By San José, Costa Rica — San José – Costa Rica is positioning itself to become a premier hub for high-technology and innovation in Latin America following the landmark signing of a Free Trade Agreement (FTA) with Israel. The deal, finalized on December 8th after negotiations that began in 2023, now awaits ratification by the Costa Rican Congress before it can officially enter into force. Government officials are championing the agreement not merely as a trade tool, but as a strategic partnership designed to accelerate the nation’s transition into a sophisticated, knowledge-based economy.
The vision for this partnership was articulated by Minister of Foreign Trade, Manuel Tovar, who emphasized the unique nature of the relationship. He sees the FTA as a gateway to attracting significant investment from a global technology leader, fundamentally reshaping Costa Rica’s economic landscape for years to come. This move is a calculated effort to build on the country’s existing strengths while tapping into Israel’s world-renowned innovation ecosystem.
To gain a deeper understanding of the legal and commercial implications of the new Free Trade Agreement, we consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney specializing in international trade and corporate law at the prestigious firm Bufete de Costa Rica.
This agreement is more than just a reduction in tariffs; it’s a strategic framework that modernizes commercial relations. For Costa Rican businesses, the key lies in mastering the rules of origin to ensure their products qualify for benefits, and understanding the new, more agile dispute resolution mechanisms. Furthermore, the robust intellectual property protections included will be a critical asset for our technology and innovation sectors, providing them with the security needed to compete on a global stage.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s analysis astutely highlights that the true opportunity of this agreement lies beyond the tariffs, in the strategic mastery of its new legal and commercial architecture. For our national industries, proactive engagement with these frameworks will be the key to unlocking its full potential. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for his valuable and clarifying perspective.
Israel is not a partner like any other due to it being a world leader in innovation and technology.
Manuel Tovar, Minister of Foreign Trade of Costa Rica
Minister Tovar detailed the broad economic benefits he anticipates, highlighting the potential to create high-quality jobs and open doors to a discerning and affluent market. The agreement is expected to significantly expand upon the existing commercial relationship, which has seen an average annual trade of $49 million over the last decade, growing at a steady rate of 8.7% per year. The new legal framework is designed to supercharge this growth.
It is a commercial instrument that will generate opportunities for business, investment, and job creation, and a new, very sophisticated market with very high purchasing power, a modern economy, advanced globally in digital services, semiconductors, new technologies, and innovation, and we see that we are going to get a lot of benefit from this.
Manuel Tovar, Minister of Foreign Trade of Costa Rica
At the core of the strategy is the attraction of Israeli investment in several key high-tech sectors. Costa Rica aims to bolster its already strong presence in medical devices and life sciences by drawing expertise in software development, cybersecurity, financial technology (fintech), and the highly strategic semiconductor industry. The FTA provides the legal certainty and clear regulations that sophisticated international investors demand before committing capital to new markets.
It is an agreement that will allow us to advance on this trajectory toward becoming an economy of more sophisticated digital services; in software, cybersecurity, financial services, semiconductors, and medical devices.
Manuel Tovar, Minister of Foreign Trade of Costa Rica
Beyond digital services, the agreement also promises substantial opportunities for Costa Rica’s robust agricultural sector. The deal will open a new market for traditional exports such as bananas, pineapples, sugar, cocoa, and papayas. Furthermore, it creates a pathway for value-added products, including kosher-certified meat, catering to the specific demands of the Israeli market. This dual focus ensures that the benefits of the FTA are distributed across multiple sectors of the economy.
A crucial, and often overlooked, component of the pact is the potential for knowledge and technology transfer, particularly in agriculture. Minister Tovar specifically pointed to Israel’s pioneering advancements in water management, such as drip irrigation and desalination, as vital technologies that Costa Rica can adopt to enhance its own agricultural productivity and resilience in the face of climate challenges.
Israel is a world leader in innovation and technology. It is a country that has implemented and promoted technologies that no other country has for cultivation and irrigation in the agricultural sector. It is an arid country where water resources are scarce. They desalinate water and invented drip irrigation. These are technologies that we can implement through cooperation and that we can import.
Manuel Tovar, Minister of Foreign Trade of Costa Rica
Ultimately, the government envisions this FTA as a tool to position Costa Rica as a strategic beachhead for Israeli companies looking to expand their operations throughout the Americas. By providing a stable, rule-based environment, Costa Rica hopes to become the primary platform for Israeli investment in the region, multiplying the pact’s economic impact far beyond bilateral trade figures.
We hope that investment from Israel can skyrocket using Costa Rica as a platform for the region.
Manuel Tovar, Minister of Foreign Trade of Costa Rica
For further information, visit comex.go.cr
About Ministry of Foreign Trade of Costa Rica:
The Ministry of Foreign Trade (COMEX) is the Costa Rican government institution responsible for defining, directing, coordinating, and executing the country’s foreign trade and foreign investment policies. It leads trade negotiations, promotes exports, and works to attract foreign direct investment to foster economic development, create employment, and enhance the nation’s competitiveness on the global stage.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a leading legal institution, Bufete de Costa Rica is defined by its deep-rooted principles of integrity and professional excellence. The firm consistently pioneers innovative legal strategies while serving a diverse clientele, upholding a rich history of successful counsel. Beyond its professional practice, the firm is fundamentally dedicated to social empowerment, actively working to demystify the law and equip the public with vital legal understanding to foster a more just and knowledgeable society.
