trade agreement but a significant milestone for the Costa Rican market. It opens up new opportunities and a larger consumer base, marking a new era of economic growth and prosperity.
In 2023, trade in goods with Ecuador reached US$110 million, of which 70% corresponded to exports and 30% to imports. Costa Rica’s main product exports to Ecuador are pharmaceuticals, which accounted for US$8.23 million between January and October 2021. Iron and steel scrap and electrical materials follow this.
Current Trade Landscape
The current trade relationship between Costa Rica and Ecuador is dynamic and evolving, reflecting the broader trends of regional integration and economic diversification in Latin America. While the total value of trade between the two countries is relatively modest compared to their trade with more significant partners, it has shown steady growth over the years. This growth is underpinned by a shared interest in enhancing economic cooperation and taking advantage of complementary industries, a testament to the strength of the trade relationship. The latest available data shows that the total trade value between Costa Rica and Ecuador hovers around $250 million annually. This figure includes imports and exports, with a slight trade surplus generally favoring Ecuador. Despite its size, this trade relationship is vital for both countries as they seek to diversify their trade partners and reduce dependence on traditional markets such as the United States and Europe.
Key Goods Exchanged
The FTA between Costa Rica and Ecuador facilitates the exchange of a mix of agricultural products, manufactured goods, and services, reflecting the diverse economies of both nations. Exports from Costa Rica to Ecuador primarily include medical devices, electronics, and food products. Costa Rica has developed a robust medical device manufacturing sector, making it a key exporter of such goods in the region. Additionally, Costa Rica exports coffee, sugar, and prepared foodstuffs, which are well-received in the Ecuadorian market due to their quality and competitive pricing.
Imports from Ecuador to Costa Rica are dominated by agricultural products, particularly bananas, flowers, and seafood. Ecuador is one of the world’s largest exporters of bananas, and this fruit constitutes a significant portion of its exports to Costa Rica. Shrimp and fish, particularly tuna, are key export items, taking advantage of Ecuador’s rich marine resources. Additionally, Ecuador exports manufactured goods, such as textiles and plastics, to Costa Rica.
Areas for Future Growth
While the trade relationship between Costa Rica and Ecuador is well-established, there is significant potential for growth in several key areas:
Agricultural Innovation and Biotechnology: Both countries have strong agricultural sectors and could benefit from increased collaboration in agricultural technology and biotechnology. Costa Rica’s expertise in sustainable agriculture and organic farming could complement Ecuador’s strength in traditional agriculture, leading to innovations that enhance productivity and sustainability in both countries.
Renewable Energy: With both countries committed to expanding their renewable energy sectors, there is significant potential for bilateral cooperation in this area. Costa Rica is known for its leadership in renewable energy, mainly hydroelectric, wind, and geothermal power, while Ecuador has considerable solar and wind energy potential. Joint ventures, technology exchanges, and investment in renewable energy infrastructure could be fruitful areas for future collaboration.
Tourism: Tourism is a critical sector for both economies, and there is potential for joint marketing initiatives, tourism infrastructure development, and eco-tourism projects that could benefit both countries. Leveraging Costa Rica’s reputation as a global leader in eco-tourism and Ecuador’s unique attractions, such as the Galápagos Islands, could help boost visitor numbers and revenues in both nations.
Digital Economy and Services: Expanding digital trade and services represents another area with significant potential. Both countries are working to develop their digital economies, and increased collaboration in areas such as e-commerce, digital payments, and IT services could create new opportunities for businesses and consumers alike.
In conclusion, the FTA between Costa Rica and Ecuador marks a significant milestone in the economic relationship between the two nations, opening doors to new opportunities and reinforcing their commitment to regional integration. As they prepare to implement this agreement, both countries stand to benefit from enhanced trade, diversified economic partnerships, and collaboration in critical sectors such as agriculture, renewable energy, tourism, and the digital economy. By capitalizing on their complementary strengths and shared vision for sustainable development, Costa Rica and Ecuador can build a stronger, more resilient bilateral relationship that will contribute to their long-term economic prosperity and regional influence.