Consequences of Protectionism

Based on the willingness of Costa Rican authorities to raise the tariff on imported sugar from 45% to 73%, Brazil decided to raise the entry taxes on four animal products from Costa Rica.

Wednesday, November 18, 2020

Months ago, the private sector has been warning of the possibility that the country's trading partners would apply reciprocal measures because of Costa Rica's unilateral decision to raise entry taxes on imported sugar.

The trade conflict began in June 2020, when the Alvarado administration decided to increase to 73% and for three years, the tariff on sugar entering the country. The argument was that imports of the sweetener were growing unusually high and local production was being damaged.

In response to the protectionist measure, in October of this year Brazil decided to raise before the World Trade Organization (WTO) a process to exercise the right of suspension, which consists of eliminating a certain tariff concession to one or more of Costa Rica's export products.

Retaliation has not been long in coming. Reviewed by Nacion.com that "... Brazil communicated, on Monday November 16, its decision to raise tariffs or entry taxes to four categories of products, in compensation for Costa Rica increasing entry taxes on sugar, through a safeguard."

Chocolates and food preparations with cocoa, extracts, essences or concentrates of tea and condiments, are the substances of animal origin that will be affected.

Duayner Salas, Minister of Foreign Trade, said that "... in the case of Brazil, what happened is that it notified on Monday (November 16) to the WTO a preliminary list of products to which it will apply from this Mars November 17, a tariff increase equivalent to the safeguard applied by Costa Rica. With the South American country, we are also open to continue the dialogue that began several weeks ago."

There are more threats to Costa Rica, since following in Brazil's footsteps, Canada also warned the WTO about the possibility of imposing compensation against the Costa Rican authorities' policy of raising the tariff on imported sugar.



More on this topic

Sugar: Brazil to Resume its Complaint against Costa Rica

April 2021

On April 26, Brazil will reactivate again on the agenda of the World Trade Organization, the complaint against Costa Rica for the imposition of a safeguard to increase the tariff on sugar.

The dispute began when in June of this year the Alvarado administration decided to increase to 79% and for a period of three years, the tariff on sugar entering the country. The argument for raising the percentage was that the unusual growth of imports was harming local production.

Sugar Tariffs: More Threats to Costa Rica

November 2020

Following in Brazil's footsteps, Canada warned the WTO about the possibility of imposing compensation against the Costa Rican authorities' policy of raising the tariff on imported sugar from 45% to 73%.

Arguing that imports were growing unusually high and local production was being undermined, in June of this year the Alvarado administration decided to increase the tariff on sugar entering the country to 79% and for a period of three years.

Sugar Tariffs: Brazil Denounces Costa Rica

October 2020

After the Costa Rican authorities raised the tariff on imported sugar from 45% to 73%, the South American country decided to raise before the World Trade Organization, a process to exercise the right of suspension.

In June of this year, the Alvarado administration decided to increase to 79% and for the term of three years, the tariff on sugar entering the country.

Sugar War in Costa Rica Restarts

February 2017

The Ministry of Economy has decided to impose a new tax of almost 7% on sugar imported from Brazil, in response to a lawsuit brought by the union of local producers.

With this new protectionist measure the government is trying to put an end to a conflict that arose in 2015 between the Agricultural Cane League (Laica) and the importer Maquila Lama, when this company denounced a proposal to amend the regulation on sugar fortification claiming it attempted to restrict trade of imported grain.

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