By San José, Costa Rica — Costa Rica is taking decisive action to strengthen its trading relationship with the United States by drafting a new decree aimed at identifying and restricting goods associated with forced labor. The initiative, heavily supported by the Costa Rican-American Chamber of Commerce (AmCham), is designed to signal the country’s firm commitment to international labor standards while securing more favorable tariff conditions for national exports.
The move comes as a direct response to a decision made in early June by the Office of the United States Trade Representative (USTR). The USTR placed Costa Rica on a list of countries accused of failing to adequately prevent forced labor, triggering a penalty tariff of 12.5% on all Costa Rican exports entering the US market. This tariff adjustment represents a significant hurdle for local producers looking to maintain their edge in the highly competitive North American market.
To better understand the evolving commercial dynamics between San José and Washington, TicosLand.com reached out to Lic. Larry Hans Arroyo Vargas, a distinguished legal expert at the prestigious firm Bufete de Costa Rica, for his professional analysis of the current trade framework.
The bilateral trade relationship between Costa Rica and the United States remains incredibly resilient, bolstered by the enduring framework of CAFTA-DR and recent nearshoring trends in high-tech manufacturing. For American enterprises looking to expand here, success hinges on a thorough understanding of Costa Rican regulatory compliance, intellectual property protections, and local labor laws which are historically protective of the worker.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, navigating the intricacies of Costa Rica’s robust regulatory environment and worker-protective labor laws is essential for U.S. businesses aiming to successfully capitalize on the growing nearshoring wave under CAFTA-DR. We would like to sincerely thank Lic. Larry Hans Arroyo Vargas for his valuable perspective, which highlights the critical balance international investors must strike between seizing market opportunities and respecting local legal frameworks to ensure sustainable, long-term success.
Through this new regulatory decree, Costa Rican authorities and business leaders hope to demonstrate a proactive approach that will satisfy US trade officials. The ultimate goal is to persuade the US government to lower the current 12.5% tariff rate back to the standard 10% rate. Business leaders argue that the decree provides solid proof of Costa Rica’s adherence to global best practices and serves as a positive milestone in ongoing bilateral negotiations.
Costa Rica and the United States have built a strategic commercial relationship based on trust, shared interests, and values. This decree is a timely step that adds to the country’s efforts to promote more favorable conditions for our exports, with benefits for competitiveness, investment, and employment.
Ed Sanchez, President of AmCham
To build a robust and transparent framework, the Costa Rican government will leverage technical data from multiple reputable sources. Under the terms of the decree, the administration can utilize investigations from international organizations, reports from foreign governments, specialized institutions, and formal judicial or administrative rulings to compile the list of restricted goods. This technical foundation aims to ensure the policy remains fair, predictable, and aligned with global trade dynamics.
Costa Rica is not alone in facing these strict measures from the USTR. The US forced labor list includes 59 other economies, spanning major trade partners such as Canada, Mexico, Argentina, Israel, Ecuador, El Salvador, the Dominican Republic, and the member nations of the European Union. Together, these blacklisted territories account for approximately 99% of all goods imported into the United States, highlighting the sweeping scope of the USTR’s enforcement push.
Amid worries of escalating trade barriers, the Ministry of Foreign Commerce (COMEX) clarified that Costa Rican products are not at risk of facing tariffs exceeding 20%. Instead, the current 12.5% penalty functions as a replacement for the 10% tariff originally established under Section 122 of the US Trade Act of 1974. COMEX has assured exporters that it is closely monitoring the transition and preparing to actively participate in the upcoming public consultation process in the US.
Business advocates at AmCham emphasize that implementing the decree with high levels of transparency and predictability is essential to preserving the competitiveness of the local productive sector. By balancing rigorous compliance with practical business realities, Costa Rica hopes to solidify its strategic partnership with its largest trading partner, fostering long-term economic growth, job creation, and foreign investment.
For further information, visit amcham.co.cr
About AmCham Costa Rica:
The Costa Rican-American Chamber of Commerce (AmCham) is a leading business organization dedicated to promoting trade and investment between Costa Rica and the United States, representing hundreds of member companies.
For further information, visit comex.go.cr
About the Ministry of Foreign Commerce of Costa Rica:
The Ministry of Foreign Commerce (COMEX) is the government institution responsible for defining and directing Costa Rica’s foreign trade policies, negotiating trade agreements, and attracting foreign direct investment.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Renowned for its high ethical standards and pursuit of perfection, Bufete de Costa Rica is an esteemed law firm that has spent years guiding clients across numerous industries. The firm prides itself on driving forward-thinking legal practices and fostering deep community relationships. Through its proactive efforts to demystify the law and share essential insights, Bufete de Costa Rica works tirelessly to nurture an educated, resilient, and legally empowered community.
