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Trade Officials Report Banner Year for Exports

2005 was a banner year for the Costa Rican export sector, according to Foreign Trade Ministry officials – but that doesn’t mean exporters will rest on their laurels in the months to come. The ministry has set its sights on a $4 billion (57%) increase in exports by 2010, and, in pursuit of that goal, has launched a far-reaching new effort to promote the Costa Rican “brand” in target markets around the world.


Doris Osterlof, Vice-Minister of Foreign Trade, said Jan. 19 during a press conference in downtown San José that the new, three-year International Marketing Plan (2006-2008) is all part of the ministry’s long-term export goals of $11 billion in exports by 2010 and $16 billion by 2015. For 2005, the minister set a smaller goal of $6.9 billion, and the export sector exceeded this goal with $7 billion. In all, exports grew 11.5% over the 2004 total.


“It’s a very dynamic sector,” Osterlof said, emphasizing – as Trade Minister Manuel González has frequently done in the past – that Costa Rica’s export products and markets are becoming ever more diverse, leaving the country’s coffee- and banana dominated past in the dust. Mango exports jumped more than 40% in 2005; cassava, tires and aluminum sheets were among the other products that showed significant growth.


In addition, Costa Rica continues to grow in new markets. While the United States remains the country’s largest export market, buying 42.7% ($2.99 billion) last year, exports to other destinations such as China, Holland, and the other countries in Central America are on the rise.


Asked whether the ministry seeks to reduce the country’s reliance on the United States, Osterlof said, “We’re distributing the dependence… but not substituting the (U.S.) market.” She added that increasing exports to the United States is still a goal for the ministry.


Each of Costa Rica’s seven provinces is involved in international trade, with Heredia, a province just north of San José, leading the way, according to ministry figures.


The province, home to high-tech giant Intel, several free zones where foreign companies operate tax-free, and agricultural producers, exported $3.05 billion (43.6% of the total) in 2005, Osterlof said. The central provinces of San José (18.7%), Cartago (11%) and Alajuela (9.5%) followed.


The northwestern province of Guanacaste exports the least, at 1.9% of the country’s export total, but Osterlof pointed out that the province contributes to national wealth through its booming tourism industry.


Small and medium enterprises (SMEs, or PYMES from its initials in Spanish) play an increasingly important role in the sector, according to Martín Zúñiga, general manager of the Foreign Trade Promotion Office (PROCOMER). These businesses account for approximately 75% of the country’s total exporters and 20% of the total export revenue, he said.


“Every year, more small and medium businesses enter the market,” Osterlof said, adding that support for such enterprises is one focus of the new International Marketing Plan.


Going Global

The ministry and PROCOMER approved the marketing plan in December; it’s designed to ensure that the country continues to move toward its 2010 and 2015 export goals. Jorge Zamora, PROCOMER’s marketing manager, described the project.


The international marketing team will “promote Costa Rica on the worldwide level” and “strengthen the image of Costa Rica in our target markets,” according to Zamora, who said he agreed to head up the team when Zúñiga asked him to “re-focus the marketing management and work on an active marketing plan.”


One focus of the plan is creating a permanent system of “trade intelligence,” with analysts researching the product needs and optimal prices in Costa Rica’s key markets: North, Central and South America, the Caribbean, Europe and Asia. The plan also calls for participating in an increased number of international trade fairs and commercial missions, beginning with an industrial fair in the Dominican Republic Feb. 9-12, and for the opening of more Costa Rican trade offices abroad.


One such office will open in Belgium next month, in part to handle marketing during the 2006 World Cup soccer event to be held in Germany in June. Costa Rica’s National Team will appear in the June 9 opening game against Germany, creating a significant opportunity for Costa Rican advertising; the Costa Rican Tourism Institute (ICT) is also planning to take advantage of the world spotlight, Tourism Minister Rodrigo Castro has told The Tico Times (TT, Jan. 13).


Zúñiga said funds for the marketing plan come from PROCOMER’s $6 million annual budget, but that the organization is hoping to form alliances with the private sector to defray costs such as convention hall space for trade shows. The plan calls for the formation of a Strategic Market Council in which private-sector leaders will participate.


Asked whether the approaching end of President Abel Pacheco’s term in office – and, therefore, Trade Ministry staff members’ terms as well – will create a break in continuity of these efforts, Osterlof said that “changes in government don’t affect export promotion.” Zamora added that the marketing plan is “already being implemented.”


No Mention of CAFTA

Discussion of the Central American Free-Trade Agreement with the United States (CAFTA), a part of virtually any public appearance by a Trade Ministry official during recent years, was notably absent from the press conference. After nearly one and a half years in the hands of the Executive Branch, the controversial pact is now under consideration in the Legislative Assembly – or will be when legislators return from their 45-day vacation Feb. 7, after the national elections.


CAFTA was set to take effect Jan. 1 between the United States and the other signatory countries that have ratified the agreement – that is, all signatories except Costa Rica – but the start date was postponed because none of those countries had fulfilled U.S. requirements for complementary legislation (TT, Jan. 6).


Osterlof did mention that exports have shown the most growth in countries with which Costa Rica has trade agreements and arrangements. Such countries and regions include the United States, with which Costa Rica still enjoys tariff exemptions in certain areas under the Caribbean Basin Initiative, which U.S. officials say will expire when CAFTA takes effect; the European Union; Chile; Mexico; some members of the Caribbean Community countries, with which Costa Rica signed a free-trade agreement last year; the Dominican Republic, Canada, and the rest of Central America.


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