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Miami-Costa Rica Annual Report: No. 5 trade partner- Med-tech goods shape trade

July 27th, 2006

Medical sector goods are on the rise and apparel imports from Costa Rica are waning as trade begins shifting to new commodities.

Costa Rica is attracting increasing numbers of pharmaceutical and medical companies and that trend is starting to influence trade results.

Last year, South Florida’s $3.5 billion trade exchange with Costa Rica was led by a 3 percent jump in Miami imports of medical equipment, which totaled nearly $298 million.

Known for its high quality of life, stable economic growth and well-educated population, the Central American country has been able to lure multinational giants such as Procter & Gamble and Glaxo Smith Kline. It also has attracted several multinationals involved in the medical and surgical supply business. Among them are Boston Scientific, DeRoyal Scientific, Arthrocare, Baxter Healthcare, Cytic Surgical products and the MedTech Group.

The medical sector imports came against a backdrop that saw bilateral trade between the Miami Customs District and Costa Rica rise 3 percent. Miami imported some $1.35 million in goods from Central America’s most prosperous nation while exporting $2.2 billion-worth of products.

Clothing remains an important South Florida import from Costa Rica, although some garment categories have been diminishing as medical imports push ahead. Still, women’s and girls’ slips saw gains of nearly 10 percent to close the year worth $100 million while men’s undershirts rose even more 39 percent to total $49 million.

But imports of men’s suits fell 15 percent to $97 million, shipments of women’s blazers dropped 13 percent to $47 million and the $31 million in men’s underwear sent to South Florida reflected a 14 percent drop from a year earlier.

Intel has assembly plants in Costa Rica and South Florida took advantage of that, importing $91 million in computer parts an astonishing jump from the $1.6 million in computer components imported in 2004. Miami economist Manuel Lasaga said the presence of high tech companies like Intel helps lure companies in other industries, including the medical and pharmaceutical sectors.

After returning Oscar Arias to the presidency this year, Costa Rica now waiting to see if it will join the Central American Free Trade Agreement, which includes the Dominican Republic. Despite opposition to the trade pact from union workers and public employees, Arias is pushing Congress to approve the treaty. Lasaga said he believes Costa Rica will join DR-CAFTA once it sees its neighbors and competitors enjoying the benefits of free trade.

Laura Dachner, a trade counselor at Costa Rica’s embassy in Washington, D.C., said she expects the measure to be approved by December, although it is unclear whether Costa Rica will meet all the requirements of the accord. In order join CAFTA, Costa Rica must open state monopolies in the telecommunications and insurance industries to competition from the private sector. Dachner acknowledged that privatization of state-owned companies is not in Arias’ agenda.

If the Costa Rican Congress fails to approve DR-CAFTA in 2006, it has until the end of 2007 to join the seven-nation treaty. Dachner said Asian companies anticipating a free-trade pact have begun making inquiries about investing in Costa Rica’s electronics, textile and agricultural sectors.

Dachner said DR-CAFTA is not a panacea for all problems but added that it will help Costa Rica set rules and bring even greater transparency to trade and investment. She said a free trade pact is also vital for consolidating trade with the United States, the country’s main trading partner. Half of Costa Rica’s international commerce is focused on the United States.

In addition, the trade accord should help Central American countries keep competition from China at bay.

“Costa Rica is a small country and the only way we will be able to survive is to trade with the world,” said Dachner.