Thursday 1 June 2023

Biden to bring benefits to Costa Rica

US respect for multilateral organizations, such as the WTO, will be very important for small economies such as Costa Rica's, economic specialists agree.

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QCOSTARICA – The arrival of Joe Biden to the White House in January will imply, for the world economy, the return of the United States to respect and strengthen multilateral entities such as the World Trade Organization (WTO).

Supporters of president-elect Joe Biden celebrate victory in front of the White House in Washington D.C. Photo: AFP.

The shift to the policy established by the Donald Trump administration will be beneficial for small economies, such as Costa Rica, which depends on international rules to protect itself from unilateral decisions, agreed economic specialists speaking to La Nación.

For Alberto Trejos, former head of the Ministry of Foreign Trade (Comex), the Biden government represents the opportunity to once again strengthen the spirit of international cooperation.

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“Global organizations are necessary for the proper functioning of the world economy, and to face problems that are, in their nature, also global, such as the pandemic or climate change,” said Trejos.

He added that the skepticism shown, in the last four years, strongly damaged multilateral rules and institutions.

“It is expected that in the Biden Administration that impact will be reversed,” Trejos emphasized.

Alexander Mora, also a former Comex chief, agreed that the United States will leave the unilateral confrontation behind.

“A return to multilateralism is a great benefit for Costa Rica. A small country is one of the most benefited from respect for trade rules and international law,” said Mora.

The former official stressed that in trade matters the Trump administration did not imply a setback for Costa Rica.

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“Recovering from the pandemic will require the use of all commercial and economic tools. Within that logic, the country gains peace of mind knowing that multilateralism will be where problems will be solved and the next steps to be negotiated to move forward,” said former Minister Mora.

Both Trejos and Mora agreed that there will be a clear change in the way the United States engages with the rest of the world.

However, some actions such as nearshoring, that is, the decision to bring back to the Americas region activities of American companies that moved to Asia, could go ahead.

“I believe that the opportunity that nearshoring represents for our region is going to occur, and that it will depend on what we Costa Ricans do to be more competitive, whether or not we can materialize it,” said Trejos.

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Costa Rica’s commercial relationship with the United States is very relevant, since it is the country’s main commercial partner.

Until last September, Costa Rica exported US$3.89 billion dollars in goods to the US market, that is, 43% of total sales abroad, according to data from the Foreign Trade Promoter (Procomer).

The weight of the US in International Foreign Investment (FDI) directed to Costa Rica is also very relevant.

Last year, Costa Rica received US$2.59 billion in FDI, of which US$182 billion came from the United States, that is, 70% of the total, according to data from the Banco Central (Central Bank).

Biden’s victory over Trump will also bring stability to international stock markets.

Analyst Douglas Montero, international investors anticipated Biden’s arrival to the White House.

“Trump gave a boost to the economy, but his rhetoric has been very divisive, confrontational, he has fought with his allies, he has fought with the whole world. So it is contradictory, because the Republicans have always promoted trade,” said Montero.

He stressed that the United States’ relations with the European Union (EU) and China will improve, which will help the economy.

“I don’t think there should be such strong rhetoric that everything has to be America. It is okay for you to defend your country, but in a globalized world, you cannot think you are alone. With Biden, there will be openness and dialogue. The stock markets have always rewarded more strongly the Democratic governments than the Republicans,” highlighted Montero.

The decisions of the Biden Administration will have opportunities for Costa Rica in attracting foreign direct investment and positioning in environmental policy issues highlights an analysis by Mercado de Valores.

“We see a more positive mandate from Biden for Costa Rica. We do see opportunities for the country in environmental matters and the return of supply chains for large US companies, which leaves the country in a very good position to attract this foreign investment,” said Silvia Jiménez, Manager of Inversiones de Mercado de Valores.

Translated from La Nacion’s ‘Triunfo de Biden fortalecerá el comercio mundial y traerá beneficio a Costa Rica, coinciden especialistas‘. Click here to read the original.


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