Israel and Costa Rica to sign Free Trade Area Agreement

Minister of Economy and Industry, Nir Barkat, will sign, together with his counterpart, Manuel Tovar Rivera, Minister of Foreign Trade of costa rica, a Free Trade Area (FTA) Agreement between Israel and Costa Rica – a strategic move that will strengthen Israeli exports, deepen trade relations with one of the developing economies in Latin America, and contribute to reducing the cost of living in Israel through significant tariff reductions.

Minister of Economy and Industry, Nir Barkat: “Costa Rica is a natural trade partner for Israel – an advanced OECD country with a deep commitment to free and open trade. The Free Trade Agreement is expected to strengthen the trend of growth in Israeli exports, deepen business collaborations, and help reduce the cost of living in Israel by lowering import prices. The agreement reflects the policy we are leading: opening new markets, diversifying trade destinations, and strengthening the growth engines of the Israeli economy.”

Following the announcement on opening talks for an FTA with India, and a week before the visit of the German Minister for Economic Affairs and Energy with an economic delegation, the agreement between Israel and Costa Rica signifies a significant achievement for the economic foreign policy led by the Foreign Trade Administration at the Ministry of Economy and Industry.

The agreement is expected to strengthen Israeli exports, deepen trade relations with one of the developing economies in Latin America, and contribute to reducing the cost of living in Israel through significant tariff reductions.

The new agreement grants Israeli exporters a real competitive advantage in the Costa Rican market – a market where currently only about 2.5% of tariff lines are generally exempt. Upon its entry into force, 99 out of 100 of Israel’s main export products to this market will receive relief, benefits, and broader market access.

Concurrently, importers and consumers in Israel will benefit from lower prices on products arriving from Costa Rica, including tropical fruits, nuts, honey, fresh and processed vegetables, and raw materials for industry – a reduction that will generate competition and expand the variety of products available in Israel.

Key Principles of the Agreement

• Over 90% of tariff lines will be immediately abolished, and about 95% of products will receive benefits under the agreement. The implication: food products, raw materials, and industrial equipment will reach Israel at cheaper prices.
• The agreement includes using a Declaration of Origin instead of a Certificate of Origin, recognizing software as part of the production process, flexible cumulation rules, and new mechanisms adapted to global supply chains. All of these are expected to simplify processes, shorten time, and enhance the competitiveness of israeli industry.
• The agreement regulates the field of trade in services with Costa Rica for the first time, including the possibility of providing services remotely, promoting free and secure digital trade, recognition of electronic signatures, equal rights for Israeli suppliers, and more.
• The combination of the two countries’ strengths – Israel in the fields of technology, Agri-Tech, and industrial equipment, and Costa Rica as an agricultural and industrial powerhouse – creates an excellent basis for expanding bilateral trade and opening new opportunities.

The negotiations were led by the Foreign Trade Administration at the Ministry of Economy and Industry, in cooperation with the Ministries of Foreign Affairs, Finance, Agriculture, and Justice, the Competition Authority, and the Customs Administration. The agreement was reached after two intensive rounds of negotiations and many professional meetings.

The current volume of exports from Israel to Costa Rica stands at an average of about $32 million annually – but in light of the agreement, the forecast is for an expansion of growth trends and entry into a variety of new fields.

Costa Rica holds 18 trade agreements with leading trade blocs worldwide, including the European Union, the US, China, and South Korea; the agreement with Israel aligns and positions the Israeli industry in a competitive position identical to, or even better than, other countries.

Following the signing, a formal ratification process will begin, after which the agreement will enter into force.

Roi Fisher, Director of the Foreign Trade System at the Ministry of Economy and Industry: “The signing of the agreement is a significant achievement for Israeli industry. Upon its entry into force, Israeli exporters will enjoy preferred access to a market with high tariff rates – an advantage that strengthens their competitiveness. Israel and Costa Rica are complementary in the fields of agriculture, manufacturing, and technology – a combination that creates real opportunities for expanding trade and deepening cooperation. Despite the challenges, we continued to represent the needs of Israeli industry even during the war, and I am happy with the result we will bring to exporters and the economy.”