Monday, 30 November 2020

U.S. Beef and Pork With No Duty to Costa Rica

Don't expect prices at the consumer level to drop, a global protein shortage has caused an increase in the costs of meats in the national market

As part of the Tratado de Libre Comercio (TLC) – Free Trade Agreement –  signed between Costa Rica and the United States, since January 1, 2020 beef and pork from the U.S. do not pay tariffs or taxes on entry into Costa Rica.

Beef and pork from the USA enter Costa Rica without tariffs since January 1, 2020

According to the signed trade deal, the relief of beef and pork will be valid for 15 years; the so-called dark parts of the chicken, such as thighs and others, will be free as o January 1, 2022, for the term of 17 years; while rice and diary will be free as of January 1, 2025, for a period of 20 years.

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Those four agricultural products were always protected in trade negotiations, but the Americans demanded to gradually eliminate taxes. Chile and Canada also achieved openness in the case of pork, while potatoes and onions were the only products excluded from free trade.

The situation may have an effect on final consumer prices, although distributors warn that this will depend on international prices, which are currently high.

Mariela Pacheco, Walmart’s Assistant Manager of Corporate Affairs, told Nacion.com that “… imports make it possible to satisfy the supply needs for different formats, because the local market is not self-sufficient, even though the company always buys and supports the national producer.” Regarding the possible drop in prices, she explained that “… It will not necessarily be like that. The lack of protein in the world has led to an increase in the cost of meat in the domestic market.”

With regard to pork and beef, the impact is a little different in each case. In the first case, pork imports were protected with a 45% tariff when the TLC  was negotiated. Beef, on the other hand, always had much lower protection, 15%.

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The gradual reduction of tariffs is also reflected in a sustained increase in imports. Purchases of pork abroad increased from 4,995 tons, in 2013, to 10,875 tons, in 2018, according to the statistical portal of the Foreign Trade Promoter (Procomer).

For Luis Fernando Solis, president of the National Association of Butchers, “… imports certainly have an effect on price reduction, but it is focused on those who buy directly from abroad or from chains that purchase what is brought in by importing companies.”

Pig farmers explained that what is most imported from the U.S. is chops and ribs. In the case of beef, high-quality cuts are usually bought from American companies, with a more fat component compared to the local product.

Final data for 2019 is not yet available, but the accumulated between January and September of this year reflects a strong increase.

Up to 2017, most of the imports of pork and beef (60%) came from Chile. In 2018, the United States started leading with 48%, Chile following, with 44%. In the accumulated January to September 2019 (last available figures) purchases in the United States accounted for 53.5% of the total and Chile 46%.

 

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"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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