SAN JOSE (Reuters) – Costa Rica will suspend tariff benefits for Panamanian products, the country’s foreign trade ministry said on Thursday, marking a new stage in a trade dispute that began in 2020 and is the subject of a trial at the World Trade Organization (WTO).
Costa Rica suspended tariff benefits for its southern neighbor after Panamanian authorities failed to comply with a 2021 ruling regulating tomato trade between the two sides, according to a statement issued by the ministry, which did not did not specify the articles concerned or when the suspension would be enacted.
“I hope they understand…we are ready to go all the way,” Costa Rican Commerce Minister Manuel Tovar told lawmakers on Wednesday.
“Taxing products that arrive through free trade as a retaliatory measure is an example of what we are prepared to do,” he added.
Costa Rica and Panama entered into a Free Trade Agreement (FTA) in 2008.
Panama has blocked the entry of products from Costa Rica for health reasons, Panamanian Trade and Industry Minister Federico Alfaro said in a statement released late Thursday in response to the suspension of tariff benefits by Costa Rica.
“International norms prohibit such unilateral actions and we will not hesitate to exercise our rights should they apply them,” he added.
Panama is the fifth largest market for Costa Rican products by value, according to government statistics.
Costa Rica’s imports from Panama totaled $221 million and exports totaled $603 million in 2021.