Although both parties have expressed interest in renewing the agreement negotiations have been stalled since May.
The parties have opposing positions and this led to the current situation where no agreement has been reached. The renegotiations were started in late 2011, as the treaty did not include modern standards regarding services and conflict resolution.
In the absence of ratification of the Agreement, the agricultural sector sees its 2013 and 2014 harvests in danger, as European buyers are already negotiating with other Central American countries.
Alvaro Saenz, president of the National Chamber of Agriculture and Agribusiness (CNAA), said the delay in the approval of the CAAA compromises the sector since on June 15 Europe will announce which countries will enter into the first block of the trade agreement to set export quotas.
The newly approved project establishes tax calculations based on the historical value of the properties, not applying the rates developed by the Ministry of Finance in 2008.
The tables compiled by the Ministry of Finance "equate the value of agricultural land to urban and tourism projects, which made the price of farms engaged in agriculture go through the roof", reported Nacion.com
The optimism in 2012 of the business world in Costa Rica has been cooled by the passage in the first instance of the 'Solidarity Tax’ bill.
The construction sector is one of the guilds less than enthusiastic over the tax reform being pushed by the Executive, who last week won the approval of the parliamentary majority in the first debate, reports Elfinancierocr.com.
Challenges to the sector include possible environmental laws on water use and real estate taxes.
Based on the preliminary results of 2011, growth forecasts for this sector for 2012 are not more than 1%. Authorities from the Ministry of Agriculture and Livestock, agree with agriculture leaders and the economist and former Minister of Foreign Trade, Alberto Trejos.
The loss of competitiveness in exports and tourism generates unemployment, but intervening in the exchange rate will generate inflation.
There seems no good solution to the problem Costa Rica has with the appreciation of its currency, which has meant a loss of competitiveness of its exports, especially agricultural, by about 5% annually over the past 4 years.
The recovery which started in September 2009 has come to an end in March 2010 and since then, more than 3,000 jobs have been lost.
The global economic crisis of 2008 caused the disappearance of 50,000 jobs in the private sector. Recovery began in September 2009 through March 2010 generating 36,000 new jobs. But since then, private employment has begun to fall again.
After the second negotiation round for the Costa Rica - Singapore Free Trade Agreement, a consensus was achieved on rules of origin. This established a general rule under which two things would be considered: firstly, if there is a tariff category change; and secondly, a 35% regional content value.
The Government of Costa Rica is putting emphasis on social spending and investment in public works as measures to deal with the contraction of the economy.
Labor flexibility, expansion of unemployment benefits, adjustment of rates for credit at state banks, the reduction of work hours, increase in pension benefits, are some of the measures announced in the "Plan Escudo" (Shield Plan).
As part of the Agritrade Platform, Guatemala will participate for the 27th time in PMA Fresh Summit, the most important international trade show and convention of fruits and vegetables in the United States, which will take place at Anaheim Convention Center, California from October 17th to 19th.