When the free trade treaty came into force, Costa Rican officials were excited that the bulk of the country’s exports and services would continue to be free of tariffs in the United States.
But the treaty also provided deep cuts in import duties on products from the United States, although some import tariffs will endure for up to 20 years.
Costa Rican pork farmers are feeling the impact of that treaty now, and other agricultural producers are likely to begin to feel the pinch. Many of the tariff reductions are staged in over five, 20, 15 or even 20 years for some chicken parts.
Pork producers took their case to Casa Presidencial Tuesday, and officials there said that they recognized the need to impose methods to insure the sustainability of the industry. Casa Presidencial asked for 24 hours to respond and said it would do so consistent with international treaties.
Pork producers had a decade to figure out how they would confront the juggernaut of agricultural production in the U.S. heartland.
In 2006 a trade delegation visited from the U.S. State of Iowa where there are five pigs for every resident. The state produces 25 million pigs a year. The visitors said that farmers in their state could produce food cheaper than Costa Rican farmers
The same year a delegation came from the U.S. State of Indiana. A representative from Indiana Packers Corp. in Delphi, Indiana, said his firm handles 12,000 pigs a day with its 1,3500 employees.
The pork meat products are then shipped vacuum packed all over the world.
The representative said that Costa Rica imposed at that time a 45 percent tariff on U.S. pork and required a Costa Rican veterinarian to inspect the packing plants. And then the government said it did not have enough money to send the inspectors.
Not any more. Under the Central American Free Trade Treaty Costa Rica is obligated to accept the inspections done by U.S.
Department of Agriculture veterinarians at the packing plants. In addition U.S. pork producers have a 1,100 metric ton quote of tariff-free pork each year. and the amount increases 10 percent annually, according to the U.S. Trade Representative.
One of the goals of the free trade treaty from the U.S. perspective was to let U.S. exporters enjoy the same tariff-free or reduced-tariff status that Costa Rica and other Central American nations enjoyed. Another goal was to encourage foreign producers to become more efficient.
The Costa Rican agriculture department and other agencies acted Monday to increase the purchase of domestic pork by government institutions and private packing firms. The officials were responding to producer complaints that they could not sell the meat and make a profit.
That is probably true because some of the U.S. agricultural visitors bragged that they could deliver shipping containers full of vacuum-pack pork at prices far cheaper than the cost of locally produced meat.
The situation will only get worse for pork producers because all tariffs on pork expire 15 years after the 2008 approval of the trade treaty.
Of course any government action to increase the price of Costa Rican pork will have an impact on the pocketbook on the nation’s shoppers.
Consumers already pay more for rice because the government tries to keep out foreign imports for the benefit of the big rice growers.
Right now a pork roast sells in an upscale supermarket here for a bit less than 3,000 colons a kilo. That’s about $2.60 a pound.