Welfare effects of a change in the trade policy regime for rice in Costa Rica Henry Benavides Ministry of Foreign Trade of Costa Rica

Policy recommendations: Related with CAFTA-DR The phasing-out schedule under the CAFTA-DR will progressively reduce the relevance of the performance requirement and the import quota since industries will no longer need to purchase domestic paddy rice in order to be able to import duty-free from the USA. This might serve as an automatic price-control mechanism: rice imports becoming progressively cheaper. The CAFTA-DR may also increase pressure on local producers to reduce their prices to avoid losing market share. The local rice sector will face the challenge of improving its competitiveness, in areas of productivity, capacity building, improved and cheaper access to inputs, and strengthening of credit mechanisms. Policy recommendations: Related with CAFTA-DR

Policy recommendations: Related with WTO Commitments Costa Rica has to continue its efforts to comply with its commitments to the WTO. A continuous dialogue between producers, millers and the government is needed to enhance productivity levels, avoid the application of trade-distorting policies, and prevent welfare losses for consumers. The possibility of fixing prices should not be politicized. Even if the internal law allows the government to regulate prices of goods and services in exceptional situations, the need for such a measure has to be properly established and justified, and applied only temporarily. Policy recommendations: Related with WTO Commitments

Ab. 2014

Welfare effects of a change in the trade policy regime for rice in Costa Rica