As a result of the blockade that has been in place since July 2020 on the entry of animal products from Costa Rica into the Panamanian market, Costa Rican exports to Panama are reported to have fallen and companies such as Dos Pinos are reporting losses in the millions.
The trade conflict began when Panama informed the National Animal Health Service (SENASA), an agency of Costa Rica's Ministry of Agriculture and Livestock (MAG), of the decision not to extend export authorization to a list of previously authorized Costa Rican establishments that have been trading in the Panamanian market for many years.
Unless intra-regional trade in chemical contents and residues, micronutrients and food preparations is regulated in a balanced manner, trade relations in Central America could face obstacles in the future.
Trade between Central American countries is essential, since a considerable proportion of foreign sales by local companies are destined for other markets in the region.
In the first six months of 2020, trade of paints and varnishes between Central American countries amounted to $43 million, an amount that is 30% lower than that recorded in the same period of 2019.
Figures from the Trade Intelligence Unit of CentralAmericaData: [GRAFICA caption="Click to interact with the graphic"]
From January to June 2020, trade in milk and dairy products between Central American countries totaled $183 million, 19% more than what was recorded in the same period of 2019.
Figures from the Trade Intelligence Unit of CentralAmericaData: [GRAFICA caption="Click to interact with the graph"]
Due to the tropical storms Eta and Iota, severe damage has been reported to the road network in Central American countries, and some border posts in Guatemala, Honduras and El Salvador have been suspended.
Since November 17, operations were suspended at the El Corinto, El Florido and Aguas Calientes border posts. These areas, shared by Guatemala and Honduras, are not operational, according to the Guatemalan Superintendence of Tax Administration (SAT).
The protests in Costa Rica, which affect vehicle circulation in the country and border crossings, will have a short-term impact on intraregional trade and cargo transport costs.
In order to access the $1.75 billion credit that it intends to request from the International Monetary Fund (IMF), the Costa Rican government proposed to tax financial transactions, raise the tax on the profits of companies and individuals, and increase the tax on real estate.
As of October 1st, Guatemala and Honduras will begin operating three Peripheral Customs Offices, areas that will simplify procedures and allow free community mobility between both countries.
Guatemalan and Honduran taxpayers who make definitive imports to each State Party will be the ones to benefit from the implementation of this type of customs, since the goods imported under this modality will enjoy free mobility.
In response to the restrictions applied to Costa Rican pilots, who are prevented from leaving with cargo from Panama, since July 14 Costa Rica has not allowed trucks with Panamanian plates to leave carrying goods.
Because of the spread of covid-19, Costa Rica was the first country to impose restrictions on cargo transport units from other countries in the region. Faced with this decision taken unilaterally, governments applied reciprocal measures.
Arguing that it is not allowed to leave with cargo from the rest of the countries in the region, Costa Rican transporters are protesting at the border between Costa Rica and Panama, and are asking the authorities to apply reciprocal measures.
The discontent of Costa Rican businessmen could hinder the transit of goods in Central America, and although as of midday on July 7 no blockades of cargo transport had been reported, the sector does not rule out extending the protests.
Local authorities decided to extend from 3 to 10 days the maximum period that drivers of international cargo transport are allowed to stay in Salvadoran territory to unload or load merchandise.
Due to the spread of covid-19 Costa Rica was the first country to impose restrictions on cargo transport units from other countries in the region. Faced with this decision taken unilaterally, the governments applied reciprocal measures.
After the difficulties generated by the restrictions imposed by Costa Rica on the entry of cargo from neighboring countries were overcome, the Costa Rican pilots denounce that the authorities of the region, far from applying reciprocal measures, have established "repressive measures."
Between May 18 and June 1, 2020, the free transit of goods in Central America was interrupted.
Because Costa Rica has imposed several restrictions on the movement of goods entering its territory, the Guatemalan government announced that it will apply reciprocal measures to Costa Rican transporters from June 9.
From three to five days, the time that Costa Rican carriers have available to stay in Nicaraguan territory, to unload goods or for regional transit, was increased.
Currently, transporting goods by sea between Central American countries can increase freight costs by at least 60% compared to the land option, which represents an obstacle to changing the way goods are transferred in the region.
As a result of the closure of the Penas Blancas customs crossing, on the border between Costa Rica and Nicaragua, some businessmen in the region had to resort to the sea route in order to deliver their orders.